Like every aspect of a business, the value of the brand and reputation is tracked as an asset, and is called “goodwill” in company reports. For every quarterly report Stratasys has released after the acquisition of MakerBot, a goodwill impairment charge – a markdown on the value of the MakerBot brand – has been recorded. Including the 2015 yearly report, Stratasys has taken a total goodwill impairment charge of nearly one Billion dollars for MakerBot. Keep in mind Stratasys acquired MakerBot for $403 Million in stock. Stratasys has written off nearly double the value it paid through the failures of the MakerBot brand.
How exactly does "goodwill impairment" work? A billion dollar tax writeoff?! This sounds like some kind of scam.
Goodwill is the value of intangible assets -- name recognition, customer relations, intellectual property, etc.
Impairment is a reduction in that stated asset due to overpayment, negative publicity harming relations, etc.
So by impairing the total paid, they are essentially saying what they paid for was worthless, and by impairing more than it is worth is saying it damaged their brand significantly in addition to being worthless.
It sounds like a difficult argument to make. Impairment on the total cost, maybe since the closing up the devices has made it last instead of first on most people's 3D-printers-to-get list. More than what they paid for it does seem like a scam -- I wonder if they have already justified it successfully? Does anyone know?
EDIT: I see skybrian's reply. Good catch. So the goodwill had increased in value temporarily and then decreased to essentially zero. Is that all of the goodwill of the whole stratasys company? Are they now saying "we have no IP/brand recognition/etc"? If so, that still sounds almost as sketchy for tax accounting as saying the MakerBot acquisition significantly damaged their own brand.
How exactly does "goodwill impairment" work? A billion dollar tax writeoff?! This sounds like some kind of scam.