Pj568

Goodwill Write-Downs, Corporate Style

True the write down itself is a non cash event. However is does represent an economic loss just as the homeowner who purchased a bubble house whose current value is now considerably less. Other cash consequences will be when the firm has to refinance or renegotiate current or future debt. Lenders will demand higher rates and more collateral. In some cases the write downs also result in violations of loan covenants.

Depreciation expense is also a non cash event representing an economic decrease in asset value except its cash consequences are an immediate tax benefit and it also an implied future expenditure to replace aging assets if the firm is to stay in business.

Company Death Watch: Harley-Davidson

The statement of not using mark to mark like the banks isn't right. If they have securities (securitized assets they mark to market), if they have receivables they reserve and write off just like the banks do with their non securitized assets (mortgages, home equity and credit cards). If they sell or convert to ABS then the appropriate gain or loss is taken. Traditionally the loan collateral of cars and bikes can be converted into cash faster and with less expense than homes. I assume the same is still true but have no current data.

Pick Your Poison: Fair Market Value, Orderly Liquidation Value or Forced Liquidation Value

Oh, the other key assumption is of best use. The only parties than should use a price other than the current price are those where the value of the discounted cash flow clearly exceeds the current price and they have no intention of selling because it would be plain stupid to do so. Unfortunately there a so many ficticious professional analyses being generated, just look at the lack of write downs in the goodwill area across the board as proof. So the only realistic value for the great majority of companies is really the current transaction prices whether they are deemed distressed or not.

Pick Your Poison: Fair Market Value, Orderly Liquidation Value or Forced Liquidation Value

In my opinion the real value of an appraisal is in the presentation of comparative sales. Everything else is some form of justification or wishful thinking. Of course the first thing to be examined are the assumptions under which they're issued. We assume a liquid market....knowledgeabl... buyers and sellers.....no distress...etc. So our conclusion can only be that they're are a rationalization of current contract/transaction prices. Anything else is pure conjecture and you only have to look to the party that hired them to assess the bias.

General Electric: Not Quite a Value Trap, More Like a Value Pit

Every company with a large financial services segment now has a bad balance sheet. Its amazing that the stellar balance sheets from two years ago, haven't changed significantly and are now viewed in an entirely different light. Look at Caterpillar, IBM and Boeing where the financing arms play a major role just like at GE. If they have higher quality investments than the banks did, they should be able to delever with less pain although they will take some hits along the way.

The pitiful GM balance sheet even improved significantly when they sold controlling interest in GMAC and no longer had to include it in their consolidated statements.

The Corporate Junkyard Is Full of Kitchen Sinks

The expectation for write offs makes sense. What do you see Boston Scientific doing? They have yet to record any impairment on the 20B of intangibles acquired with their Guidant purchase in 2006. Is this the year? Will it be 5B, 10B, more or none?

Hanes Unfairly Treated by Mistaken Association with Gildan

Didn't read the GMRA report, but the leverage factor of 12 along with a net deficiency in tangible assets makes me wonder why this is a good investment in todays market.

Ken Lewis on Bank Accounting: Sensible Talk from a Surprising Source

It seems quite rational that earning increase in good times and decrease during bad times. Why does Lewis and Brown think otherwise? The twisted squirrel analogy is weak.

There's nothing in the accounting rules that prevent companies from increasing capital during good times, when available & cheap (fall) and saving it for the bad times, not available and costly (winter). Isn't this really the message behind squirrel analogy?

What's sad is that the bankers seem to believe that the problem is in the accounting and not in common sense.

Who'll Blink First: Sirius, Loral or the Banks?

Does anyone really think that Loral would allow Sirius to draw on the above mentioned facility? Banks everywhere are cutting off credit lines and renegotiating agreements. My guess is Loral will have a different interpretation of the agreement.

Hormel Foods Could Be a Good Addition to Your Shopping List

Although the author warns of his lack of knowledge, I wonder if he realizes what a "gold mine" Spam is when joking about it. Spam is essentially trimmings of other products packaged into a premium priced product. A major benefit is, being precooked in the can at the plant, there is no refigeration required to prevent spoilage. Created in the late 30's, it became a prime source of protein for soldiers and other countries around the world during the war years when little else was available. As it still serves that function, it continues to be popular in many countries today.

Why AIG Was in the CDS Business

It seems like Paulson & Co and Goldman were two of the earlier firms to recognize and act on the problems in the market by becoming major CDS buyers either in 06 or early 07. Anyone know when AIG recognized their problem and how they attempted to mitigate their loss.

Dell: Absurdly Cheap

Sorry, leverage is 10 not 9. They might have to use that 3.78 money in the bank to pay the 5.60 of accounts payable. (both are per share numbers)

Dell: Absurdly Cheap

Leverage of 9 to 1 might be a concern.

Sirius Reverse Split Only "to Satisfy Listing Requirements"

Company history. Formed in 1990, IPO 1994, first revenue 2002, number of profit years 0.

Caterpillar Is Undervalued

Besides your projected cash numbers did you also consider the current state of their lending operations since they have a significant role in financing their customers? What's their status on access to capital, renewal timeframes and cost of debt. What about bad debt expense and reserves? There is a lot more than a simple cash flow guestimate at work in the market today.