Dipy:
That's good! That is the same as Method I then. And that is a consistent reasonable way to calculate returns (note though that it does not adjust for timing - it can't say whether the return was done over 5 years or 5 months).
(My method I excluded the 30% because I ignored commissions etc. If I included it then calc becomes:
[200*10 - 100*10 - 100*(25-10)*(1-0.3)]/100 = -0.5, which agrees with your calc. Essentially this method adjusts for cash inflows and outflows (the way things should always be done BTW) whenever they come in. So BTW your entire gain on LSI in after tax dollars is (Market Price - 7.5)*(remaining shares) and your remaining risk is lower.]
- ending song: Repeat 22--
'The base revenues for LSI were $1.85 billion in 1998. Except for a IPR&D accounting
writeoff (bogus), the Symbios assets that LSI bought were not subsequently written off.
What did take place was a $5.4 million Symbios Integration Accrual. Per the 10-K,
page 42, this accrual comprised '$4 million related to involuntary separation and
relocation benefits for approximately 300 Symbios positions and $1.4 million in other
exit costs primarily relating to the closing of Symbios sales offices and the termination of
certain contractual relationships.' Therefore it appears that the $75 mil restructuring
charge taken later was for the 'old LSI' and has very little negative bearing on Symbios
continuing operations. LSI valued Symbios at a fair value of $804 million - $324 million
for tangible assets, $214 million for current technology, $37 million for assembled
workforce and trademarks, $83 million for goodwill, and $146 million for IPR&D (this
part was written off). In this context, $5.4 million is puny and irrelevant. Symbios' assets
(read: ability to generate revenue) only strengthened after integration with LSI. They did
not weaken. Further, LSI has not indicated that they discontinued anything significant in
the Symbios product line. Because they used purchase accounting (versus pooling) LSI
can't use pro-forma Q1, Q2, Q3 or
full-year 1998 numbers going forward. It is NOT because, as Jock mumbles
grandiosely: "It would be a terrible disservice to the company, shareholders, and the
public in general.". Give me a freakin' break.'
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