Ibexx, thanks for the link. The MSFT 'deferred revenues' concept has always seemed legit to me. If I fork out $250 for Office '97, MSFT doesn't take all $250 into revenues right away cuz I'll be calling service and support, they'll be fixing bugs and issuing 'free' upgrade patches, so in essence they haven't earned all $250 in the year of, or at the moment of, sale. There is some undefined cost going forward, so they take the revenue in ratably over, in this case, a five year period which they estimate is the product's life cycle. Meanwhile they expense all costs each year regardless, so what you wind up with is a super conservative look at earnings which analysts and investors love for obvious reasons. That this accounting treatment also provides a nice cushion for the future is a quite obvious result rather than an attempt to manipulate earnings. I can't have anything but respect for that.
If there is an analogy here to the Q and the change in recognition of royalty and licensing payments (and there probably is), I don't quite see it explicitly but your post has me headed in the right direction. Thank you.
DaveMG, jlf, dougjn, Ramsey, Maurice, Jeff--all you guys--very thoughtful discussion of the Q and their manufacturing problems, earnings report issues, future prospects, analysts' reactions and perceptions, the whole can of corn. Scared the hell out of me: think I counted 30 straight "on-topic" posts before the string was thoughtfully broken by Diana :)
Not knowing which end of a screw driver is operable, I am perhaps more inclined to be lenient with the Mighty Q and their problems pushing out hundreds of thousands of these phones per month than I should be. Doug makes a great point about HP and becoming a customer for life based on their rock solid reliability. Count me in the club. My HP12c died last week, and it was like losing a family member. Thing only lasted about 12 years of pretty intensive use and the only thing I want to buy is another HP product; don't even care to look elsewhere.
My hunch is the Q will be forgiven a few stumbles, but not many. Not by customers and not by analysts. Chaz is an NT shareholder, and I almost became one in part because of an NT phone I own which is hands down the highest quality handset I've ever used: nothing even comes close. LU, TLAB, HP, and NT should be the Q's quality models. I feel certain that they will get there and agree with Chaz that the 3rd Qtr is still a little iffy, but the 4th and beyond we should be off to the races.
It's tough watching this guy grow up, but they're doing pretty well with just an incredible amount on their plate. Look who's jumping on board: the Hewlett Packard announcement of their WCDMA gizmoes, LSI Logic with their CDMA chipset--just in the past week. Big names, right names.
Globalstar launches tomorrow (hey Maurice, how did it go?) and the Q's presence in the satellite telephony business will become known to lots more folks. No way to build something this big w/o a few skinned knees, management continues to tell the truth, and nobody's got a spread spectrum alternative that's even remotely viable. Down 2, up 3--it's all noise. Thanks again for your great discussion. Mike Doyle |
