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

To: M. Charles Swope who wrote (37929)	6/25/2000 1:22:00 PM
From: The Phoenix	Read Replies (2) \| Respond to of 77400

Well it seems to me that the purchase method does not count intellectual property into the cost basis. If it did it would not amoritize it out as goodwill in future years (now compressed to 20 years thus compounding the problem). The issue stems from expectation of growth - this is not goodwill. Accountants orginally used the term goodwill as a method for accounting for value paid above book value. This was typically a result of customer/brand awareness and supplier relationships - not intellectual property. Today's start-ups have none of these things - they only have an expectation of future cash flows which results from intellectual property. This is distinctly different from goodwill. I suppose one could call it an engineering expense but it's probably better characterized as an investment. Either way it's certainly not goodwill. OG

To: M. Charles Swope who wrote (37929)	6/25/2000 2:36:00 PM
From: JDN	Read Replies (1) \| Respond to of 77400

Dear Charlie: No, you are wrong. Remember the concept, "LOWER of cost or market". So the tangible property cannot be value greater than current market value (ie appraised value). The "goodwill" aspect that has many in the tech field upset is the INTANGIBLE assets particularly intellectual property. Personally, I should think there may be away to assign more value to patents and such but still, they have to be amortized. The proponents of Pooling basically want to NEVER recognize as expense the EXCESS purchase price over tangible net book value by never amortizing it. They would likely argue that there is no dimunation of value in intellectual property EVER unless the company begins to become obsolete and then the lower revenues and earnings would reflect that fact. Its not a real strong arguement. While, I personally, like the Pooling Concept, I think the FASB is on pretty strong ground in their arguements. Sadly, as investors we will be hurt more than helped by all this, for while we will MAYBE get a clearer picture, we wont like what we see and it also will DRASTICALLY IMHO reduce prices companies are willing to pay for each other. JDN