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Technology Stocks : Ampex Corp: Digital Storage
AMPX 8.740+10.8%Jan 2 9:30 AM EST

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To: Kevin O'Donnell who wrote (1407)1/23/1997 11:02:00 PM
From: Duane L. Olson   of 3256
 
Kevin, shareholder's equity is nothing more than accumulated, retained past earnings. If those historical, accumulated earnings are positive, there is a positive shareholders equity. If the accumulated earnings are negative, then there exists a negative shareholder's equity. By itself, a negative shareholder's equity has less importance to the value of the stock than the prospect for future earnings. In fact, it can be beneficial to have negative equity, if you have accumulated tax loss carryforwards. Then, future earnings will not be taxed until the tax loss carryforwards are used up. I would base your assessment of the stock on the prospect for a positive future earnings stream. OLE (Former accountant for IBM)
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