Ifran, you are correct that they made a new SEC filing today, an 8-K/A to amend and include by reference into recently filed S-3 and S-8 registration statements new language for the "Risk Factors" sections. It does appear that the CNNfn language came from this filing, but that does not diminish its significance. They make these disclosures for a reason - because they don't want you suing them when it comes true.
First, they are in fact charging off 92% of the price of a material acquisition. The remaining $4 million, BTW, they will amortize over three years. This is very unusual and the effect is to take a long-term drag on earnings and shove it into one quarter so that future quarters will look better. Had the spread most of the price over the three years instead, say $45 million in total with only $4 million taken right away, the earnings drag would have been about 30 cents per share per year for three years.
And don't try to argue that it doesn't matter because it's non-cash - they handed over $49 million worth of stock which they then turned around and registered so that there would be no restrictions on its saleability. It's cash to the people who got it - if they act quickly, that is. It's also dilution to you.
Thank you, BTW, for reminding me to look at YHOO's recent filings. I hadn't realized that there were 3.2 million new shares working there way into the float as a result of the S-3 and S-8 filings.
For now, unless we get further news beyond what CNNfn said, the market may very well say what you said - It's just an SEC filing, so who cares?
Regards,
Bob
PS: The details of the DIS/SEEK deal, with a little more digging, look to raise some interesting valuation questions. More on that tomorrow (or when I get around to it). |
