The big news story of the day was Hewlett-Packard (NYSE: HPQ) reporting that it had to write down a majority of intangible assets resulting from the purchase of Autonomy, a software provider.
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This means that marketing is no longer viewed as merely a tool for building market share or short-term revenues, but is instead considered a strategic investment in building critical intangible assets, such as customer relationship and brand equity, which produce important long-term profits.
Whereas tangible assets like plant and equipment drove a company's value during much of the past century, intangible assets such as brands, patents and trademarks are what create value today.
It's yielding 4.8% and has a fortresslike tangible equity ratio (capital minus intangible assets) of 13.9%.
These reconciliations adjust the related GAAP financial measures to exclude stock-based compensation, amortization of acquisition-related intangible assets, other acquisition-related costs, a contribution expense, a legal settlement charge, and the associated tax impact of these items, where applicable.
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He points to the Private Employment Partners Program, a small group of investors set up to provide loan guarantees to growth companies rich in intangible assets.
It plans to book part of the cost of the Visto settlement, which gives RIM a lifetime license to some Visto patents and legal possession of others, as an acquisition of intangible assets.
He quotes bankers who say that such a guarantee might encourage more banks to lend to growth companies based on the value of their intangible assets, because the guarantee would remove much of the risk for banks.
The contribution that four important intangible assets--reputation, innovation, management and human capital--make to a company's market value is deemed to be its corporate brand value.
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