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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: patron_anejo_por_favor who wrote (115758)	8/6/2001 4:30:50 PM
From: posthumousone	Read Replies (1) \| Respond to of 436258

Big names to feel pain of reality, 'goodwill' USA TODAY Aug. 06, 2001 NEW YORK - Companies that rolled the dice on big deals at the height of the bull market are being forced to settle up. Phone giant Verizon Communications became the latest victim last week, reporting a $1 billion loss for the second quarter, thanks to $3.4 billion in write-downs tied to soured investments and acquisitions. "This is just the tip of the iceberg," said Robert Willens, Lehman Bros. accounting analyst. "The real pain is going to come in the first half of next year when we see the bulk of these write-offs." Experts say scores of hyperacquisitive firms, largely in high tech, will follow with write-offs that could reach $1 trillion. The flood is expected to be triggered by new accounting rules next year on how companies treat goodwill: the difference between what a company paid for an acquisition and the book value of the acquisition. Companies will no longer amortize goodwill over a set period of time, up to 40 years. Instead, goodwill is to be written off when the acquired company is found to be "impaired" or reduced in value. As a result, hundreds of billions of dollars have disappeared in recent weeks. JDS Uniphase took a record $44.8 billion in goodwill write-offs; Nortel Networks, $12.3 billion; VeriSign, $9.9 billion; Corning, $4.7 billion; and Qwest Communications, $3.5 billion. In a practice known as big-bath accounting, firms use bad times to include as many expenses as possible in one-time charges. By that standard, Verizon met expectations. "These companies can take massive charges, and Wall Street ignores them. It's a big game," said David Tice, manager of the $170 million Prudent Bear Fund, which focuses on accounting irregularities. "We're talking about a lot of money spent on dealmaking that is not productive.">>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> So what is an investor to do? Do we 'ignore' them too? Is it really bad if no one pays attention to it?