Value Investing Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: TimbaBear who wrote (13857)	2/5/2002 3:27:34 AM
From: Don Earl	Read Replies (2) of 78748

<<<If I am attempting to arrive at a total liabilities number in a bankruptcy situation, then I would factor in the long term leases>>> Actually, bankruptcy law allows the debtor to reject leases without penalty. Where lease obligations start looking like debt is when a company is forced to down size to curb expenses. A good example is SCNT, which I don't own, trade sometimes, and am not overly impressed with at the moment because of their recent merger and cash burn. Scient was one of Wall Street's darlings during the Internet boom and was experiencing huge growth. As a result of their rapid growth and mass hiring, they assumed huge commitments for lease space to accommodate their expansion. When the bottom fell out of their market, and they laid off around 80% of their employees, they were stuck with a huge overhead in unused space with long term leases. In a healthy company lease obligations are basically just normal operating expenses quarter to quarter. Where leases start looking like debt is a situation like SCNT where they have to either pay for space they are unable to utilize or negotiate some kind of a settlement to cancel the lease.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next