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Why This Columnist Is in Favor of In-Process R&D Charges

Also, an update on unlisted stocks.

Wimp-out Wednesday:

Please don't ban in-process R&D charges:

Bummed would be an understatement to explain how I felt when I read that story in yesterday's


about how the

Financial Accounting Standards Board

may do away with writeoffs for in-process R&D, which covers technology that is in the process of being developed. Takeover writeoffs, especially in-process R&D, have helped make this column possible. (Ever hear of full employment for columnists?!) They have led to some of the wildest allegations of abuses of


accounting -- the kind of abuses on which this column thrives.

If there were no in-process R&D writeoffs, for example, this column would never have been able to

compare the "honey pot" accounting of

Network Associates


with the "cookie jar" accounting that the SEC has targeted. If there were no in-process R&D charges, this column wouldn't have been able to raise questions about

Lernout & Hauspie


. (Okay, this column never got into


issue about Lernout, but it shoulda. Darn

Kevin Petrie

, the buzzard,

beat me to it!)

And if there had been no in-process R&D, this column would not have been able to wonder what would happen if the SEC didn't like what it saw when it reviewed the charges at merger-happy

Engineering Animation


. The company recently told me that the charges it took were appropriate. But that didn't stop it from last week reversing more than 70% of the charges associated with two of those mergers.

And, finally, if there had been no in-process R&D charges, this column would never have been able to

question what would happen if the SEC second-guessed the charges taken by



when it acquired

Digital Equipment

. (Nothing happened (yet), but it's a compelling issue, no?)

That's why this column will heartily endorse Silicon Valley's efforts to block the abolition of in-process R&D writeoffs. Without them, this column stands to lose some of my best material.

Not for day traders:

When all else fails -- as it did late yesterday, when the item I intended to write fell apart -- I like to check in with

Harry Eisenberg, who publishes the Lafayette, Calif.-based

Walker's Manuals

, including

Walker's Manual of Community Bank Stocks


Walker's Manual of Unlisted Stocks

. These are stocks you can't easily buy (or sell) and, although they're perfectly healthy, trade on the Bulletin Board. Remember, not every stock on the Bulletin Board is a scam. Some, especially the banks, are happy to at least be there, and others, especially the big companies, would prefer to trade nowhere.

While it's been many months since I last talked to Eisenberg, he continues to be a fan of the banks. He says they're doing exceedingly well. Megamergers involving such banks as


(BAC) - Get Free Report


Wells Fargo

(WFC) - Get Free Report

have left enough small customers disenfranchised "that they're providing a steady flow of business to small banks," he says. That's especially true in states like California, where the economy is thriving and the market shares of many banks are growing.

On the nonbank side, a sampling of companies that can be found on the Bulletin Board include:

Benjamin Moore

, the paint company. It has 1,700 shareholders and is required to file its financials with the SEC. But if you call the company and ask for shareholder info, Eisenberg says it will tell you it has nothing to send. He says Benjamin Moore has been reacquiring large blocks of stock since he began tracking it in 1992.

Crowley Maritime

, a big San Francisco tugboat operator. It always traded at $900 per share, until a year or so ago when a sister of the founder died, putting $10 million worth of stock on the market. The stock now trades at around $1,200. "To sell at a 30% premium to what it was trading is almost unheard of among unlisteds," Eisenberg says.

Adrian Steel

, which makes and installs storage compartments for customized service vehicles. Sure, there's that $200 spread between the bid and the ask, but such is life among the unlisteds.

And finally, the ultimate conference call b.s.:

"Congratulations, guys, great quarter." (Thanks to my colleague

Justin Lahart

for the inspiration.)

Herb Greenberg writes daily for In keeping with the editorial policy of TSC, he does not own or short individual stocks. He also does not invest in hedge funds or any other private investment partnerships. He welcomes your feedback at Greenberg writes a monthly column for Fortune and provides daily commentary for CNBC.