Global Crossing - GX (formerly GBLX) Message Board

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Technology Stocks : Global Crossing - GX (formerly GBLX)

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To: cfoe who wrote (11247)	5/16/2001 2:07:20 PM
From: cfoe	Read Replies (1) of 15615

Financial/Accounting question for the thread. I was catching up on my On24 clips and heard GX's CFO being interviewed last week. One thing he said I am curious about. He said that accounting rules require them to amortize over 25 years the recognition of income from the sale of fiber capacity. He used the example that if they sell the fiber for $25MM, while they get all the cash up front, they can only recognize as revenue $1MM per year. I am trained as an accountant, so I understand the reasoning behind this. However, here is are my questions: Is this the only revenue that GX can recognize on that stretch of fiber for the next 25 years? I would expect the answer to be no, they are selling not actual fiber but the rights to that much capacity for a period of time. Is this correct? If so, why is the customer paying all the cash up front? Is it to get a better price? Also, is the period of time 25 years and that is why the recognition period is 25 years? TIA. cfoe@anincreasinglyhappyholderofGXjusttryingtogetclear

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