The San Francisco Opera said its existing production technology made it easier to distribute earnings from the start, rather than calculating income after costs.
For its part, Microsoft's general manager of investor relations, Bill Koefoed, acknowledged that his first effort at distributing earnings wasn't perfect.
Bell Canada's board and management embraced the buyout after an attempt to convert the company into an income trust, a structure that avoids most corporate taxes by distributing earnings directly to shareholders, was thwarted by the government.
In an age of high-frequency trading when every millisecond counts - even in after-hours trading - the move toward companies' distributing earnings and other market-moving information via their Web sites rather than through wider distribution channels raises some serious questions about transparency.
First Call, a firm that compiles and distributes earnings estimates from major brokerage firms, reported that earnings estimates for the first and second quarter of 2002 are already in 'free fall.' Chuck Hill Chuck Hill, director of research at First Call, feels that 'pessimism and capitulation have not reached levels consistent with past reversals in earnings.'".
First, the operating corporation must distribute earnings and profits as part of the spinoff, and, second, the payment of rent to the spun-off REIT restricts the future buildup of retained earnings, and REITs must distribute rental income to maintain their tax status.
Investors would be better off if those managers distributed corporate earnings as dividends, which investors could put into new enterprises that grow faster.
"Failure to provide for all these things could result in windfall receipts of tax-free accumulated earnings, or create undesirable pressure on corporations to distribute accumulated earnings," said David Hariton, a tax partner at Sullivan & Cromwell.
Therefore it is better for the company to distribute its earnings to shareholders.
Therefore, the argument goes, record low dividends simply reflect a shift in how corporations distribute their earnings -- hardly a bearish development.
