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

To: Michael G. Potter who wrote (147548)	11/17/1999 7:41:00 AM
From: GVTucker	Respond to of 176387

Michael, RE: There are tons of choices that have to be made in the current accounting framework. I'd go after the accounting for options far before I went after IR&D/purchase accounting. True. In DELL's particular case, employee options accounting has been far more influential in overstating earnings than IR&D. With the stock's recent performance, however, this effect has been muted. What will be interesting is if the stock's current performance continues, how the company's use of options in its stock repurchase program affects cash flows.

To: Michael G. Potter who wrote (147548)	11/17/1999 2:37:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Michael, I agree with this from an earlier post of yours: If the valuation is not extreme, then the dilutive effect of the extra shares issued or the cash paid out will approximate the effect of capitalizing it and amortizing the investment. The problem is that valuation often tends to be extreme in technology acquisitions. I do agree that the constantly recurring non-recurring charges become a joke. Restructuring reserves are far worse than a compnay that continues to grow and acquire, imho. Absolutely! You get to sweep away future costs by expensing them now and artificially boost future earnings. Happily, an astute investor can easily recast the financial statements to restore a semblance of sanity to this nonsense. That's why cash flow analysis is such a potent tool. Unfortunately, no such easy fix is available when accounting for employee stock options, which, IMO, remains the single biggest distorter of financial reports. But here I respectfully disagree (if you are talking about an acquired company) You really shouldn't capitalize R&D. The supposed synergies and cost savings are the rationale behind capitalizing goodwill. Why should acquired R&D be any different? Just as expected synergies and cost savings fail to emerge, so do IPR&D projects. I guess my point is that the rationale for buying such companies is often the IPR&D. Thanks again for engaging me in a stimulating discussion. TTFN, CTC