© D.L. Crumbley
Watch the Honeypot – Companies in the midst of big changes will often take a huge charge – which Wall Street is supposed to look right through, because, hey, it’s a one – time thing – to set up a “restructuring reserve,” and then slowly reverse some of the charge later on. This technique is known as a “honeypot,” because the company can dip into it whenever its operational results aren’t looking so great.
Source: Pat Dorsey, “Five Tips for Spotting Financial Fakery,” Yahoo! Finance, February 11, 2004.