SI winning Phophet post from MSTR board
Doesn't this concern anyone?On Oct. 4, MSTR announces a huge deal with NCR. NCR agrees to buy $27.5m of MSTR software. In return, MSTR agrees to buy $11m of NCR software (data warehouse) and its Teracube business for $15m. The latter purchase of Teracube will be with stock.
So, what happened here? MSTR gave NCR $11m in cash, $15m of a very expensive stock, and a floppy disk. NCR then returned the $11m, paid $17.5m for the stock, and gave MSTR two floppy disks. But MSTR gets to recognize $27.7m in revenues. More amazingly, MSTR recognized 17m of these revs in the September quarter, even though we didn't hear about this agreement until Oct. 4! Without that $17m, revenues
would have been only $37m, down $8m from the June Q!!
to be continued.........
Message #394 from Turs at Jan 30, 2000 2:04 PM
What about this?
Flash foward to January 6:
MSTR signs an agreement with two-bit player Exchange Applications. EXAP agrees to buy $65m in software from MSTR for a combination of cash and stock. $30m of that amount will be paid immediately: $10m of it in cash and $20m of it in stock. In return, MSTR says it will purchase some of EXAP's software.
This allows EXAP to recognize over $4m in additional revenues in the December quarter. Meanwhile, MSTR will recognize $10m of the $30m in December. But this agreement wasn't even announced until January 6th! Without that revenue, EXAP would have reported less than $10m for the December quarter, down 20% from the September quarter figure of $11.2m.
Meanwhile, MSTR reports revenues in December of $69m. However, $20m of that comes from the rest of the NCR deal and the first installment of the EXAP deal. Without those wo HUGE, LAST MINUTE agreements, MSTR would have reported only $49m in license revs, essentially flat with the June quarter ($45m). There is stock being paid by buyers for software MSTR is recognizing as revenues. HUGE, HUGE deals that supposedly close in time for revenues to be recognized in the prior month aren't being announced for days! The first is with a company so big that the deal is a rounding error. The second is with a company that needs the revenue even worse than MSTR. Given the tiny marginal costs of pumping out another copy of the software, the biggest expense involved in padding the revenue line is the elebratory dinner between the dealmakers after they concoct this arrangement. I have NEVER seen this kind of blatant deal making in a software company before. I welcome any reasonable explanation of what is going on here. Because to me, it looks like a house of cards and come Spring, we're
gonna open up the windows and watch the breeze blow it down.
Turs
MSTR was $330 in the Spring before the collapse. Now around $20. The lesson of trading revenue is the best I have seen.
Jack |
