AOL-Time AOL-Time Warner massive first-quarter net loss of $54.2 billion, or $12.25 a share, as it took a postedusly announced $54 billion charge to write off goodwill to reflect a sharp decline in the value of its $106.2 billion purchase of Timassiveer in 2000.
Nor will firms be able to write off goodwill (the value of a business to an acquirer over and above that of its physical assets) over a period of, say, 20 years.
In the fourth quarter, Aetna took a $238.3 million after-tax charge to write off goodwill as it withdrew from unprofitable Medicare markets; a $92.6 million after-tax "severance charge" related to actions announced in December, and $51 million in after-tax costs resulting from the spinoff of Aetna to shareholders.
"Since we first announced our merger with US West, we have a very different economy and lowered demand for telecom services, which has resulted in our having to write down goodwill," Qwest Chief Executive Joseph Nacchio Joseph Nacchio said in a statement.
Much of that drastic improvement, however, can be attributed to a change in accounting rules that dictates how media companies write down goodwill charges.
But the firm has an advantage over its peers: Spanish law lets it write off goodwill against tax when making acquisitions, which means it can afford to pay more than rivals.In Britain BT has done well by sharpening its focus.
The giant software company had already said it would write off goodwill of $6.2 billion, almost exactly what it spent on aQuantive, an advertising business, in 2007.
Part of the loss was attributable to new accounting standards which forced Ford to write off goodwill from acquisitions, including $708m at Kwik-Fit, its British car-repair chain.Boeing reported a loss of $1.25 billion in the first quarter.
Thanks to recent accounting rules, Tyco does not have to write down goodwill unless the value is significantly impaired.
"It's consistent with other companies' releases," says KeyCorp. "In Europe you can write off goodwill immediately," says Mellon.
