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Technology Stocks : Compaq
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To: rudedog who wrote (27912)6/20/1998 4:13:00 PM
From: Andreas  Read Replies (1) of 97611
 
To Rudedog;

A reduction of the goodwill will not (i) impact cpq's cash outlay one cent at the time of acquisition and (ii) will have a negative cash impact upon cpq due to a reduced write-off of goodwill thereby increasing the tax liability (or at least reducing tax loss carryforwards)), if any, owed by cpq. Goodwill is nothing more than an accounting reflection of the extent to which the purchase price exceeds the valuation of the assets purchased. In fact, the greater the goodwill the higher the amortization write-off and the greater the basis in the event of a later sale, which is of a benefit to the purchasing entity. If you want a detailed explanation of the accounting entries reflecting the dec purchase let me know and I will be more than happy to provide them. I am getting real tired of listening to a bunch of misinformation regarding the benefits to cpq resulting from the reduced market value of cpq stock at date of purchase. I have worked for a big eight (now less than eight) years ago; worked in private practice as an attorney for a few decades and have worked in government for a few years regulating securities offerings. I have personally been involved in numerous public offerings, not the least of which included Genentech in 1979/80 Lets knock off the crap about it's not as simple as it looks.

It is that simple and I will gladly refute any nonsense anyone wants to spew about the benefits to cpq resulting from a reduced share price at time of acquisition.

Enough said on that subject.

.

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