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Biotech / Medical : Munch-a-Biotech Today
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To: Biomaven who wrote (80)1/21/1999 9:31:00 AM
From: Biomaven  Read Replies (3) of 3158
 
The SEC's hard-line position on write-off's of in-process R&D may be starting to bite. For example, a non-biotech stock I have long owned Citrix (CTXS) just announced they may have to restate past earnings to moderate their previous sharp write-down following an acquisition, and the market didn't like it at all. (Ditto with Network Associates earlier this month.)

I'm not sure how far back the SEC is going to make companies go, but it's even conceivable that AGPH, which made an acquisition in 1997, will have to go the same route.

This issue will certainly impact any non-pooling acquisitions, because it means that goodwill will be written off gradually over several years, rather than all in one lump sum. This decreases earnings for several years. With pooling also getting squeezed, this issue will definitely put a damper on some outright acquisitions.

Meantime, watch out for any companies that made non-pooling acquisitions last year - they may well be vulnerable in the short-term.

Peter
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