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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: Mephisto who wrote (34606)	5/4/2000 3:18:00 PM
From: JDN	Read Replies (1) \| Respond to of 77400

Dear M: who knows, just preearnings jitters. Never knew CSCO to disappoint. JDN

To: Mephisto who wrote (34606)	5/4/2000 3:20:00 PM
From: t2	Read Replies (2) \| Respond to of 77400

I was puzzled by that rumor on Cisco as well. Does anyone have any comments from Cisco in the last little while. Ahead of earnings, I bet the shorts will get nervous just before earnings. Expecting a rally in the stock ahead of earnings. good luck

To: Mephisto who wrote (34606)	5/4/2000 6:27:00 PM
From: Road Walker	Read Replies (2) \| Respond to of 77400

Cisco, GM disagree on merger accounting method By Bloomberg News May 4, 2000, 1:35 p.m. PT WASHINGTON--Cisco Systems, the leading maker of computer-networking equipment, told Congress that elimination of a popular merger-accounting method would stifle technological development. Cisco's corporate controller, Dennis D. Powell, told the finance subcommittee of the House Commerce Committee that barring the accounting method called "pooling of interests" would "impede capital formation and slow job creation" because it will discourage mergers. ? Get the "Big Picture" ? Related News ? Message Boards Quote Snapshot CSCO 63.62 -2.44 GM 88.12 +0.06 Enter symbol: ú Symbol Lookup Quotes delayed 20+ minutes General Motors, the world's largest automaker, disagreed. Peter Bible, GM's chief accounting officer, said the pooling method often misleads investors by obscuring how the costs of a merger undermine corporate profitability. "A business combination...on an economic basis could be, and often is dilutive, but that dilution is never reflected in the income statement" when the pooling accounting method is used, said Bible. Many Internet and technology companies have used the pooling method when they buy other companies that have technological expertise but few hard assets. Pooling lets companies combine their books without taking charges for "goodwill," or the amount an acquirer pays over the book value of the assets purchased. Cisco's Powell said companies would avoid mergers because they won't want to take the large charges against earnings that follow acquisitions, if the Financial Accounting Standards Board implements a change requiring companies to use a different method called "purchase accounting." Last September, FASB, which has the authority to set accounting standards for U.S. business, proposed eliminating the pooling method. FASB chairman Edmund L. Jenkins said the proposed change would not be implemented before the end of this year. FASB argues that pooling gives investors less comparative information than the purchase method, which requires a purchaser to account for a new asset by spreading its cost over its useful life. "I believe there is one method that gives you the truth and that method is purchase accounting," Jenkins testified. Cisco and other high-tech companies argue that having these costs on their books year after year will lower the earnings they report in a disproportionate way. They note that high-tech mergers and acquisitions often involve large amounts of intangibles categorized as goodwill. Cisco has acquired more than 50 companies amounting to $19 billion since 1993, Powell said. Of these acquisitions, only $900 million worth--or 5 percent--qualifies as hard assets, he said. "The arguments for and against the pooling and the purchase methods of accounting haven't changed over the past 30 years," Powell said. "However, the problems of the purchase method are still with us, and the implications today are much more severe than they were in 1970." GM's Bible said pooling too often misrepresents combinations of companies as mergers of equals instead of acquisitions. "Do mergers of equals exist? Sure they do, just like Michael Jordan and Jack Nicklaus exist, but they are rare," Bible said. "All business combinations are acquisitions." Representative Thomas Bliley, the Virginia Republican who chairs the House Commerce Committee, has sided with the high-tech companies. Bliley asked the FASB in March to postpone its proposed rule change. Representative Calvin Dooley, a California Democrat who chairs the centrist New Democrat Coalition, also opposes the FASB proposal. "If you eliminate pooling...you're going to reduce the incentive for investment and venture capital investment in start-ups," he said. The top Democrat on Bliley's committee, Representative John Dingell of Michigan, has not come out for or against the FASB proposal.