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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: Louis V. Lambrecht who wrote (5373)	11/30/2000 7:14:01 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 19219

Next year, mergers will have to be accounted by the "purchase accounting" method and amortized over a certain period of time. = increase debt (buying a company) and increase losses (amortize the cost of buying over several years). No, purchase accounting will not increase debt at all. It has nothing to do with cash flows. It is all about whether to amortize goodwill, a noncash item. The FASB and their supporters have gotten religion about this issue and are unlikely to back down. They believe acquirers are fooling the public by making billions of acquired intangibles disappear like magic. The problem I see is that the accounting profession does not have a modernized conceptualization of intellectual property and other brain-related assets that make up the value of many new-economy companies. Since they can't point a finger at it (like tangibles), they say it's just goodwill and must be written off, which is a penalty to the acquirer. But in fact intangibles account for the majority of the value in knowledge-based companies such as MSFT. I think the FASB will get its pound of flesh, but it won't matter. Tech cos. will just issue pro-forma numbers that back out goodwill amortization, and will train analysts to follow these numbers. I doubt the "world as we know it" in high tech will come to an end.

To: Louis V. Lambrecht who wrote (5373)	11/30/2000 7:28:22 AM
From: macavity	Read Replies (1) \| Respond to of 19219

Louis 5 I agree with you this whole bull run has had 'preferential' accounting and practices that are all drying up, or being changed. 1)You mentioned mergers accounting - spot on. 2)Another is accounting for share options. In the UK they are trying to change this so that they actually appear as a charge to the issuing company. I do not know the form in the US These 2 practices could have massive implications for companies, tech especially. New Economy - schmoo economy I say. Earnings may never look the same again. Some may remember my posts weeks back - my fixation is share floats and corporate options. If you want to see a company that was in a bull market, that took over competitors in related markets by issuing new shares to buy companies and options to payoff insiders to encourage them to stay; then look no further than FMO. stockcharts.com[W,A]MACLYYMY[PC12!C48][VC60][ILE12,26,9] There are other problems at FMO but the graph demonstrates the laws of supply and demand. More shares =>lower prices. With the likes of Bernie Ebbers and Jay Walker rumored as getting margin calls on their stock holdings then as all these shares are looking more and more likely to come on line. I will only look to go long (tech) when NDX approaches the 2200/2000 level.