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To: Paul Engel who wrote (48727)	7/29/2001 8:12:58 PM
From: brushwud	Read Replies (1) \| Respond to of 275872

You haven't a clue how accounting works - do you Dan? Depreciation will offset profits - and reduce taxes - but if there are NO profits, there is nothing to offset - and there is NO CASH GAIN AT ALL. Cash flow = Profit + Depreciation & amortization regardless of whether profit is positive or negative and regardless of whether any taxes are paid.

To: Paul Engel who wrote (48727)	7/29/2001 10:11:04 PM
From: Dan3	Read Replies (1) \| Respond to of 275872

Re: Depreciation will offset profits - and reduce taxes - but if there are NO profits, there is nothing to offset That's where a lot of companies get into very serious trouble - thinking that "profits" is a simple, one dimensional result of a straightforward arithmetic operation. Tell it to NT! The thing to be on the lookout for are increases in undepreciated plant, and goodwill. Both represent accounting entries where money was spent in a quarter, but costs were not taken against revenue when calculating "profits". In other words, the money is gone, but the company is treating that expenditure as though it hadn't happened - they list it as a swap of one form of cash for another form of cash, they act as though they still had the money. If it turns out later that the "goodwill" or the equipment isn't worth as much as the cash was, then that difference has to be taken as a cost in that later quarter. That's what happened to NT - they thought that they'd swapped $19 Billion for some things that were "as good as gold" (or, at least, as good as cash). But it turned out they were really, really, wrong, didn't it? I don't think Intel is as wrong as NT was, but I think their accounts have moved in that direction.