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To: Ilaine who wrote (691)	6/25/2000 7:52:00 PM
From: LLCF	Respond to of 436258

< Kudlow argues that stocks should be analyzed using a simple discount-earnings model that uses Baa corporate bond rates as the discount rate> This is what I think makes more sense than these bone heads using T-Bonds.... at least he's taking into consideration the bear market in credit. DAK

To: Ilaine who wrote (691)	6/25/2000 10:00:00 PM
From: Spekulatius	Respond to of 436258

Well, JDSU uses purchase accounting instead of pooling and does not seem to have any problem. I doubt if the innovation really depends on the accounting methods. If discounted free cash glow methods are used instead discounted earnings the difference between both accounting methods should be nonexistent. Old economy companies like WCOM and T have used purchase accounting for their recent mergers and their earnings are subsequently depressed by goodwill depreciation - their 'cash earnings' would be significantly higher (20-30%) when the pooling method instead of purchase accounting would be used. For some stocks this seems to matter, for others it doesn't...