Goodwill Hunting: Will Facebook Write Down Its $1 Billion For Instagram?
The Wall Street Journal looked into goodwill levels and found something interesting: companies whose goodwill exceed their market caps.
These companies seem like good candidates for write-downs, as they’re carrying around goodwill that doesn’t appear to be worth anything. So, who are they?
Nasdaq (NDAQ) is one, with $5.1 billion in goodwill.
Frontier Communications (FTR) has $6.3 billion in goodwill.
And Republic Services (RSG) has $10.7 billion in goodwill.
Indeed Hewlett-Packard (HPQ), Microsoft (MSFT) and Boston Scientific (BSX) were also on this list, but in August HP announced an $8 billion write-down on its acquisition of EDS. In July Microsoft wrote off $6.2 billion of its aQuantive acquisition. And Boston Scientific has written off $9 billion in goodwill since 2007, according to the Journal.
The best comment left by a reader on the Journal’s story says: “Imagine the FB write down in Instagram,” which Zuckerberg and crew bought earlier this year for $1 billion. In fact, in a rare bright spot if you can call it that, Facebook (FB) seems to have goodwill under control. It has $809 million of goodwill and intangible assets on the balance sheet.
And if you’re curious about Groupon’s (GRPN) situation, it has $167 million of goodwill on the balance sheet.
Both of those companies, of course, have other problems -– like their business models.