Deferred revenue:
Here is Fool's analysis. This information is from the year 2000. The numbers are irrelevant, but it explains what you asked:
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Cisco is also recording deferred revenues on its balance sheet. This number, which Cisco used to report annually, was reported separately this quarter. Cisco includes the amounts owed under its leasing agreements in its deferred revenue balance.
As a general rule, deferred revenue is a good liability because it represents cash the company has collected in advance of satisfying all the obligations (normally in the form of warranties, services, etc.) related to those revenues. As those obligations are met, the deferred revenue becomes actual revenue in the income statement. However, in this case Cisco has provided products to customers for which it has not yet been paid in full. It then recognizes revenue from its riskiest leases as the cash is received. It will be important to keep an eye on Cisco's deferred revenue account by reviewing the financial statement footnotes, the balance sheet, and the cash flow statement. If Cisco does not ultimately collect these revenues, its financial performance will suffer as a result.
Has this affected Cisco so far? Yes. The company could be out as much as $180 million in loans due to ICG's bankruptcy. In addition, Pacific Gateway Exchange defaulted on $2.7 million in loans earlier this year. The amount of the loan default is not the only cost to Cisco. It likely also invested operating capital or hours of technical support into these companies. Cisco might get some money back through the bankruptcy proceedings.
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Cisco's SL commitments are established over a two- to three-year period, and require that the customer achieve specific business milestones and/or financial covenants. Since the inception of this program, SL commitments total approximately $2.4 billion. Cisco has funded $600 million to date. Provided that the borrowers meet Cisco's requirements, it is anticipated that the remaining $1.8 billion will be funded over the next two to three years. Approximately 65% of the $600 million has been either classified as deferred revenue or reserved on Cisco's balance sheet. Cisco maintains that it is paid a market rate of return on this financing.
fool.com
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Fast forward to now.
Conclusions:
1) With 0% equipment financing in vogue, deferred revenues are bound to be huge.
2) How many Service Provider customers are going under? Hardly any.
3) Methinks this is extremely conservative accounting.
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