(FORTUNE Magazine) – When it comes to financial statements, tech companies like to think that they're special, that the old rules don't apply. After all, their investors certainly don't hold them to the same standards of valuation and earnings they use for other companies. So why should accounting rules be any different?

Accordingly, tech companies and the friendly analysts who follow them are taking creative writing in the income statement to levels never before seen. The basic idea is to find a new way of defining the financial situation of companies that don't produce profits or that suffer from a host of special circumstances that detract substantially from reported earnings. These companies are not necessarily trying to hide anything or do anything illegal. For that matter, they're not always inventing new techniques. It's a time-honored tactic, for instance, to try to persuade investors to ignore one-time charges like merger costs. And the cable television and cellular telephone industries for years stressed cash flow, clunkily known as Ebitda (earnings before interest, taxes, depreciation, and amortization), rather than earnings. That's because heavy interest expenses associated with their debt had wiped out their profits.

But perhaps no other industry employs as many techniques as heavily as the tech industry. Chief among them is "cash earnings," a slight variation on Ebitda (it excludes from profits a hodgepodge of noncash charges but includes taxes). The tech crowd also likes to deduct in-process research and development costs at a newly acquired company--a gimmick the Financial Accounting Standards Board had threatened to eliminate after the SEC identified numerous abusers. (That threat struck terror in Silicon Valley--see "An SEC Clampdown Is Shaking Up the Valley," The Wired Investor, March 15--but FASB has since backtracked.)

Then there's so-called "cheap stock," the compensation expense a company must take when it grants stock options to executives at below-fair-market values. That's a major factor in the tech world, where so many executives are paid with stock options. So toss that one off the financial statement. Other calculation methods include "pro forma earnings" (results as if a merger that actually took place later had been in effect throughout the reporting period); earnings before acquisition and stock-based compensation expenses; and profits before the line-item veto employed by the CFO. (Just kidding on the last point.)

Consider the second-quarter financial results of auctioneer eBay, one of the relatively few profitable Internet companies. Net income was $816,000 (a third of the year-earlier level), or a penny per share. Revenues were $49.5 million, about 2 1/2 times that of last year's second quarter. Read on, however, in eBay's earnings announcement, and the $816,000 becomes "historical earnings." The company wants you to know--"for informational purposes only"--that if you exclude the effects of noncash expenses such as merger costs, stock-based compensation, and "acquired intangibles" (assets, including goodwill, that must be amortized over time), the "supplemental" net income is actually $5.1 million, or 4 cents per diluted share. And that, CFO Gary Bengier says, is the figure that's relevant to analysts' expectations. In other words, forget the penny, and concentrate on how eBay didn't disappoint Wall Street.

Got it?

So what does matter in a net-earnings-less world? For cable and cellular companies, the trick used to be to get investors to focus not on financial performance but rather on metrics such as the number of potential or actual subscribers. "All these things are proxy values," says Peter Currie, erstwhile investment banker, former CFO of both McCaw Cellular and Netscape, and now a Silicon Valley venture capitalist. "The market goes through phases where it will accept proxy values. And then it won't."

Currie has a point. Rigid, old-fashioned definitions of earnings may not apply to fast-changing tech companies. The problem is that investors could end up trying to compare one company's Ebitda with another's Web hits--with no common language. Moreover, many of the tossed-out charges are real business expenses. "What are cash earnings?" grouses Jack Ciesielski, publisher of the accounting newsletter The Analyst's Accounting Observer in Baltimore and a member of a FASB advisory committee. "Are they just what you say there are?"

FASB has taken a stab at defining earnings in the real tech world by proposing--reluctantly--that companies be allowed to report earnings before goodwill amortization charges. The tech world was doing this informally anyway, and the change should make it easier to compare companies that use different accounting treatments for their mergers. However, that doesn't mean FASB will allow all the other creative techniques. Says FASB chairman Edmund Jenkins: "Some of [the non-net-income figures] are good measures of internal performance that may or may not be of use."

Maybe. But what would be most useful would be for everyone to agree on a single, realistic--and accurate--method of accounting for earnings.

ADAM LASHINSKY is the Silicon Valley columnist for TheStreet.com. You can browse his Wired Investor columns at www.fortune.com/investor/wired or e-mail him at alashinsky@thestreet.com.