To: Anaxagoras who wrote (107 ) 12/6/1998 3:42:00 PM From: Anaxagoras Respond to
There's a little article over on talks.com that's relevant to this thread. It's a John Tompkins' Matador column entitled <<Smoke And Mirrors Corporate Acquisition Department>> . The article is basically the product of an interview with David Tice of Pru Bear Fund fame. Part of it discusses the issue of write-offs of IPR&D, a topic I've been interested in lately (could ya tell? Didn't mean to hi-jack the thread, Rainier <g>).<<Tice explains that one of the most common ways a company can turn mediocrity into excellence is by writing off "in-process research and development." This is where the acquiring company claims the research performed by the acquired entity is worthless and won't lead to any new products. The write-offs are taken even as management reports to shareholders the benefits of the merger. <<...few Wall Street analysts are interested in panning a stock for creative accounting or any other reason. According to Business Week, only 1.4% of Wall Street recommendations are negative today, down from 30% in 1982. And today's analysts give a "thumbs up" almost 75% of the time, even with today's sky-high stock market valuations and uncertain economic prospects.>> <<...the SEC...told McDonald's its $190 million charge for kitchen refurbishment was bogus. Updating a kitchen, regulators argued, seems like the normal cost of doing business for a restaurant.>>
