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Technology Stocks : JDS Uniphase (JDSU)

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To: Runner who wrote (20968)	7/29/2001 12:07:55 AM
From: BWAC	of 24042

Runner, <The balance sheet would be the same? > Essentially the same in regards to the Goodwill writeoff. Inventory, restructuring costs are a different matter. But the bulk of the staggering loss was Goodwill. Take this quote from the earnings report "... the majority of the goodwill was recorded based on stock prices at the time merger agreements were executed and announced." That means that the Goodwill resulted from the excess of the then MARKET VALUE of stock issued in the acquisition over the book value of net assets carried on SDLI's books. (or any other company acquired). JDSU used a their stock trading at an insane 150 times revenue to buy another company trading at 150 times revenue for example. Take the same transaction, done today. Issue the same number of shares, in the same ratio. You'd end up with a far lesser amount of Goodwill, by definition, since the value of X Million shares of stock issued at $9 is far less than X Million issued at $150. (Unless of course you assume that SDLI would still be trading at its same insane bubble level, and never fallen at the same rate and pace as all its competitors. Thus requiring JDSU to pay the same as their actual bubble purchase price.) Ok? Or Disagree?

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