Pancho (No, I don't even follow MCHP) I'm waiting till Oct 15 for the next 10Q from SAPE before I move either way.
I understand your cash flow analysis, and that for the past 2 Qtr's it has not looked positive, but, with contracts spanning more than 2 Qtr's, my belief is that increases in unbilled revenue is real, and potentially a positive sign!! (I don't think they are booking this revenue except against real expected revenue) Perhaps it is over optimistic, then again perhaps it is used to compensate and show continued growth against known cash flows in slow Qtr's. I don't know what the total size of potential “unbilled revenue” pool is… but it seems to always be enough to ‘spice' the EPS growth at Qtr end. Certainly not illegal and considering SAPE has showed decent margins and continued growth, I'm not ready to think they are slowing down. Aggressive yes… ‘cooking' I don't think so.
<<I am a developer and can tell you from experience that fix price contracts usually get you into trouble.>>
Only when a project plan and scope are not fully defined. My impression is that SAPE's contracts are well defined and ‘scope creep' does not happen without additional revenue. Additionally SAPE's employee compensation system for developers makes it attractive for said developers to complete projects on a timely basis without SAPE incurring any unexpected expenses. I think this might explain why reserves are not increased for cost over-runs.
SAPE is not CATP in many ways, although paired with it from many annalists who do not know the company that well.
I'm just giving you my thoughts and info, I am certainly looking much closer at SAPE now, and will grab the next 10Q ASAP (as soon as posted!) |
