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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Teri Skogerboe who wrote (20035)	6/9/1998 10:22:00 AM
From: 16yearcycle	Respond to of 70976

This is Gretchen's new thing. She hammered Disney, G, Ko, and Travelers over this and other accounting issues, recently. Ironically, she quoted Buffett in the article as an authority against accounting tricks. It escaped her that he was the largest shareholder in each company. Can we have a "Duhhhhhhhh" please?

To: Teri Skogerboe who wrote (20035)	6/9/1998 1:03:00 PM
From: robbie	Read Replies (1) \| Respond to of 70976

<<Consider the peculiar case of Applied Materials Inc., a formerly high-flying maker of semiconductor equipment. In the quarter ending in January, it paid $32.2 million to a company in a licensing agreement. Rather than consider the fee an operating expense, as Schilit said would be typical, Applied Materials called it in-process R&D, even though no acquisition had transpired. That accounting improved the company's operating cash flow by 26 percent.>> More information is needed to make a judgement on what is going on here. The article does not state what periods the license agreement benefits. Obviously if it benefits periods subsequent to Q1 it wouldn't all be expensed in the first quarter. It's also obvious that cash flow isn't improved no matter how the transaction is accounted for. The article's complaint is that the transaction makes the "operating" cash flow look better. Who's that going to fool? It's also interesting that the company was closed Friday and this article would have had to go to press Saturday. So the author didn't go to a lot of trouble to get an explanation from management. It's a non-event, IMO, until we get more details. Robbie (waiting patiently to go long again)