Comments on: Wipeout! Wachovia Posts $23.7 Billion Quarterly Loss

By: kfunck1

kfunck1 — Thu, 23 Oct 2008 14:35:00 +0000

I think you can make that same comment about GW in general, there’s no reason to limit it to just financial companies. Unfortunately, unless you know of another way to write up assets to a value other than their fair value, tis difficult to account for. Goodwill really doesn’t have anything to do with how the credit markets view you either, since it’s entirely at the discretion of the company to revalue it (since its intangible and all).

By: Richard Kline

Richard Kline — Thu, 23 Oct 2008 08:31:00 +0000

Oh, and s at 11:30, I _totally_ agree with you. Fictions should be zeroed out at every financial, but a few are still being given irrational faith by the rest of the markets. Goodwill doesn’t get you on the last jumbo jet out of Financial Saigon; only cold hard assets punch that ticket.

By: Richard Kline

Richard Kline — Thu, 23 Oct 2008 08:28:00 +0000

It’ll end in Tiers collapsing, and not just at Crashovia.

Goodwill has indirect importance in that it is a simulacra of how the credit markets view an organizations status: the more you can get away with claiming, the better your counterparties view you. It’s like saying that your mark is good in a card came; up to a certain level the other players think you can raise it if they push you for so much. Nil for Wachovia says it all.

By: kfunck1

kfunck1 — Thu, 23 Oct 2008 03:30:00 +0000

I’d just like to comment that the positions about goodwill being irrelevant in the announcement are spot on. Of course, you could pay attention to the other numbers, all of which show the dire position the company was in. GW is indeed simply an accounting fiction; its how you make things balance, and as someone commented earlier, exists in almost any merger or acquisition. I would be willing to bet that if you could break down that gw, the majority of the writedown would be out of gw attributed to the Golden West acquisition.

By: patrick neid

patrick neid — Wed, 22 Oct 2008 20:23:00 +0000

They made the worst trade of the century when they bought Golden West right at the top of the market in 2006. How bad was that trade for 25 billion? It cost them the entire bank.

Lord have mercy!

By: tompain

tompain — Wed, 22 Oct 2008 19:43:00 +0000

Mara, the ability to gather cheap deposits is just as good an intangible asset as a brand name

Goodwill is just an accounting creation. It’s not worth the attention being given to it. It has little effect on anything in the real world.

By: Mara

Mara — Wed, 22 Oct 2008 17:20:00 +0000

I think the entire concept of goodwill, as currently employed, is a load of crap. Goodwill is the caulk holding together otherwise awful balance sheets. Take a look at finance.google.com where you can check out the income statements and balance sheets of any traded company. Take a look at the goodwill amount. Note when goodwill’s rising as the company’s true income is sagging. BofA is a great example. Do they really have $90 billion in goodwill?! You could make an argument for the value of goodwill in a company like Coca Cola, as people will still want Coke over Cheapo soda and happily pay more. That’s goodwill. Not as a manhole cover for the black hole that net income’s been sucked into.

By: tompain

tompain — Wed, 22 Oct 2008 16:37:00 +0000

Doc-

Anyone who acquires publicly held companies will have goodwill. Particularly if they buy publicly held companies with brand names or other intangible assets. I have never heard anyone suggest that Warren overpays for the companies he acquires, but that’s basically what you are contending if you think his goodwill is phony. You could be right. Probably not, though.

Cool head – don’t be so paranoid. This writedown is effectively nothing more than a restatement of the announcement that WB was being purchased for $7. From that moment on, this writedown was inevitable.

By: doc holiday

doc holiday — Wed, 22 Oct 2008 16:09:00 +0000

Re: Wachovia Corp. on Wednesday reported a staggering $24 billion loss as it took a goodwill impairment charge of nearly $19 billion ahead of its acquisition by Wells Fargo & Co.

I'm still amazed that no one in the investing world is willing to take a close look at Buffetts $30 Billion in goodwill and connect the dots of Level 3 Asset distortion. Buffett is treated is continually with kid gloves and no one dares look at his books, because the sweet old guy is such a trustworthy legend, who can do no wrong. If you believe that shit, maybe you should buy into his goodwull and say a few prayers!

Bah Humbug!

By: Cool Head

Cool Head — Wed, 22 Oct 2008 15:55:00 +0000

I smell another scam here. The so called “goodwill writedown” is either an attempt to artificially show a much higher loss to get a bigger pie of the bailout cake, or it means that Wachovia was used to cooking its books and now is forced to show its actual hand of cards (actually a house of cards) before the takeover by Wells Fargo. Everybody’s seem to be jumping on the gravy train. Hey! Wait for me! I want to get on too…but sadly I am not a bank