
Does HP + Palm = Facepalm? - monkeygrinder
http://www.computerworlduk.com/community/blogs/index.cfm?blogid=14&entryid=2938
======
raganwald
I am not a financial whiz or even moderately edumicated, so do not buy or sell
stock based on what I write here. Clarification sand corrections eagerly
solicited!

> I'd be grateful if some financial wizard could explain to me why it has $33
> _billion_ of goodwill on its books when Apple, by contrast, has only $480
> million

One source of what accountants call goodwill is free spending on companies.
When HP buys Palm for $1.2 billion, it will add up all of Palm's cash and
assets and put those on its books. If all that adds up to less than B$1.2, the
rest is marked as "goodwill."

Later on, HP can decide that they really didn't get B$1.2 out of Palm and
adjust the amount of goodwill to reflect overpaying. This is called "writing
it down." It's very embarrassing but it's also prudent, as having too much
goodwill on your books makes you look like a financial pufferfish. A writedown
trades one-time embarrassment for long-term attractiveness.

B$33 is a lot, it probably reflects HP having done a lot of M&A while not
writing the goodwill down.

~~~
JshWright
Ordinarily I wouldn't, but since you eagerly solicited...

s/Clarification sand corrections/Clarifications and corrections/

------
tkiley
I stopped reading when I got to the part where the author expressed an
apathetic ignorance about the concept of "goodwill". If the author can't be
arsed to research an article, I can't be bothered to read it.

That said, the article did motivate me to do 10 minutes of research into
United States GAAP and conclude that the $33 billion is probably a result of
the Compaq merger.

Edit:

The Inquirer says HP valued the goodwill from the Compaq acquisition at $14.5
billion: [http://www.theinquirer.net/inquirer/news/1019181/when-hp-
bou...](http://www.theinquirer.net/inquirer/news/1019181/when-hp-bought-
compaq-crock)

That leaves another $18.5 billion that is probably explained by this list:
[http://en.wikipedia.org/wiki/List_of_acquisitions_by_Hewlett...](http://en.wikipedia.org/wiki/List_of_acquisitions_by_Hewlett-
Packard)

~~~
xtho
It's somehow interesting that their previous acquisition was 3com. It's as if
Palm returned to a previous home but in a different city.

------
jsz0
The Android handset market seems to heavily saturated at this point. I think
HP was probably wise to go in a different direction and do something unique
with potential for a bigger splash in the market than just another Android
handset with an HP logo on it would.

------
adriand
Off-topic, but wow, that site is a promo for AdBlock if there ever was one. I
wonder how frequently authors of cogent, well-written content (like this
article) feel frustrated that they have to

[!!!!!!!ADVERTISEMENT!!!!!!!]

compete for their readers' attention with scads of distracting ads, some of
which are placed smack-dab in the middle of their content.

~~~
mambodog
Not often, I'd say, as those ads are where their paycheck comes from.

------
jimmyrcom
No facebook + palm = facepalm

~~~
C4vem4n
/facepalm

