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Non-Tech : LIST OF COs. THAT MAY HAVE ABUSED ACQUIRED R&D WRITEOFFS -- Ignore unavailable to you. Want to Upgrade?

To: Robert Douglas who wrote (1)	4/8/1999 1:26:00 PM
From: Paul Berliner	Read Replies (1) \| Respond to of 41

I remember not to long ago that the NETA CEO bragged about how the Company would always exceed estimates because the poolings with the acquired companies yielded what he dubbed 'Honey Pots' - well, now that the books are under scrutiny, he can no longer enact these shennanigans to benefit the financial statements. I have a feeling that NETA is the first in a long line of companies that the SEC will point its finger at. Wall Street is no help either on this issue, because they have encouraged companies to use the pooling-of-interest method in order to yield proforma historical statements that decomplicate the work of making earnings estimates. This is why the purchase method of accounting for acquisitions is not appreciated by the sell-side analyst. As for the growth rate, maybe the companies could appease the SEC with a disclosure of 'results from original ops' and then 'results from acquired companies' (listed seperately). I like how retailers disclose 'same-store sales' (stores opened more than 1 year), which shows the reader if the core business is strong and whether or not the results are benefitting simply from opening additinal units. Paul

To: Robert Douglas who wrote (1)	4/8/1999 1:45:00 PM
From: Frodo Baxter	Respond to of 41

>Another important issue may be if the FASB changes how the accounting for pooling of interest is done it may limit future acquisitions because of the dilution to earnings. To paraphrase Buffett, basing a purchase decision on its effects on accounting earnings rather than discounted cash flow is idiotic. But what does he know? His portfolio has moved sideways. >What would this do to the growth rates of these companies that have lived off of acquisitions? Roll-ups were in the shitter even since the blow-up at Cendant. BTW, nice thread, Paul.