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Tellabs, AŞ Message Board

  • Haf48 Haf48 Oct 21, 2008 4:56 PM Flag

    Goodwill impairment

    Can someone tell me what this goodwill impairment is. Seems this is just another way to say they are losing money and making it legal for them while screwing the shareholders.

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    • GW impairment has NOTHING to do with losing real money (ie cash). It is an accounting game that just accelerates the recognition of cash previously spent on an asset (in this case a business or two).

    • TLAB acquired companies some time ago. A simple way to explain what Goodwill is as follows:

      Example: If TLAB paid $100M for a company whose book value was $50, it is required to carry a goodwill of $50M for that acquisition.

      TLAB is required by regulations to assess its goodwill every year in order to properly account for how the acquisitions are working out.

      The charge does not affect the cash, or investments, as such it is considered a non-cash chrage off. It does affect the book value of course.