Microsoft unearned revenue drop affects fund managers
By Bloomberg News
Special to CNET News.com
October 28, 1999, 5:00 a.m. PT
news.cnet.com
REDMOND, Washington--The first quarter-to-quarter drop in the balance of Microsoft's "unearned revenue" account is causing some investment managers to change their position on the world's highest valued company, according to reports citing several managers.
Unearned revenue reflects sales from previous quarters that haven't yet been recorded in the company's income statement.
Microsoft's unearned revenue account declined to $4.13 billion on September 30 from $4.24 billion in June, as copies of Office 2000 were shipped, depleting the account.
Stephen Dalton, senior vice president of First Capital Group, the institutional investing unit of First Union, said he pared his Microsoft position in the past month partly because the premium stock price assumes predictable future revenue, and an expanding unearned revenue account is the most predictable way to show revenue already in hand, the Wall Street Journal reported.
Microsoft said its profit from operations climbed 37 percent to $2.09 billion, or 38 cents a share, for the quarter ended September 30 from $1.52 billion, or 28 cents, a year earlier on higher PC shipments for homes and businesses.
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