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After the mkt. closed, news of more insider selling hit the news. I think it was the CFO, but at this point, I don't really care. I'm actually contemplating covering my short. Rationale: AGPH is going to take a huge writeoff in the June quarter for the acquisition, it will be the writeoff of in-process R&D. As most of the assets of the acquired firm are intangible, they will likely write off almost the entire acquisition in one pen stroke. Even though this violates the notion of the writing off of goodwill at an accelerated rate, they'll do it anyway. My fear is that they'll throw "the kitchen sink" into the writeoff, and their auditors will let them get away with it, including anticipated legal fees from the pending trial dealing with stealing UCSD information. What that does is remove from future quarters expenses that would hold down reported profitability. A more proper approach is that taken by Microsoft in their most recent acquisition. MSFT's CFO was interviewed on CNBC where he stated that the SEC is looking into these huge writeoffs, and although he didn't mention it, FASB is also. So, even though I believe that the lifetime of AGPH's drug in the marketplace is limited, due to - as Marcus Conant said in his conference call - "all you have to do is wait 6 or 9 months and they'll be a better drug" - (funny how the bulls on AGPH didn't mention that in their summary of the conference call), AGPH could turn into a story like Genzyme, with accounting so convoluted, that they can report pretty much whatever earnings they want, even though Genzyme is a screwed up company. Ah well, maybe I'll just sleep on it. But, I'll volunteer to be on the jury for trial. Where's the sign up sheet? |
