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Non-Tech : Conseco Insurance (CNO)

CNO 41.21

-0.5%

Nov 14 9:30 AM EST

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To: StaggerLee who wrote (1095)	4/9/2000 5:50:00 PM
From: StaggerLee	Read Replies (1) of 4155

Here's an example of why "tangible net worth" is a meaningless concept: Microsoft has tangible net worth of $6.68/share and 5.2 billion shares outstanding. One day, in an effort to evade the Justice Department, Microsoft buys Coca Cola for $114 billion in cash! Since it's not a stock deal, MSFT uses purchase accounting and records $10 billion for Coke's tangible net assets and $104 billion for GOODWILL. Suddenly there is $20/share of goodwill on MSFT's books. As a result of paying fair value for Coke, MSFT's "tangible net worth" is now negative $13/share! And to add to the absurdity, MSFT's earnings for the next 20 years are depleted by $.25 every quarter to write off this goodwill balance to expense -- but this has no impact whatsoever on tangible net worth. Tangible net worth will be impacted by this acquisition forever. I can only imagine the headlines in Barron's.

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