Alien, some of this stuff is downright silly. I dealt with the SEC letter in previous posts, but the upshot is this: amortization of the in-process R&D vs a one-time write off causes an increase in book value and a decrease in earnings over the next n years that exactly equals the increase in book value. In other words, it is a pay me now or pay me later kind of deal. It has no affect whatsoever on cash flow, taxes, or any other material parameter. It is an artifact of the accounting system. The heart of the matter is whether the mergers made sense at the "prices" NETA paid for them, NOT whether the "one-time charges" are justified.
But this part of the post is even more nonsensical:
Insiders, though, aren't easily fooled. From late October through late November they were selling stock as if a virus were running through their holdings. At least seven officers and directors exercised options for 700,000 shares and then almost simultaneously sold them, for as low as $39 per share and as high as $57 per share.
The fact is that these kinds of sales occur all the time, and they occur because of a combination of factors:
(1) Stock options are used in lieu of salaries by high-tech companies, so these sales really represent compensation. This is an awful practice, and I've railed at great length on this subject, so I won't repeat it now. The point is that it does not indicate trouble because,
(2) If they don't sell they are subject to a very unpleasant surprise: AMT.
Bottom line, you will find this immediate conversion and sale of stock at companies as diverse as AOL, BA, DELL and IBM. The list goes on and on. Only a total fool reads anything into this stuff.
TTFN,
CTC |
