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Technology Stocks : Global Crossing - GX (formerly GBLX)
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To: Ally who wrote (13171)8/5/2001 4:08:54 AM
From: RobertSheldon  Read Replies (2) of 15615
 
*However, I fail to see how goodwill would enter in a capacity purchase. It is not like buying a business with a branded product or service that would "enhance" revenue for a period of time in the future due to the brand recognition. Wouldn't capacity leases be like capital leases, and expensed over the period of useful life?*

You hit the nail on the head. This is the issue that was troubling several of the analysts who have just come to religion. They are claiming that GX could easily term part of the purchase as goodwill since it is a "network" purchase (as opposed to a pure capacity purchase - this is what has some folks befuddled). In other words the purchase price is above that of just the equipment and costs to install it. To me the size of the numbers are small enough to ignore any accounting games that may be played (I doubt that there are any at this particular level).

Hope this helps.
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