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Technology Stocks : The Learning Company (TLC) -- Ignore unavailable to you. Want to Upgrade?

To: Obewon who wrote (6218)	1/7/1999 10:39:00 AM
From: Trader Dave	Respond to of 6318

Obewon, TLC doesn't have exposure to this retroactive change by the SEC on the Broderbund deal. There were no R&D write offs on that transaction. Mindscape is a different story, but unlike NETA, TLC already has explicit approval from the SEC in a letter on the Mindscape deal. This change by the SEC will cause hiccups for the first few technology companies that report the changes, but since dozens are vulnerable (including giants like cisco) institutions will ultimately just look at this as an accounting change. Institutions generally value companies on operating earnings. Stand alone, it could be a risk, but as part of the Mattel purchase it's a rounding error and won't even cause a minor bump. I don't think TLC will even be able to report it's q4 results before the deal closes. Regarding valuation, I agree at the experience level of the Lee and Bain folks. But I think part of their willingness to agree to the deal that Oleary and Perik struck was excitement to get liquid on their restricted stock in a tax free transaction. They probably got a good look at Mattel's product roll out plans and a detailed look at the accounting difference between Mattel's sell through compared to the sell in. TD