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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: jim kelley who wrote (147523)	11/16/1999 4:24:00 PM
From: TigerPaw	Read Replies (1) \| Respond to of 176387

DELL apparently paid for ConvergeNet with stock. If my memory serves, and it doesn't always, ConvergeNet was an all cash deal. TP

To: jim kelley who wrote (147523)	11/16/1999 5:31:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 176387

Jim, One of the purposes of GAAP accounting is to match revenues with expenses. By failing to capitalize the cost of an acquisition and amortize the goodwill over a reasonable period of time and taking a one-time charge instead, the invested capital (capital plus long-term debt) is reduced making it appear that subsequent growth is stronger than it really is. In fact, you will see many analysts discuss earnings before one-time charges, blithely ignoring these charges. This approach conveniently ignores the cost of the future growth. Acquisitive companies (CSCO comes to mind) have recurring nonrecurring charges so often that the phrase has become meaningless. In the case of Dell, this will result in future earnings being overstated by about $.007 per share per year if you accept a 10 year goodwill amortization as reasonable. Not a big deal in this case. But if Dell continues to acquire companies this can become a major issue. TTFN, CTC