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Non-Tech : Tyco International Limited (TYC) -- Ignore unavailable to you. Want to Upgrade?

To: Chuzzlewit who wrote (1050)	12/11/1999 9:34:00 PM
From: Walcalla	Respond to of 3770

Friday, December 10, 1999 Bargain-hunter alert: Tyco Tyco's accounting practices have been criticized, and now an informal SEC inquiry is under way. But there's no evidence that Tyco has done anything improper, and the stock could benefit from a big-time rebound. By Michael Sivy The past few months have been the worst period in more than half a century for bad-news stocks. Companies that disappoint investors--or become embroiled in negative news--are apt to sell off sharply. A prime example is Tyco, a dynamic technology-oriented conglomerate that we included in a list of 12 attractive underpriced stocks in our November issue. Since then, a few analysts have criticized the company's accounting practices, and the SEC has begun an informal inquiry. Nonetheless, most analysts continue to defend the company and believe that its share price will rebound substantially, as much as doubling from current levels. When a company's accounting is questioned, investors run--and with good reason. The minute you lose confidence in the accuracy of a firm's numbers, you can't value the stock. Deliberate deceptions--shipping products to a warehouse to book sales in advance, for example--are often severely punished in the market. But as I understand the issues in Tyco's case, the accounting questions are of an entirely different kind. There has long been a debate about the accounting policies that should be followed when companies acquire underperforming firms that they hope to turn around. One line of thought is that the value of any subpar operations should be written down immediately and charged against net worth, leaving the company with lean businesses that have been fairly valued. This is the approach Tyco has followed. From a certain point of view, this is highly prudent, since all the bad news is recognized right away. Critics of the approach point out, however, that such harsh markdowns clear the way for exceptionally good-looking earnings in following years. That wouldn't be a problem in the case of a single acquisition, but companies that make regular acquisitions can, in some sense, boost their results perpetually even if they follow all the accounting rules. This effect may have enhanced Tyco's reported results, because the company has made some 120 acquisitions in the past six years. Tyco maintains that it has done nothing improper and that the SEC will discover nothing serious. Most security analysts defend the company's point of view and say that once the dust settles, the stock will rebound to top its previous all-time high of $53 and could go to $60 or more. There are obviously risks in a situation like this. The stock will continue to be extremely volatile as rumors swirl. Tyco will have to become less aggressive in both its acquisitions and its accounting. Indeed, the SEC is actively trying to promote less-aggressive treatment of such accounting matters. Based on the accounting issues under discussion, however, the worst that Tyco faces is a period of great uncertainty followed by a somewhat slower growth rate in the future than the company has reported over the past five years. Unless new evidence emerges of improper accounting that violates accepted principles for the express purpose of misrepresenting profits, Tyco stock looks as though it's selling for half what it's really worth.

To: Chuzzlewit who wrote (1050)	12/11/1999 9:34:00 PM
From: Richard James	Respond to of 3770

Tax Loss Date. Chuzzlewit. Check with a tax accountant, but I suspect that as long as the loss is realized this year and you do not run afoul of the wash rule, you are ok as long the loss is realized this year. However, it may not be the date of the TRADE but the SETTLEMENT DATE that you go by. (This is such a common question I would think it would think there may be an article on it somewhere on the internet.) Richard