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Hi Matthew,


So the value has been eroding overtime. Obviously the acquisition story likely plays into that(and likely why not stripping out goodwill from analysis is sometimes warranted).

Rough Cut ROIC average is 19%. So the ROIC-WACC spread has to be 5%+. Based on that the value should be 1X IC.


It would seem that value has been destroyed in large chunks with each new acquisition HPQ has made.

Granted there was likely fraud involved but the result on the value of the stock remains the same. They spent $10B on something that was worth considerably less and likely zero. With investment returns like that, ROIC is a very large negative number and certainly not +19%.

Stripping out goodwill in this case is most definitely warranted.

Rich
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