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Technology Stocks : Electro Scientific???
ESIO 29.990.0%Feb 1 4:00 PM EST
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To: vinh pham who wrote (554)3/19/1999 8:19:00 AM
From: Mark Oliver  Read Replies (2) of 723
 
It's interesting to see some of the high flyers taking a dive on SEC rulings on acquisitions and how they can be written off.

It occurs to me that ESI has actually made quite a few acquisitions. I wonder if you, or anyone knows if ESI might be facing SEC scrutiny over their accounting procedures?

Here's an example of what I mean relating to Network Associates.

Company says it will beat estimates.

=Network Associates -3: Co. Has Predicted 4Q Earns 47c/Share

Network Associates is not the only company that has been sent an SEC comment letter on accounting matters. The SEC is cracking down on what it perceives as accounting abuses that companies take in order to manage earnings.
In-process R&D writedowns by technology companies is one of the areas that the SEC and the Financial Accounting Standards Board have been scrutinizing. Last month, the FASB proposed eliminating up-front R&D writeoffs.
The elimination of companies' ability to take up-front R&D writeoffs raises companies' future amortization costs and lowers their future earnings.
The SEC's comment letter to Network Associates concerned some $220 million in write-offs in connection with its 1998 acquisitions of Cybermedia Inc. and Magic Solutions Inc.
The company had previously said that if it lowers the amount of write-offs associated with those acquisitions, its future earnings could be reduced by 2 cents to 3 cents per quarter while amortization is incurred.
Network Associates also has told analysts that it estimated preliminary 1998 fourth-quarter earnings of 47 cents, above the 46 cents consensus estimate. It alsoreported that preliminary fourth-quarter revenue rose 30% to $272 million.
- Maria V. Georgianis; (201) 938-5244;
maria.georgianis@cor.dowjones.com
(END) DOW JONES NEWS 03-18-99
01:17 PM
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