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Technology Stocks : Intel Corporation (INTC)
INTC 37.82-4.3%3:59 PM EST
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To: Road Walker who wrote (163927)4/16/2002 8:00:37 PM
From: ptanner  Read Replies (1) of 186894
 
John, re: ""Other" loss decreased a lot. I believe it has to do with accounting treatment of goodwill. What happened to the goodwill amortization??? If anyone really understands this and can explain, I would appreciate it."

I don't really understand it but the change in accounting for Goodwill was FASB 142 which became effective for accounting years starting 12/15/01. A general summary can be found here: fasb.org

Some companies will need to note significant impairments while others will benefit from closing the gap between pro-forma and GAAP earnings. Last quarter' Intel reported $550M in "Amortization of goodwill and other acquisition-related intangibles and costs" as compared to this qtr's $0 in "Amortization of Goodwill" and $111M in "Amortization of acquisition-related intangibles and costs." This is a reduction of $439M which is comparable to the $387M change in the loss from the "other" category.

The new rule seems to be more sensible as the money has already been spent on the assets so reducing current income when there is no impact on current cash flow is counter-intuitive to me. Of course a company with a huge impairment of acquired assets, like many of the telecoms, has to take a write-down of enormous proportions. Again, a paper transaction but one with bad PR.

Someone else will need to address how this change affects taxes.

-PT

Some links to how this impacts other companies can be found with this search: google.yahoo.com
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