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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Boplicity who wrote (57153)	12/28/1999 11:36:00 AM
From: Jim Willie CB	Read Replies (3) \| Respond to of 152472

Naz turned up... Q should move shahtly (Boston accent) <eom>

To: Boplicity who wrote (57153)	12/28/1999 11:45:00 AM
From: Jill	Read Replies (1) \| Respond to of 152472

Oh well, if you're going to snip, I'll snip too, as the main emphasis of the article is not the negatives, but the overwhelming positives and leverage of knowledge assets: SNIPS: So here's the situation: We are using a 500-year-old system to make decisions in a complex business environment in which the essential assets that create value have fundamentally changed. Economists call physical assets "rival assets" -- meaning that users act as rivals for the specific use of an asset. With an airplane, you've got to decide which route it's going to take. But knowledge assets aren't rivals. Choosing isn't necessary. You can apply them in more than one place at the same time. In fact, with many knowledge assets, the more places in which you apply them, the larger the return. With many knowledge assets, you get what economists call "increasing returns to scale." That's one key to intangible assets: The larger the network of users, the greater the benefit to everyone. Given the nature of knowledge assets, what is the conflict between these new assets and the old laws of accounting? One problem is that you end up with accounting practices that are virtually antithetical to the business practices that they're trying to measure. Let me give you an example. In 1994 and 1995, America Online capitalized some of its customer-acquisition costs -- which means that it considered part of those costs assets. In other words, AOL was saying that, in acquiring new customers, it was creating a unique asset -- one that would help the company become even more profitable in the future. Financial analysts called that cheating! It was a new industry, competition was fierce, and analysts thought that AOL was trying to manipulate its earnings. Finally, in October 1996, AOL gave up and completely expensed its $385 million in customer-acquisition costs. Today, AOL has a market value of roughly $140 billion. Compare that with the $385 million that it tried to capitalize, and it's almost humorous! And yet only five or six years ago, financial analysts were proclaiming that AOL was a cheat.