Tuesday, February 17, 2009

Transocean Needs to Re-visit Intangibles

Transocean (RIG) Q4 and year end results. They spent a lot of time explaining adverse impactors of the after tax variety. This was to be expected after they had re-domesticated themselves from Cayman Islands to Switzerland as well as completed a merger/acquisition.(Global SantaFe)

Where they seem to have missed the boat is on the write down of intangible values. They did take a hit totally almost $385 million for various impairment charges. But the balance sheet still contains approximately $8.1 billion of intangible values. This is approximately 50% of the equity book values and approximately 44% of its market cap.

Oil prices are down, economies are struggling, petroleum demand is off why not cleanse the balance sheet now and set yourself up for future growth. Now they will die the death of a thousand cuts as individual intangible asset valuations suddenly go through impairment tests. The stock is near the 52 week low this was the time to wash out the sludge. Board of Directors lacks foresight and fortitude.