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Technology Stocks : Gemstar Intl (GMST) -- Ignore unavailable to you. Want to Upgrade?

To: Stu R who wrote (3684)	8/17/2000 2:43:14 PM
From: NY Stew	Respond to of 6516

Stu, I threw that terminology out there (from recent notes and reports)hoping that Direwolf or someone else would refine further for those studied in other areas. Regards NYStew@araggedmaninraggedclothes.com

To: Stu R who wrote (3684)	8/17/2000 5:29:58 PM
From: A.L. Reagan	Read Replies (2) \| Respond to of 6516

ATCFPS = After-Tax Cash Flow Per Share. Agree w. Buckley that EBITDA is more often than not a crock of poo. Bernie Schwartz at Loral/Globalstar has been measuring his performance based on EBITDA for years. Now look at his stock charts! Depreciation is typically understated in terms of measuring the amount which the enterprise will have to spend in order to maintain its productive capacity at the status quo. So adding it back can be a real folly. Goodwill amortization is a hot accounting potato. Some tech companies try to allocate as much of the purchase price as possible to in-process R&D and then write it off in one lump sum. In recent years the SEC, among others, has taken a stricter view and some entities have actually had to restate purchase accounting adjustments and subsequent amortization. The appropriate timeframe over which to amortize goodwill in purchase accounting varies company by company and deal by deal. The accountants struggle mightily with this. If I were taking a broad-brush stroke at Gemstar going forward, I'd adjust e.p.s. for amortization of TVGIA goodwill because of this being an all-stock deal. Not so for a cash or debt deal. Reason being that in an all stock deal it's more of an apples to apples comparison because the denominator of e.p.s. has been also adjusted. The pooling method is now essentially banned, but it is arguably a better way to compute eps in an all stock deal, whereas purchase accounting is arguably better for a cash or debt financed acquisition. Going forward, GMST will have to disclose pro-forma results as if TVGIA had been acquired in comparative earlier periods. There will be lots of disclaimers that the past period pro-forma numbers aren't meaningful, etc., but they'll still be in the SEC filings. Agree w. NY Stew that the P/ATCF"FO"PS (FO= from operations, including "normal" capital expenditures) ratio going forward is a worthwhile metric. Nice day today. About back to my original cost on this issue.