Let me clarify, as best I can, what IR told me re backend loading in this quarter. The previous posts of 6/13/98 have both paraphrased me and attempted to extrapolate from my statements.
What IR told me was that this quarter does have some backend loading in the numbers, but nowhere near the extent of last quarter. This would also be true historically. She also told me that Bay believes it is on track for the stated revenue target of about +10% sequential growth. That is also about the official consensus of the analysts at about $596MM.
Now, a company will almost always tell you that their revenues will have somewhat of a skew to the backend of a quarter, if they are a publically-traded company. The reason is a product of both human nature and the reality of sales philosophy. That is, sales targets are set, but most salespeople are not running ahead of quota early in a quarter(analogy: hey, I got alot of time to study; finals aren't until next week!). As they close on the quarter, they are under alot of pressure from their sales managers to deliver on what they committed to in their quota. Many times their bonus is based on this quarterly target, and even their overall job performance rating. So they will make up shortfalls from early in the quarter in the last few weeks of the quarter. This may involve moving business that would normally fall into the following quarter into the end of the current quarter, but if this occurs on a neverending basis, no real harm is done. The danger is in loading the channel to make a short term number. That is why VAR channel inventory levels are such a critical factor to look at when evaluating the raw revenue number.
The key point that IR was stressing to me was that the guidance to the analysts and the public has NOT changed since last quarter's C.C. So semantics aside, Bay believes that they are on track to deliver between $590-$600MM in sales this quarter. They did say, as a hedge, that this is naturally predicated on June finishing as planned. No one will know this until June is over.
The more philisophical discussion should center around what do you all think will be the Street's reaction if Bay does not merge this summer(or at least before the Qtr numbers are released in mid-July), but it does hit the forecasted rev and profit numbers on the head? Will Bay be viewed as being back on track, with renewed Mgmt credibility, or are the whisper numbers/expectations considerably higher(in which case we get pummeled in late July)? As an investor in the company, I am of course interested in how the company performs on the fundamentals. As an investor in a stock, however, I am even more interested in the prediction of the Street's reaction to a given set of parameters. As we all know, everything is relative. Sometimes bad news is good, and sometimes good news is bad.
What is this thread's take on this point?
Paul |
