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Strategies & Market Trends : Misleading Earnings Reports -- Ignore unavailable to you. Want to Upgrade?

To: Shtirlitz who wrote (5)	9/26/2000 9:56:26 PM
From: A.L. Reagan	Read Replies (1) \| Respond to of 53

Re: AMCC. Here's a choice quote from their sell side analyst on the acquisition you think they'll choke on, which ties in quite nicely to the theme of this thread: There is, however, an obvious downside to buying an established, public company: the very dear price tag AMC has put on MMC. The deal is the second largest ever in the semiconductor business, ranking behind the $7.6 billion Texas Instruments (TNX:NYSE - news) paid for Burr-Brown earlier this year. But the thinking on Wall Street is that AMC didn't have much of a choice, given the strong position of its competitors and the intense escalation of stock prices in the communications semiconductor group. "It vaults them instantly to the top of the heap of networking component suppliers," said SG Cowen analyst Drew Peck, who rates the stock a strong buy. (His firm has performed underwriting for AMC.) "And given the impact of new age accounting, which ignores things like amortization and goodwill, it makes sense financially. If people ever stopped and thought about the goodwill being paid for all these companies, they'd have a heart attack." In an acquisition, goodwill is the amount the buyer pays over a seller's book value, or the value of its assets. The acquirer then has to write off goodwill over time, which reduces earnings. "But the analysts and investors seem to be going along with this," Peck continued. "And therefore the price AMC is paying won't have much of an impact." --from TSC siliconinvestor.com