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 : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: Charles Tutt who wrote (53075)	1/16/2003 4:19:08 PM
From: ivan solotaroff	Read Replies (1) \| Respond to of 64865

Charles, Howdy. Gutsy move, to buy at 3:57 before earnings! I think the "guidance on the guidance" (McNeally's quotes in the 4:01 PR statement) indicate positivity ahead at 4:30: "Overall, our balance sheet is very strong with more than $5 billion in cash and marketable securities and net equity of over $7 billion." That seems to minimize the damage of the write-off, which is the bad news of the release. Nice trade! Ivan

To: Charles Tutt who wrote (53075)	1/16/2003 6:49:45 PM
From: Robert	Read Replies (1) \| Respond to of 64865

The FASB rules regarding goodwill impairment is a compromise between the SEC and technology lobbyists. Previously, acquisitive companies like Cisco (which paid for purchases with stock) could charge the excess of market value to book value to their balance sheets as R&D and expense the total cost virtually immediately, instead of amortizing the cost. This would boost profits going ahead into the future. The rules were supposed to prevent companies writing off the total cost as R&D but create an impairment account to mark to market the value of the goodwill. Now... I seriously doubt that the Cobalt and Highground acquitions were so poorly chosen that their resale value is worthless in less than a few years, but for tax purposes this adds about $50 million in pretax income going forward. At the same time, by reducing the shareholders equity by $2 billion, return on shareholders funds is boosted by about 22%, (because of dividing by $7 billion instead of $9 billion) all pretty good for sleigh of hand....