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Technology Stocks : All About Sun Microsystems

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To: Charles Tutt who wrote (48401)	4/19/2002 7:04:43 AM
From: JDN	Read Replies (3) of 64865

Dear Charles: Well, as we all know goodwill is the excess of what was paid in an aquisition over the underlying carrying value of an asset on an aquirees balance sheet. It used to be amortized over a life of no greater than 40 years and often shorter. I guess that is now considered an arbitrary thing and its more important to compare the existing amount to the profitable revenue that asset is providing to operations, if it isnt supplying such should be immediately written off, if revenue impaired should be immediately written down to what its worth. Only problem I see in all of this is the solution is only as good as the people making the call. From yours and my viewpoint, we probably are smart enough to look at CASH FLOW and not income statements anymore in comparing companies (amortization of goodwill is noncash expense) so we probably dont care in either case. However, if a company were to exit a line that had caused goodwill it of course would have to be immediately written off, but we used to do that anyhow, so I dont see a big deal over all of this. JDN

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