Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Thomas Mercer-Hursh who wrote (33498)	10/22/2000 1:43:52 PM
From: mtnlady	Read Replies (2) \| Respond to of 54805

"Were it actually reasonable that Cisco should represent the market value of these shares in their financial statements" You would make a great trial lawyer <g> (i.e. you almost had me believing that this accounting method was logical!)... But.. I couldn't help thinking about two points. First, if Cisco thinks that the market value of their stock is so out of whack that it's ridiculous to use their stocks value when they book the acquisition. .. Then what the heck are we doing paying that amount for their stock? In essence what Cisco is then saying is.. 'Hey (!) you guys have WAY over valued our stock so it's ridiculous to use that market value when we buy another company using our stock. Instead we will value our stock at... oh lets say.. .'x' amount instead. We'll use that amount as the actual 'cost' of the transaction. And second, why would Cisco be allowed to value their stock at whatever price its seems acceptable to them? We surely are not allowed that privilege! Sure wish I could do that with my taxes.. Let's see Mr. IRS. My SEBL stock recieved 'x' amount when I sold it but I really think it's worth 'y' amount instead. After all.. the stuff is waaaayyyy over valued (I mean LOOK AT THAT PE!) and it's ridiculous for me to have to post that amount on my taxes.. My 2 cents worth.. (again simple logic I admit). a) If Cisco thinks their stock is way over valued compared to it's actual value then we ought to not buy the stock until it drops to that 'true' value. b) If Cisco's stock IS worth it's current market value then for Cisco to not use that market value is manipulating (legally of course) the books. c) What is the other company actually getting anyway? The miniscule amount Cisco is showing as the 'cost' of the transaction? Or are they really getting Cisco stock that is worth (i.e. they could sell it for that amount) the current market value? In short.. Cisco wants their cake and eat it too. They want to value their stock at a much lower amount for the sake of their P&L but use the current market value of the stock as payment for what they have purchased.