AOL reports largest loss in corporate history

Doug Henwood dhenwood at panix.com
Thu Jan 30 11:09:40 PST 2003


Nomiprins at aol.com wrote:


>Wait til 'analysts' get hit with the $50 billion in WorldCom
>writedowns to come, or the $24 billion from Qwest. Worse yet, the
>slew of ailing telco and media companies that have only started to
>'amortize down' their goodwill because a full writedown would mean a
>full bankruptcy filing. So, companies like Lucent are taking little
>quarterly losses at a time which represent mere fractions of their
>true goodwill loss. But, it's all okay by current accounting
>standards.

What are the actual effects of such writedowns? They're mostly writing down goodwill, which is all hot air anyway. They may have to renegotiate loan covenants that require certain levels of assets, but what cash flow impact is there, if any?

Doug



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