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Technology Stocks : Network Associates (NET)
NET 202.34-2.7%3:59 PM EST

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To: Elephant who wrote (4047)1/21/1999 12:49:00 PM
From: Chuzzlewit  Read Replies (1) of 6021
 
Elephant, there must be a delayed echo here! I made those identical remarks about a week or so ago. [Just kidding -- the more investors read and understand these concepts, the better].

It seems to me that the real question that needs to be addressed is how to adequately account for R&D. I see nothing wrong with having the expenditure capitalized and amortized over a three year period. And I would like to see the practice of in-process R&D write-offs discontinued entirely. It seems to me that the only rationale for having an R&D project written off is if it is abandoned and deemed unmarketable to another development company.

These kinds of changes are for accounting purposes only. They have no bearing on cash flow or income taxes. I think that it is important that "earnings" reflect something about the ability of the business to generate economic profit. Right now, I'm not at all sure what "earnings" means, especially when a company has engaged in as many acquisitions as has NETA.

TTFN,
CTC
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