Tim, I am not so sure about the SDLI buy being dilutive, at the time, the price to book of JDSU (book without goodwill) was higher than that of SDLI, if memory serves. As for taxation, corporation pay taxes on portfolio gains (stocks appreciated and sold), and marking to market at the end of a period (with SEC blessing), is simply the reverse, it is a loss and such a loss should, but I know not for sure, be compensating future gains. There would be no valid reason to recognize so rapidly all this good will, particularly when there is no forcing market for the securities of SDLI nowaday. I think they are cleaning the book retroactively, accepting a reduction of the book value to closer to their own market value, hoping the market will forget (it will) and taking the tax benefit of this episode. All in my opinion, maybe there is a corporate accountant amongst us who can clarify the tax treatment.
Zeev |
