When you apply a business with a domain that matches inch perfect what the business does, you more or less have the latitude to stick any valuation on its component parts. This is precisely what Citrix has done in valuing the domain, Cloud.com.
The company acquired Cloud.com—the business—for a whopping $200 million dollars a while back and was recently presenting its sets of accounts as part of their reporting obligations. Everything else was pretty standard until someone noticed that the domain itself, Cloud.com has been valued at a staggering $18,000. The valuation raised eyebrows because although the ‘Cloud’ computing industry is a growing one, the price tag of $18 million seems completely arbitrary.
Of course, Citrix’s internal measures for determining value are theirs, and they certainly will have to conform to general accounting principles. The amortization of the domain obviously has some grounding in financial propriety—even if a few commentators on the matter feel Citrix is inflating value for tax purposes. Only the tax authorities can determine if the valuation is sound, so in many respects Citrix and its team of accountants are free to pretty much what they want until the assessment is made.
Is Citrix overvaluing Cloud.com? Share your views below.
Source: http://www.sitetrail.com/2011/11/18/cloud.com-is-worth-18-million-according-to-citrix/
The company acquired Cloud.com—the business—for a whopping $200 million dollars a while back and was recently presenting its sets of accounts as part of their reporting obligations. Everything else was pretty standard until someone noticed that the domain itself, Cloud.com has been valued at a staggering $18,000. The valuation raised eyebrows because although the ‘Cloud’ computing industry is a growing one, the price tag of $18 million seems completely arbitrary.
Of course, Citrix’s internal measures for determining value are theirs, and they certainly will have to conform to general accounting principles. The amortization of the domain obviously has some grounding in financial propriety—even if a few commentators on the matter feel Citrix is inflating value for tax purposes. Only the tax authorities can determine if the valuation is sound, so in many respects Citrix and its team of accountants are free to pretty much what they want until the assessment is made.
Is Citrix overvaluing Cloud.com? Share your views below.
Source: http://www.sitetrail.com/2011/11/18/cloud.com-is-worth-18-million-according-to-citrix/