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Noble's shock Q4 loss: Why no warning?

Published Sun, Mar 1, 2015 · 09:50 PM

WHEN the share price of commodities firm Noble Group stabilised very shortly after a selloff following the release of a report by short seller Iceberg Research a fortnight ago which attacked Noble's accounting practices, the market had high hopes that Iceberg's criticisms would be easily dismissed and the attack quickly repelled.

Two weeks later, the market is now not so sure. Noble's shares on Friday resumed their downtrend, plunging 8 per cent after the company reported a shock US$240 million loss for the fourth quarter ended Dec 31, 2014, largely due to an unexpected US$438 million writeoff.

Since a main prong of Iceberg's attack was the need for more writeoffs, it looks very much - notwithstanding Noble's protestations that Iceberg's arguments have no basis and are wrong - that the short seller wasn't too far off the mark.

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