Dan3, obviously this will erode into a fruitless discussion, given your response. A couple of things, though:
A company can write down the value of an asset at any time, and take charges against its reported earnings at that time.
Sorry, that just isn't true. Under German GAAP, yes, that is possible. German companies continually write down assets, sometimes for no reason at all other than management decided that it might be prudent to do so. That's one of the big reasons why you see the German market trade cheaper than the US market, because German companies are continually taking general asset impairment charges to earnings. Under US GAAP, you can't just write down an asset if you feel like it.
And AMD took a $10 million charge against that $25 million book value in the quarter Nexgen was acquired.
I quote from AMD's SEC filing:
"AMD will incur charges to operations currently estimated to be $10.0 million in the first quarter of 1996, to reflect transaction fees and costs incident to the Merger."
In other words, Dan, the $10mm writeoff that you refer to had absolutely nothing to do with NexGen's book value. It was essentially what AMD paid to its investment bankers to get the deal done.
And once more, for emphasis, AMD did this deal as a pooling of interests. That is NOT the conservative way to account for an acquisition, in spite of what you maintain. Intel's method, purchase accounting, is much more conservative. Yes, goodwill is an issue, but it is an issue that is easily measured because of Intel's accounting policy. |
