WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 153.96

+0.7%

3:59 PM EST

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To: orkrious who wrote (16200)	10/28/2000 4:06:27 PM
From: Zeev Hed	Read Replies (1) of 60323

Jay, I do not think that Royalties are part of AR, it would be very unusual accounting. Royalties are recognized as revenues when paid. SNDK has a very big "defferred revenues" item (some $40 MM if memory serves), if it has any similarity to RMBS this item is mostly licensing fees paid , but that cannot yet be recognized as revenues, since the license extends over a number of years. The special treatment of royalties and licensing revenues is why I took only "product revenues" to calculate DSO. I checked again the March 10Q, and indeed SNDK does not recognize as revenues product sold to the retail channel until it sold to the end user. This accounts for about 25% of sales and actually should have a beneficial impact on DSO, since these shipments are not sales, and once sold to end user, the terms are probably 30 days or less (like all "consignment" type sales) The delays in payments must be from the 75% of product sold to between 10 to 20 large customers (in the March quarter, 61% of revenues were to their 10 largest customers). Zeev irrevolute.iuma.com

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