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Technology Stocks : The Learning Company (TLC)
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To: Trader Dave who wrote (5178)7/25/1998 2:12:00 AM
From: Not a Short  Read Replies (1) of 6318
 
Well Paul, Fool, henry, gianelda all say (or is it just he said) that TLC didn't use enough shares to figure EPS. TLC used 74M when it should use 83M, it used 54M when it should have been 68M (or whatever their claims were). This time the conference call clearly stated the number will be near 110M because the BROD deal is a "pooling of interests". Note that "pooling of interests" is an accounting term not an attitude. You can't just say that TLC changed their minds on how they will deal with the share count. The rules are laid out well in advance of the deal. Everybody does their accounting in the same general fashion and you'll just have to find something else to complain about if the share amounts are maxed out the next time earnings come around.

I also seem to remember someone making a big ruckus about rebate redemptions. Claims were made that they would be much higher than the 20-25% that TLC held reserves against and that it would wreck the earnings estimates. hmmm...

Listening to the conf call I hear that rebate redemption rates are in the mid to upper teens and won't increase much at all in the next 6 months. Last time I checked that math that meant less than the 20-25% they held reserves for. Sounds like to me the big rebates that everyone worried about aren't a factor. The free product rebate (with competitor's product return) didn't ruin the earnings this time around and won't next time either.
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