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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Thomas Mercer-Hursh who wrote (33703)10/24/2000 4:14:23 PM
From: mtnlady  Read Replies (2) of 54805
 
"Unless the acquired company was not public, the prior quarter's results from Cisco and the other company are simply added to get the pooled statement, so it doesn't seem to me that this is so obscure."

The issue here is how pooling affects the expense of the purchase. Not the revenue garnered from the company purchased. This is the cruxt of the problem. Pooling allows companies like Cisco to take the acquired companies revenues but only books a fraction of the expense of the purchase. Nortel, and others not using the pooling method, accounts for the entire expense 'up front' and thus, greatly affects their bottom line. Cisco's PE ratio would be off the map if they didn't use the pooling method of accounting.
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