Hi Neil, You seem to have been puzzled and upset by SYNA not subtracting the cost of their acquisition from their earnings. Let me say a word about how I see it. The way I see it, the goal of the quarterly report quarterly is to give us, the investors, a picture that reflects how well the business is really functioning.
Here’s an example, getting away from SYNA. Lets talk about ABC whose last five earnings have been 40 cents, 42, 44, 46, 48, and 50 cents. This quarter they made 52 cents, but they used some of that cash they’ve stored up to make an acquisition. Does it make any sense to have them take all the cost of the acquisition off earnings and report 4 cents or 6 cents earnings, or even negative earnings? Does that help you to better understand how well their business is functioning? Or doesn’t that totally distort the picture? And next quarter, when they don’t have the acquisition cost, and make 54 cents, it will look like a huge sequential jump from 6 cents to 54 cents. Will that help you understand the real progress of the business?
I’m sure they will depreciate the acquisition, by the way. They have to, after all. They can’t just decide not too, and no auditing accounting firm that’s checking their books would let them!!! I really don’t think there is anything for us to worry about here. There are standard ways of treating acquisitions and the auditing firm will make sure they do it right. However, remember, that if they depreciate over 20 years, say, they only depreciate an 80th of the price every quarter. (Just guessing here). Hope that helps.
Best
Saul