Goodwill Writedown of ~$1 BN?

The current Goodwill Value is ~$1.9 BN, calculated 100 days ago when the stock price was double what it is now. If the writedown is on par with cap losses, that is about a billion dollars that gets written off next week.

It's intangible, and not real money, BUT, that would put XRX enterprise value well below the debt load as of Dec 24 of $3.6 BN*. Also, refinancing at non-usury rates will be impossible.

Taking out loans at 10%-13% to pay off 5% 2025 notes sounded d-mb last week, but XRX got while the getting was good.

*It's higher now, but that was the last official number.

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How in the he-l does this company have any Goodwill left?

None of you know what you're talking about 🤣

Of course but the OP suggested the GW was impaired BECAUSE of the stock decline. That’s not how it works.

The impairment results in a decrease in the goodwill account on the balance sheet. The expense is also recognized as a loss on the income statement. This directly reduces net income for the year. Earnings per share (EPS) and the company's stock price are also negatively affected.

"NO IT'S NOT!!!"

Yes, it is. https://www.investopedia.com/terms/g/goodwill.asp

NO IT'S NOT!!!

It's reported as an EPS loss, and the kind of investor that is concerned a stock has lost 1/2 of its value YTD might value the stock lower.

We'll see on 5/1

Goodwill impairment is unrelated to stock price.... ACCT 101

Yikes, so ITS was Q4, Lexmark will be Q2. Q1 will be all pain, no gain.

Just to clarify for the accounting-curious: ITsavvy’s $286M in goodwill was already booked in Q4 2024.

What’s coming in Q2 is the painful realization that none of it was worth it.

"Sleight of accounting hands will add goodwill with itSavvy and Lexmark acquisitions. "

True. Good point. So like ~$550MM (400-ITS, 150-lexmark).

But Lexmark should (I think) hit in Q2, along with all that debt, so -150mm, just the 400mm for Savvy. It could still be $1-$2 loss per share, on top of whatever actual losses there are. The impairment is still bigger than any accounting shenanigans they might pull.

The loss is so staggering over 90 days, there is no good way to paper over it, but they will try!

Sleight of accounting hands will add goodwill with itSavvy and Lexmark acquisitions.

Now you know why they waited an extra week to report.......

There will be some sort of impairment on this call. No way they can pretend a 43% market cap loss in 90 days (and more after) is not an emergency.

Yes, I am, but my math is wrong. More like 800 MM. 1 BN would be year to date, and 800 mil would be the percentage drop for 12/31 to 3/31.

The impairment is calculated/checked quarterly. If it dropped 10%-20% they could let it slide, but it dropped 43% in that 90 days and is lower now. They don't want to do it, I think they have to. CFO and CPAs sign off on this, so they have a legal duty to adhere to the rules. If 800MM div/ 125m shares = $6.40/share. Even half of that is still pretty rough.

The math is all different now b/c the shares dropped so quickly. The real dollar losses will be small, a couple of pennies per share, but if they have to address goodwill on this report it will be bananas. The Cap is 500mm, the Goodwill is ~4X at 1.9BN, and the cap is half what it was 90 days earlier. It's not good.

Are you suggest the chance of them reporting a 1B goodwill impairment again? Keep in mind they did that in Q3 last year.

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Goodwill Writedown of ~$1 BN?

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