As Time Goes By….

October 9, 2008

People may disagree about whether a kiss is just a kiss or a sigh is just a sigh, but Footnoted readers know very well that words in SEC filings are never just words.

As Michelle highlighted in a post last week about Apple (AAPL) (and the comments that followed), alert investors can get ahead by paying attention to language in filings that differs from what’s been used in the past.

That’s why we found it startling to read the following passage in a 10-Q that Demandtec (DMAN) filed last Friday:

Many economists are now predicting that the United States economy, and possibly the global economy, may enter into a prolonged recession or depression as a result of the deterioration in the credit markets and related financial crisis, as well as a variety of other factors.

What’s different is that this is the first filing in the last several months to mention “the D word” as a possibility (as well as the first time Demandtec has used it). What we see regularly are statements that use the word in a hypothetical context – never in a passage like this.

Wise minds out there differ on how bad things really are. While this Bloomberg story noted that Goldman Sachs Group Inc. (GS) “said the U.S. economy will enter a recession ‘significantly deeper’ than previously forecast”), this story from yesterday’s WSJ said that while “no doubt the parallels are stark and frightening…..the differences between now and then are even greater.”

It’s scary when we know we haven’t hit bottom, but we don’t know exactly where the bottom is. Maybe a couple more lyrics from Herman Hupfeld’s classic song will keep us grounded while we sort things out: “The fundamental things apply, as time goes by.”

Image Source: The Claremont Colleges Libraries

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