The Hulu IPO and intangibles

Over at Smarter Companies, Mary Adams makes an incredibly important point about the upcoming Hulu IPO:

The internet television video company Hulu is reportedly considering an IPO. But, reports the NY Times, the company "evidently makes little in profit."
I am not privy to their numbers but I can tell you from experience that their income statement is probably full of "expenses" that are actually investments in their intangible productive capacity (also called intangible capital). These include investments in some investments in processes, training, networks, and other forms of organizational knowledge.

As she points out, treating these investments as expenses lowers the company's profitability and distorts the analysis of its financial situation:

I worry about this a lot. Not just because it hurts IPO chances of companies like Hulu (funds get allocated instead to companies that fit the model better). But because our understanding of corporate productive capacity is being distorted by industrial-era accounting. The only way to get our economy back on track is to improve our collective use of knowledge. And we cannot even see it.

Amen to that!