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Technology Stocks : Simulation Sciences (SMCI)
SMCI 51.96+3.2%Oct 31 9:30 AM EST
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To: kvogel who wrote (135)2/16/1998 7:42:00 PM
From: spiny norman  Read Replies (1) of 183
 
kvogel et al, re book value,

the proper current amount of shares is actually closer to 13.8 million. I'm using the 11.3 from the previous 10Q plus the size of the offering (2.5 mm) sold by the company. The 12.8 figure on the P&L section of the quarterly report is the weighted average of shares outstanding during the quarter. Since the secondary offering was midway during the quarter, the 12.8 figure does not fully reflect the shares sold in the secondary offering.

Also, although I am long, buying after the correction, am I the only one who is concerned about the different revenue recognition that is mentioned in the SEC reports?

SMCI clearly states that quarters prior to '96 are not comparable since their new contract terms have been changed, i.e. specify a higher percentage of licensing fees that are recognized immediately. Thus their new policy is now "front loading" recognized revenues more than in the past. I think that this is why the "unbilled Accts Receivable" line on the balance sheet has ballooned. Apparently the customers still pay the same, but the income is recognized sooner.

I think this would have the effect of giving a slight (5-15%??) boost to apparent growth rates for several years, as the relatively front loaded terms replace older contracts. The flip side is that the quarterly revenues & profits are now more volatile, as we have already seen.

Any comments?

regards,

spiny

PS - this is one of the most informative and civil threads I track.
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