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Technology Stocks : Network Associates (NET) -- Ignore unavailable to you. Want to Upgrade?

To: Chuzzlewit who wrote (4597)	3/31/1999 4:36:00 PM
From: David Perfette	Respond to of 6021

Thanks for the response. I've read the earlier posts, and I understand and agree with what your saying. One of the things I was trying to get at is simply that all this business about restating earnings and now the delay, has a very negative connotation to it. And the longer it drags on, the more weary investors may become, deservedly so or not. For instance Herb Greenberg of the Street.com is a very vocal detractor of those accounting procedures that many, many company's used for the r&d write-offs, and neta seems to be one of his favorite examples. In his article on Friday 3/19 Mr. Greenberg said "This is the company, you may recall, whose CEO, Bill Larson, told analysts how he builds "little honey pots" and how his company creates "acorns" to help when sales are off." This has a not so good connotation to it. To me this article was implying that there was something more fishy going on with the company. In fact I emailed Mr. Greenberg about this and his reply was simply that "neta is just one of the few that described it the way it did." In his column today he seems to turn a suspicious eye to the fact that a) neta is delaying the 10k, and b)the call letters just HAPPENED to be spelled wrong. This kind of continual attention can only hurt. Hopefully it will not be deserved. Just one other thing. I recently joined SI and have found this as well as the several other threads i follow, to be extremely informative and helpful. It seems like a good place were people can continually raise issues and test each others insight in views, without all that nastiness I've frequently found on other boards. -David P.

To: Chuzzlewit who wrote (4597)	4/1/1999 8:52:00 AM
From: AlienTech	Read Replies (4) \| Respond to of 6021

You don't have it quite right In Process Research & Development (IPR&D) does NOT arise out of a pooling transaction. In a pooling the two companies are combined using historical costs. In fact, the financial statements are restated to make it appear as if the business combination occured at the beginning of the earliest period presented. Since neither company has any capitalized R&D (it must be expensed under FASB Statement #2), none is created in a pooling transaction. The issue arises when the combination is accounted for as a PURCHASE. Then the all of the assets of the "target" company are written up to fair value. The excess of the purchase price over the fair value of the net assets acquired is recorded as Goodwill which is amortized over a period not to exceed 40 years. The fashionable thing to do was to assign a large part of the purchase price to an asset called IPR&D, thereby reducing the amount of Goodwill recorded, and naturally avoiding its amortization expense in future years. Any amount assigned to IPR&D is written off immediately - again by operation of FASB Statement #2. Quite frankly, I don't see why this should spook any investor. We are talking about a noncash charge - amortization. Yes it would lower earnings, but would have no effect on EBITDA - a much more meaningful number when evaluating a company's performance. Hope this clears up some of the issue. Lou