PSFT - Fiscal 1998 - Discussion for the next year Message Board

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Technology Stocks : PSFT - Fiscal 1998 - Discussion for the next year

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Oct 29 5:00 PM EST

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To: Just_Observing who wrote (1615)	7/23/1998 2:54:00 PM
From: Tom Smith	Read Replies (1) of 4509

J.O., You won't have to worry about analysts "not doing the calculations" anymore, since PSFT will no longer disclose the contracting activity metric (see quote below from the operations review.) Seems PSFT agrees with you that this causes more harm than good. Tom The Company has for several years disclosed contracting activity (defined below). In October of 1997, a number of the investment community analysts were asked about the value of this disclosure and whether the Company should continue to disclose contracting activity. The feedback was mixed; some find it useful and informative, while others questioned the lack of comparable information from our competitors and the lack of clear, generally accepted accounting guidance on this disclosure as the underlying business changes concerning this disclosure. Recent trends in the Company's business reduce the information value of contracting activity as it is currently defined by the Company. Contracting activity does not include billable service activities, which represent an increasing share of revenues. In addition, some customers are now prepaying several years of maintenance with the initial license fee contract. Such prepaid maintenance activity may grow in the future as more customers consider financing/leasing arrangements as part of the software purchase transaction, and contracting activity may therefore be increased without associated increases in license fees. As announced last quarter, the Company has decided to terminate disclosure of contracting activity effective with the commencement of the fiscal third quarter; therefore this quarter's disclosure is the last one. The Company may reevaluate the need for such a disclosure should other software industry firms initiate such a disclosure, or if generally accepted standards are developed by the industry or accounting profession.

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