SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Dell Technologies Inc.
DELL 138.80-2.7%3:59 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: stockman_scott who wrote (153059)2/5/2000 2:28:00 AM
From: Chuzzlewit  Read Replies (2) of 176387
 
Scott,

OT

I certainly do have thoughts.

Pooling of interests is supposed to be a merger of equals. Unfortunately, this accounting method hides the true cost of the merger from shareholders because the value of the assets "purchased" is never accounted for. The two balance sheets are simply added up without regard to the market value of the assets being purchased. This device is used to hide costs.

The odd thing is that the accounting method has nothing to do with how well the combined entity performs. Nothing changes except the way the purchase is accounted for. Many tech companies have used purchase method accounting and write off the cost of IPR&D to accomplish much the same thing by taking a one time write off which analysts and the street promptly ignore. That technique minimizes goodwill, and it has come under close scrutiny by the SEC.

Regardless of the accounting method (pooling or purchase), cash flow remains unchanged, and that's why I think cash flow is a better metric for analyzing mergers than earnings.

A good merger should not be dependent on the accounting method. If mergers and acquisitions stop because of how the FASB mandates merger accounting then those mergers should probably not have taken place to begin with.

TTFN,
CTC
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News