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Technology Stocks : Dell Technologies Inc.
DELL 138.80-2.7%Nov 11 3:59 PM EST
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To: Lee who wrote (141721)9/9/1999 11:18:00 AM
From: Ian@SI  Read Replies (3) of 176387
 
Lee,

Re In process R&D writeoff.

In the grand scheme of things, a one-time writeoff of 7¢ by Dell is close to meaningless. Especially given its track record for frequent acquisitions. ;-)

The SEC has been showing some annoyance when Companies such as CSCO routinely purchase assets, then write those assets off as a one time charge, thus not affecting operating earnings, and permitting subsequent revenues from those purchased and fully depreciated assets to flow directly to the bottom line.

Given that the Sell Side analysts factor out all these one time charges, the investors that listen to them never get to see a fair number which really reflects the profitability of the business.

WBM or Kemble could probably do a much better job, but in a completely
"honest" accounting, any excess of Purchase Price over Tangible Book Value should be recorded as good will; and R&D should be capitalized and depreciated over the period that the products resulting from that R&D will produce revenues.

While that approach would produce a truer picture of what return an investor should realistically expect, it isn't done and probably never will. ... unless of course, Mr Levitt get's more than just a little annoyed with the deception.

Note: My comments are not directed at Dell. It hasn't played this game. Many other companies that specialize in frequent acquisitions have.

Ian.
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