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August 24, 2007
Determining value of an intangible
Do intangibles have value? Of course they do. What a silly question, you might ask. But let me give you an example of how not so silly it is. Earlier this year, the VoIP company SunRocket closed down and began the legal process of liquidation (under the control of SunRocket LLC). Yesterday, SunRocket LLC sued another VoIP company, Vonage, for illegal use of its customer lists. (Vonage has its own problems with intangibles - specifically patents - but that is another story). According to today's Washington Post story :
SunRocket said that its customer list is "one of its single most valuable remaining assets," and that Vonage's use of the list has caused "immediate and irreparable harm and injury" to the company.
Here is the irony and the difficulty. While SunRocket was a going concern, the value of its customer list was official zero. That is right - worth nothing according to accounting rules. Only intangible assets acquired from outside the company can be put on the accounting books. But now, in liquidation proceedings a court will decide how much that asset is worth. In this case, we have to rely on the damages remedy under contract law to determine value. (Technically, that appears to be what SunRocket is doing - suing not for taken the assets but breaking a confidentiality agreement). The International Accounting Standards Board and the US Financial Accounting Standards Board are talking about a joint research project to extend accounting rules to internally generated intangible assets. A decision on the project timing and scope is due by the end of the year.
The sooner, the better.
Posted by Ken Jarboe at August 24, 2007 9:21 AM
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Comments
I was a Vonage customer in 2005-2006. My bill was around $30 a month with all the extra charges. My fax won't work unless I paid them extra $10 a month. So at the end of my 1 year contract with Vonage I called them and asked for a better price. They declined and suggested I go to some other provider. So I went to SunRocket. Vonage has been sending me postcards ever since, asking me to return to them and calling me a "Vonage alumni" :) Thanks, but NO Thanks! Even when SunRocket died on me, Vonage was never an option for me. So after shopping around between VOIP.com, Lingo , JoiPhone , ViaTalk and Packet8, I went with Packet8. It took them only 3 days to port my number that I had for several years and phone service works just fine.
Posted by: cjackson ![[TypeKey Profile Page]](http://www.athenaalliance.org/weblog/nav-commenters.gif)
at August 24, 2007 3:11 PM