"The CFO Maffei clearly said in the conf call that it's mumbo jumbo to add back the defered revenues. They are defered for a good reason."
Uh huh.
Have it your way, but if a company you were looking at buying is not booking revenues that come in, but depositing the money in the bank, how would you determine what the acual e or profits were?
Let's imagine that a company you own outright had revenues of 1.0 million through 11 months, and then had 100,000 more in december. Because you hit your revenue goals for the year, you decide to carry this amount over into the next year. You deposit the money, but carry over the revenue into the next year on your ledger. Did you have only 1,000,000 in revenue or did you have 1.1 million?
mind you, you showed all the expenses for the year, so the additional revenue is all profit.
You don't have to believe or agree, but you may want to think about this. By the way, what is the good reason you are referring to? Do you know any other companies that are doing this? Is this a common accounting approach? Would aol do this? Maybe cendant would. How about Sunw? Well, maybe GE? How would a smaller business handle the same issues? |
