Endosonics(eson) Message Board

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Biotech / Medical : Endosonics(eson)

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To: Asymmetric who wrote (33)	7/28/1997 4:32:00 PM
From: Jimmy Lin	of 205

Peter, As far as the writeoff is concerned, I am not too worried. Corporations routinely write off acquired companies so that they can start fresh. Otherwise the depreciation cost of the newly acquired company can be a permanent drain on future earnings. Writeoff will decrease the equity base for the company, but then make future ROE (Return on equity) and ROA (Return on asset) look extremely good. Wall Street cares a lot about ROE and ROA and profit margin. Sometimes the writeoff can be reversed making future earnings look good. Very few technology stocks' price has anything to do with book value anyway. Equity base only means something when you try to borrow money from the bank. The bank wants to know what kind of equity you have so it can liquidate you in the event you default. But, ESON has no long term debt and probably won't need financing for a long time. It is now highly profitable. I really like IVUS' profit margin this quarter, albeit the growth could be higher. Good thing is the stock didn't tank after earnings. Somebody is doing the buying. We may need another quarter before the blast off occurs (when IVUS has 60% growth). Peter, any other stocks you like ?

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