MSFT and deferred revenue: I have to mostly agree with you
here, Reg; it seems that in the corporate world everyone plays
the game of managing street expectations and shifting revenue
and expenses around to make the current quarter look good. It's not fair to criticize microsoft for being better at it than most. And I'm
sure no one thinks they are pumping up the stock in preparation for Bill Gates dumping a big chunk. I can even see it being to everyone's benefit to smooth revenue and make the stock less volatile, in that it encourages long term holding vs. speculative trading and provide better liquidity for shareholders.
But we all want to be well informed investors. I think it's fair for Gerald to ask what, precisely, is going on with deferred revenues. If it is a well defined and consistent system, that's good. If there is some delayed day of reckoning that the deferred stream is covering up, that's not so good, from the investor's standpoint.
A more general question, though: where, exactly, do Microsoft's earnings go? (besides into cash on hand, of course).
I can accept low profits for netscape, on the theory that at this
stage they should be pumping all their money into development.
In more conventional industries, my understanding is that earnings
can be distributed as dividends or stock buybacks, be retained as cash & equivalents, or be used for capital investment to grow the company. But in software, there's not much in the way of capital investment, at least in the industrial production capacity sense. The primary investment is salaries for developers, right? But salaries would normally be a direct expense, not? I'm way out of my depth here.
Cheers, Dan. |
