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To: HG who wrote (50429)	4/14/1999 9:45:00 PM
From: Glenn D. Rudolph	Respond to of 164684

First Call Changes Tracking Of Internet Earnings (Last updated 1:31 PM ET April 14) Current quotes (delayed 20 mins.) YHOO 191 -12 (-5.91%) MSPG 105 5/8 -14 5/16 (-11.93%) NEW YORK (Reuters) - First Call Corp., a company that keeps track of Wall Street analysts' earnings estimates, has decided it is time for a change in the calculations used for the Internet companies. The introduction of the new method, referred to as cash earnings per share (cash EPS) follows a series of U.S. Securities and Exchange Commission inquiries, into how technology companies choose to account for corporate acquisitions. The new model may also help settle questions about the appropriate way to value Internet companies. "The majority (of analysts) said this is the way we want to value these companies," said Chuck Hill, First Call research director. "Clearly there is a groundswell to do this among the analysts in Internet-related industries." Cash EPS adds back to operating earnings the amount written off for short life amortization of goodwill, typically over a period of three or four years. Goodwill, the premium paid for assets in an acquisition, is an important topic now because of SEC scrutiny into accounting for "in-process research and development," an area tech companies had used to write off acquisition costs. In some cases, companies have reversed portions of their R&D charges after the SEC opened inquiries into accounting for deals. When allocated to goodwill, the costs have to be recognized over longer periods, depressing future earnings. Hill noted that with the official U.S. accounting rule making body, the Financial Standards Accounting Board (FASB), and the SEC looking at this and several related issues, the methodology could shift again. "We're not espousing anything; we have no ax to grind," he said. He said he welcomed a continuing debate among analysts, portfolio managers and companies about how to best present results. The cash EPS calculation for the Internet companies is different from traditional "cash flow," which is earnings before interest, taxes, depreciation and amortization (EBITDA). Some of the Internet companies affected include Yahoo! Inc, Avid Technology Inc. and MindSpring Enterprises Inc. . First Call is also continuing to provide its traditional calculations of operating earnings estimates for these companies. Robert Willens, an analyst at Lehman Brothers who specializes in accounting issues, said he was pleased with the change First Call is making. "The fact that First Call is even acknowledging the concept of cash EPS is a very important development," he said. "I'm very comfortable with it." First Call is majority-owned by Thomson Corp .