AOL/TW posts biggest annual corporate loss in world history

From: John Conover <>
Subject: AOL/TW posts biggest annual corporate loss in world history
Date: 31 Jan 2003 06:03:10 -0000


this years AOL/TW loss, (actually, a Goodwill accounting write down
from the synergism of the AOL/TW merger-so it is subtracted from the
shareholder's value,) is about a hundred billion bucks-or about
twenty-two bucks a share. (This, on top of a 54 million buck write
down last year.)

To put that in perspective, the AOL/TW loss in shareholder value this
year was larger than the GDPs of 2/3 of the planet's countries, (all
below New Zealand-in case you are curious-some 124 out of 193 of


BTW, as a reminder from accounting, the Goodwill column of the balance
sheet, (e.g., assets minus liabilities,) is a place for assets that
have intrinsic value-but not value their self; for example, the
Coca-Cola trademark is worth a fortune, but what is a bottle cap
worth? When companies merge, the synergism is worth something, (the
implication being that the whole will be larger than the sum of the
parts,) because of less overlap of administrative systems, (i.e.,
management,) consolidation of buildings, sharing of advertising
budgets, etc. So, the estimated value of the synergism is added in the
Goodwill column of the merged companies, and if it turns out to be
optimistic, then there will be a write down at some future date.

To long term investors, it doesn't make any difference-they lose value
they never really had. However, to investors that bought in at the top
of a company's value, it can be devastating, (even though the
estimates of value were done with honesty and integrity.)


John Conover,,

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