Ask Rande

Top 1689. Aug 7, 1999 8:51 PM

» RandeS - Tony,

Tony,

I know it doesn't seem right. Of course, I don't think ANY capital gain tax is right. Yes, applies to LEAPS -- holding period doesn't matter. BTW, if you exercise an option to buy the asset, the holding period for the underlying asset begins on the date of exercise as there's no carryover of option holding period.

-- posted by RandeS

Top 1690. Aug 8, 1999 11:58 AM

» RandeS - Barron's is Bearish (and other news flashes)

Barron's continues to be Bearish on the Nets. Andrew Bary's "The Trader" points out how Mary Meeker made some positive comments on AOL last Friday, only to go on and express his (Barron's editorial) view that "The Street" is only interested in hyping the group so they continue to take in the enormous underwriting revenues and commissions associated with bringing these companies to public and then seeing them trade actively. Some excerpts:

The problem for the Internet stocks is that even with their pullback in recent weeks, valuations still are outrageous by traditional standards....AOL trades for 140 times earnings, eBay 200 times, Yahoo 373 times. Virtually all of the secondary Net stocks have no profits and no hopes for earnings any time soon. The Street, which is raking in millions in underwriting fees from 'Net companines, has conveniently devised a way to finesse the profit issue by constructing an entirely new valuation methodology....The dirty secret of many 'Net companies is that they have little prospect of justifying their valuations from future earnings. They hope to be taken over by a Yahoo or another 'Net giant looking to expand its franchise.

Bearish indeed. And only an editorial opinion. Should serve to keep many from participating, for better or worse. Certainly, as far as the neophytes and risk averse are concerned -- for the better. The rest should take it with a grain of salt, as with anything else. You know where I stand. When it comes to stock ownership, you've got to show me the earnings. When it comes to the Net, I'm hard pressed to think of another group with more potential over the next 10 years. What's an investor to do?

-- posted by RandeS

Top 1691. Aug 8, 1999 3:36 PM

» Happy - I heard on Bloomberg that your company, KPMG, is doing a billion

I heard on Bloomberg that your company, KPMG, is doing a billion dollar investment network content deal with Oracle.

How are you affected by this? What is this?

-- posted by Happy

Top 1692. Aug 8, 1999 4:13 PM

» RandeS - Norm,

Norm,

Sorry, haven't heard much about it. With tens of thousands of professionals in nearly 150 countries around the world, the Partnership is too big for me to follow everything (though you'ld think I would have heard about something so close to home). The consulting side of the business has all kinds of strategic alliances going on (with Microsoft, Cisco, SAP, HP, Sun Microsystems, Compaq and on and on...). Heard sometime back the Firm was thinking of going public with a portion of the consulting practice. Would be nice to do a stock option exercise analysis on myself for a change.

-- posted by RandeS

Top 1693. Aug 8, 1999 9:09 PM

» Happy - Rande, Heard a little more.

Rande, Heard a little more. It seems Cisco Systems is making a billion dollar investment in KPMG. Buying 20% of KPMG or agreeing to provide technology to KPMG for 20% share? Would think partners would not want to dilute thier share?

-- posted by Happy

Top 1694. Aug 9, 1999 5:19 AM

» RandeS - Norm,

Norm,

This dates back a year or more when the Firm first started to talk about spinning off a percentage of the consulting practice. This would have been the first IPO for a public accounting firm and it seems the SEC had its reservations. The issues go to the old debate about whether a firm's consulting practice exerpts any undue influence on the independence of its auditing practice. The "Chinese Wall" has been maintained nonetheless and it seems a logical next step. My being able to monetize a portion of the consulting practice, additional resources could be had for further expansion -- a tradeoff which is more than acceptable. Currently, it appears the Firm is looking to incorporate first as a step toward public trading. While the Firm evidently would have preferred to keep the majority of control/ownership and only spin off a smaller percentage, it now looks as though the way to SEC clearance might be the reverse. In any event, it looks like Cisco is the first big investor should incorporation of the consulting practice become possible.

-- posted by RandeS

Top 1695. Aug 9, 1999 5:20 AM

» RandeS - "By" being able to monetize.

"By" being able to monetize.... Not "My." I wish.

-- posted by RandeS

Top 1696. Aug 9, 1999 5:23 AM

» RandeS - BTW -- For any Big 5 firm, while the consulting practice represe

BTW -- For any Big 5 firm, while the consulting practice represents only a portion of the worldwide business, it also represents the greatest potential for future growth as the traditional assurance and tax functions are relatively mature facets of the business. Still, even though only a portion of the business, we're talking many billions in annual revenue.

-- posted by RandeS

Top 1697. Aug 9, 1999 5:52 AM

» RandeS - More info -- The Cisco purchase is actually a private placement

More info -- The Cisco purchase is actually a private placement wherein they will receive convertable preferred stock (convertable to common at the IPO). The alliance will involve KPMG setting up a half-dozen or more Internet Centers focused on delivering and maitaining Cisco's voice, data, and video networks. A few years ago, the Firm alligned with Microsoft and Cisco to form the world's largest NT-dedicated consulting practice. Now, the Internet and digital communications. Over $1 billion going into this private placement. Think these guys are serious? Evidently there are some who are content to let others joke about tulips and manias while they put up their own billions as a show of committment and faith in what they believe the future might hold. Once again, it should be interesting to see how it all turns out in the next several years.

-- posted by RandeS