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Strategies & Market Trends : Value Investing

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To: Ron Bower who wrote (5224)	10/31/1998 3:29:00 PM
From: James Clarke	Read Replies (1) of 78568

<<Example: A company pays above BV for a software company that's carrying a large R&D asset and sets up the Goodwill amortization over a 10 year period. In 10 years the software would likely be obsolete. I would write off both the Goodwill and R&D assets and base forward value of the company purely on anticipated operational cash.>> You're absolutely right. I wasn't thinking of an example like that, but of course there are many companies with such economics. Like you said, none of these rules can be applied mechanically. Jim

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