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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: 249443 who wrote (13819)	1/30/2002 2:12:22 PM
From: Bob Rudd	Read Replies (3) \| Respond to of 78768

mrcmoney: I sold ELN once before because of this same laundry list of issues...Forbes, Herb and others had put them out. A Merrill report reiterated Strong Buy and discussed tax and other issues underlying the JV structure...ELN was 34 at time report was written. At 40+ I didn't feel the risk/reward worked...mid 20's it does, for a small position. ELN has recovered before from this same littany of issues...I agree with Paul it will again.

To: 249443 who wrote (13819)	1/30/2002 7:13:06 PM
From: Terrapin	Respond to of 78768

mrcjmoney, I have to draw the line at the allegation of Tyco 'cooking the books'. I'm not sure if you mean using 'aggressive accounting' that ought to be frowned upon or outright illegalities of which I firmly believe there are none. I invite you over to the Tyco thread to further discuss this because even at these prices the level of risk in Tyco shares would likely disqualify it as a value (although I have added). Here are a few comments from a SSB report on Tyco's accounting: "A recent argument we've heard about TYC's margins centers around how acquisition purchase price is allocated between goodwill and fixed assets. The argument goes goodwill is overstated, so fixed assets will be understated, so depreciation expense will be lower, so margins and income will be higher. We believe this argument does not hold water relative to an analysis of TYC's disclosure, or comparisons to peers. By our calculation using data from TYC's 10-K, 79% of the purchase price of 2001 acquisitions (including purchase accounting restructuring costs) was allocated to goodwill. We ran a calculation of approximately 10 acquisitions done by several other companies in our coverage list and found that on average that a very similar 75% of the purchase price was allocated to goodwill. Further, if fixed assets were being deflated in the acquisition accounting wouldn't TYC's depreciation/sales ratio be lower than other companies? You would think so, but that is not the case. For example TYC's depreciation/sales was 3.8% in 2000 and 3.7% in 2001 compared to 2.7% for GE (2000), 3.4% for Danaher (2001) and 3.0% for EMR (2001). " Look forward to discussing this further, Terrapin