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This is a pretty standard new CEO move. Big impairment, net income goes way down, next few years look a lot better. Meanwhile cash flow doesn’t change.
by formercoder 7y ago
This is a pretty standard new CEO move. Big impairment, net income goes way down, next few years look a lot better. Meanwhile cash flow doesn’t change.
- hn_throwaway_99 7y agoBut the cash flow will definitely change. They are selling fewer planes in the near term.
- ogre_codes 7y agoThat's exactly why the new CEO will push for a big impairment immediately. That way the very-terrible-bad results are attributed to the former execs. The new CEO is essentially resetting the baseline and can post growth from there. If the 787 recovers eventually, it's a windfall and the new CEO looks like a hero for implementing revolutionary change.
- jimclegg 7y agoHow does cash flow not change when you have to scrap the whole lot of 737Max orders?
- formercoder 7y agoI meant the impairment itself does not impact cash flow (setting aside taxes, can’t comment there). See Verizon Oath write down. Of course this can happen to already distressed firms who are experiencing cash flow issues. It’s just a way of making things appear “even worse” in your books without materially impacting your day to day business.