You know, when you listen to enough conference calls, you start to sleep through the caveats, such as ye olde safe harbor statement. That's not always smart. Sure, every company is going to say, "It is possible that the Company's actual results may differ materially from those projected in these forward-looking statements," but when the warning comes from FARO Technologies (NASDAQ:FARO), you'd better believe it, Jack.

Unfortunately, people who didn't heed FARO's safe-harbor warnings last quarter are licking their wounds again this week, after FARO's latest swing in the biff-your-own-earnings-projections derby. For Q4, the instrument maker turned in not the $0.19 to $0.26 it predicted last fall. And not the $0.03 to $0.05 it promised later. No, FARO came up with exactly one thin penny per share, a whopping $4.7 million decrease from last year's total. You realize the scope of that failure when you notice it comes with a 21% sales uptick.

For the full year 2005, earnings were $0.57 per share. That compares to $1.06 for last year, and $1.03 to $1.36 that the firm originally predicted for 2005, back in March of 2005.

(Forward-looking statements, Jack. Not our fault!)

What happened? A more appropriate question might be, what hasn't happened? Costs have spiraled out of control. The competition, Hexagon, has bulked up and pinned FARO down in patent lawsuits. You think they don't want to make inroads with customers like Boeing (NYSE:BA), Toyota (NYSE:TM), Hewlett-Packard (NYSE:HPQ), GeneralElectric (NYSE:GE), and Deere (NYSE:DE)? I bet they do, and I suspect the 3.7% gross margin erosion at FARO this year has a little something to do with that situation.

A few more points to ponder: Inventory jumped 75%, free cash flow went way negative, and, well, it's tough to find anything good here.

In the conference call, new "co-" CEO Jay Freeland characterized this dubious list of achievements as "a year of investment for growth." That's cruel and ironic, given that formerly solo CEO Simon Raab used the first portion of this year of "investment" to drop a giant chunk of his own investment in the company, and he did so, conveniently enough, before all the bad news started to come out. I notice that insiders still haven't acquired much of a taste for these shares, except for a pair of buys by Freeland and CFO Barbara Smith back in November -- buys that looked to me like a direct response to all the heat Raab was taking for his big sales.

But back to the call. For 2006, Freeland predicted a mid-range of 8% net margins on sales around $153 million, which would make for full-year net income of $12.2 million or so. That would be a lot better than this year, but it would still be less than the $14.9 million in 2004.

(Jack, forward-looking statements!)

Right. Sorry. The credibility gap. Should investors really believe any of this? My answer's a big, fat "no."

Listen, having been left holding the bag on this former Motley Fool Hidden Gems pick myself, I began to utterly disbelieve all of FARO's forward-looking statements and bailed out a quarter or so ago. The firm's gone on to do even worse than I expected. By now, even the stalwart Hidden Gems crew has given up on this one (which is why I don't think you'll see any more of those big, scary, pre-emptive "Seth Jayson is a malcontent" disclaimers on the top of my FARO takes.)

Here's the softer side. This hasn't been an easy decision. I like the technology. I like the products. I like the prospects. But I simply can't abide the treatment Raab and the rest of management have given outside shareholders. There may be money to be made here for people brave enough to put in with that crew, but I certainly won't be one of them, and I wouldn't wish it on you, either. Give them a chance to fool us a fourth or fifth time?

I don't think so, Jack.

I've looked backward at too many of their statements.

At Motley Fool Hidden Gems , they live and learn. FARO didn't work out, but there are plenty of others that have. A guest pass will let you compare them all.

Seth Jayson is hoping to stop talking to imaginary Jack some time soon. At the time of publication, he had no positions in any firm mentioned here. View his stock holdings and Fool profile here. Fool rules are here.