From reading Kitty's post, the implication is that Siebel keeps reserves (deferred revenue, bad debt, etc.) that may not be managed exclusively by "rational" estimation techniques, but also by determining how much revenue or earnings they need to show. If you need more earnings, estimate expense reserves on the low side (but still within legitimate levels). If you need more revenue, be more aggressive in your recognition policies. If you are well above expected revenues, salt away a little for a rainy day by being very conservative and including more sales in deferred revenue.
That would not be unusual behavior by any means, but it has nothing to do with managing your earnings growth, and everything to do with window dressing. It's not illegal, immoral, etc. but it does take management time away from actually running a business. If the results were material, the outside auditors would eventually make them stop fiddling with the numbers, but these games can affect the top-line growth as well, so you shouldn't discount Kitty's comment.
FWIW, the growth pattern looks good to me too. It's just that, being an accountant myself, I know the games that can be played with the numbers, how little difference it actually makes, and how much time management wastes trying to make analysts happy. |
