Allen, thanks for your reply. A few questions/comments below:
- on pre-paids vs. downstream royalties, your point about customers allocating pre-paids to their development budget as a way of lowering effective mfg. cost is a good point. As to whether royalties will increase as a percent of sales over time, it would seem that now that WIND reports the royalty figure, we can track that, and time will tell.
- on the point of how WIND handles pre-paids, I'd assume there is no reason they couldn't declare the pre-paid royalties upon receipt (there is no obligation to deliver anything further, except the right to mfg. 'n' units, right?). Does the pro-rating simply smooth out the revenue curve?
I did an analysis of WIND in a post about March or April of 1999, in which I imputed the royalties at about 28% for WIND at the time.
If you can find the meesage# for that post, I'd like to read it. If you have the time to update the analysis, given WRS's current business, even better.
The reason royalties currently run at 22% (not 20%) of total sales [...]
At the current level of discussion, I don't think it is worth worrying over 2%. Back to the question of accounting for pre-paids: If the pre-paids are not immediately shown as revenue, when received, then where do the pre-paids show up? As some sort of 'intangible' on the balance sheet? |
