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Technology Stocks : LAST MILE TECHNOLOGIES - Let's Discuss Them Here -- Ignore unavailable to you. Want to Upgrade?

To: MikeM54321 who wrote (11015)	4/17/2001 7:08:12 PM
From: EJhonsa	Read Replies (1) \| Respond to of 12823

Are you saying capex never effects net income? Other than by means of potentially bringing down a company's interest income (which does count towards net income) via the depletion of its cash reserves - yes. It's just one more reason why investors should do more than merely look at a the pro forma earnings numbers that Wall Street and the media love to harp on. This is all more so the case when you're dealing with companies that operate businesses that are both highly capital-intensive, and are prone to seeing the value of their existing capex-related investments depreciate rapidly - a description that fits just about any telecom service provider in existence. Eric

To: MikeM54321 who wrote (11015)	4/20/2001 11:24:10 AM
From: RAT	Read Replies (1) \| Respond to of 12823

I don't want to do the full accounting lesson here, but CAPEX hits the income statement as depreciation. There is a staggered impact from the buildout, over some agreed upon expected useful life of the equipment. This is usually considered an operating expense and therefore is reflected in operating income, net income and EPS. Some investors base decisions on EBITDA - earnings BEFORE interest, taxes, depreciation and amortization - to eliminate the impact of changing capital expenditures, but EBITDA isn't the same as EPS/ Net income. As for cash flow, the impacting isn't on Cash Flow from operations - the spend hits cash flow from investing activities as a reduction of cash. If funds are borrowed to purchase capital, the funds purchased / repaid are captured in cash flows from financing activities.