Medient Studios, Inc. (MDNT)
On July 31, the U.S. Bureau of Economic Analysis (“BEA”) will rewrite history on a grand scale by restating the size and composition of the gross domestic product, all the way back to the first year it was recorded, 1929.
The biggest change will be the reclassification of R&D investment: NO longer will it wrongly be treated as a mere expense, like the electricity bill or food for the company cafeteria.
It will be categorized on the government’s books as an investment like the investment made to build a factory or dig a mine. In another victory for intellectual property, original works of art such as films, music, and books will be treated for the first time as long-lived assets.
Net result? The BEA has UNDERSTATED GDP in the United States since…1929. We get @3% boost to GPD since 1929….but more important we finally recognize that most of the capital stock in the 21st century comes from IP not “real assets”.
IP and R&D ARE the main ingredients of The Transformation Economy (TTE). The U.S. generates a disproportionate share of its wealth from the likes of patents, copyrights, trademarks, designs, cultural creations and business processes. To see the intangible economy in numbers, look at Apple Inc. (AAPL)’s balance sheet: Property, plant and equipment, those traditional forms of wealth from the industrial and preindustrial eras, account for $15 billion of its $400 billion market value --- just 4 percent of the total. They’re only 7 percent of market value at moviemaker Time Warner Inc. (TWX) and drug maker Pfizer Inc. (PFE).
It’s about time!
Source: Business Week
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Founder and Editor-in-Chief for NBTEquitiesResearch.com. Contributor and Anchor for the Fox News Channel and Fox Business Network 2000-2013. Chairman & CEO of NBT Group, Inc., a boutique private capital investment bank and investor relations organization.
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