To ALL !!! : Look closer , Yes closer, Not here, below:
Look at the balance sheet of the company, now look at current liabilities, what do you guys see under deferred revenues?
As at 31.12.96 : 5.6M
As at 30.9.97 : 32M (i.e. a 550% increase, close to total Q3 revenues)
They already earned enough revenues for the 4Q to equal the 3rd!
Working for a big six firm I can tell you that this kind of window dressing is done by thousands of quoted companies for showing sequential growth when they know next quater could show weakness. They just have to book these revenues as deferred income in the BS and make these numbers go thru P&L next Q and that's it.
These numbers are already receivables so they will more than probably easily beat this Q record revenues. Remember these figures date back to Sep 30, that's 3 months before Dec 31! Three months to make this Q the best in the company's history. For sure it'll be easy beginning with what they've got.
So don't worry too much about next Q revenues...better worry for 4Q profits.
Indeed, I did not tackle this issue : 4th Q earnings per share.
I assume they should be at least equivalent but would bet the ranch they'd be slightly better. Royalties are not yet factored in the deferred revenues entry and indeed, that is where the money is made.
Still, 1stQ 98 should be low, as it is seasonally bad.
My conclusion :
Wall Street remains a bad analyst, they look at what they want to see and forget the rest, the stock should creep up in the weeks ahead or it will not again before next summer.
Good investing.
Jerome |
