SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : America On-Line: will it survive ...?
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Ken Merwin who wrote (4557)8/21/1997 12:02:00 PM
From: Todd Daniels   of 13594
 
CSRV shows receivables on its balance sheet. AOL never has, despite having identical types of revenue streams. Handling of allowances for doubtful accounts can impact earnings. e.g. in FY96, CSRV overestimated to the tune of $0.016/shr, which presumably is reflected in Q1 97's income. (Surplus/deficit from reserves is carried from the balance sheet to the subsequent period's income statement).

CSRV's receiveables are shown at 46% of total revenue - very large.
In fact 35% larger than the total of Network Services and Other Revenue; which are where most receivables would be expected. I
presume CSRV is including Interactive Services revenue earned but either not yet submitted to credit card charge or fully cleared and to allow for disputed charges.

CSRV's bad debt reserve has run around 4% of revenue. Suppose AOL's internal books have 4% as bad debt reserve. Now suppose it had over-estimated 10% in Q2 and Q3.
Q4 Q3 Q2
(mil)
TOTAL REV $475.7 $456.2 $409.4
4% $19 $18 $ 16
Surplus vs
Prior period $ 1.8 $ 1.6
EPS SHARES 116.4 113.8
Surplus/shr $0.015 $0.014

The point is: Reserves are wellspring of earnings management. AOL makes no disclosure of them and their handling apart from those established for special charges.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News