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Strategies & Market Trends : Value Investing
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To: anializer who wrote (33593)2/21/2009 11:08:09 AM
From: MCsweet  Read Replies (1) of 78472
 
Anializer,

In general, I also do not trust companies that use pro-forma accounting numbers. However, I think you are double counting. The losses consist of goodwill writedowns and intangible amortization plus losses on the ARPs. Since these balance sheet items are approaching 0 anyway, those losses will not continue to eat into book value. More importantly, you have already subtracted them out of tangible book, so saying they will eat into tangible book value is not correct IMO.

That's why I recommend you look at the cash flows.

I agree it is correct to mark the intangibles to 0. So you have 0.55 in book plus significant positive operating cash flows, plus potential for an ARPs settlement in cash equal to the current value of the stock price. Plus a buyback of another $1 million or so coming up.

MC
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