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.

Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Dave who wrote (59755)	7/12/2001 4:50:00 PM
From: Exacctnt	Respond to of 74651

<<<Many other companies report their investment income as one-time gains.>>> Dave, There are different types of investment gains and losses. If you'd look at MSFT's last annual report as an example, you'd see an Investment Income line and a Gain on Sales line on their Income Statement. The difference being that the Gain on Sales line was the result of selling off some piece or division of the company itself. That means a one-time event. Their Investment Income line contains gains or losses from their portfolio investments as it should be because it generates income/losses when the investments are sold, it is an ongoing occurance. The size of MSFT's cash generation requires that how it is invested is just as important to company results as any of their business segments. The $2.6b writedown this quarter is a one-time event and is not part of normal events. They did not sell the investments. It has the same effect as if they were writing down inventory. It is an asset impairment. They cannot continue to fully value at cost those investment on their balance sheet. When they eventually sell those investments, more than likely, they would be reported on the Investment Income/Loss line. If they didn't have to write-down the investment due to GAAP, they could carry those investment forever at cost even though they would be worth less (worthless).