SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Wind River going up, up, up!
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Mark Brophy who wrote (3991)1/29/1999 4:39:00 AM
From: Jerry Asher  Read Replies (1) of 10309
 
Mark,

There has been a lot of recent concern over WIND's handling of deferred revenue and how it relates to "earnings management", a process that may lessen the credibility of financial reporting.

You wrote:

See the 9/28/98 speech by the SEC chairman at sec.gov. The speech indicates that the SEC will crack down on accounting fraud and Wind River will be asking for legal trouble...

You quoted the speech as saying:

A third illusion played by some companies is using unrealistic assumptions to estimate liabilities for such items as sales returns, loan losses or warranty costs. In doing so, they stash accruals in cookie jars during the good times and reach into them when needed in the bad times...

Thank you for addressing earnings management, and thanks for the URL -- it is an interesting speech. Your use of bold in the quote leads me to feel you are accusing WIND of such cookie jar management.

A little web searching reveals that deferred revenue can be defined as "Amounts for which asset recognition criteria have been met, but for which revenue recognition criteria have not been met"

No one in this forum has ever said that WIND was fudging with the sorts of assumptions or liabilities that the SEC chairman uses to define a cookie jar. The WIND discussion has always been around their use of deferred revenues to help manage the earnings.

And absolutely nowhere in the chairman's speech does he refer manipulating deferred revenue as a method of "earnings management". Wouldn't you believe any controversy in deferred revenue recognition would be so familiar to the chairman that he would have mentioned it if he felt it relevant to earnings management problem?

Would someone describe what it is thought that WIND does in order to defer revenue? And can you attribute these thoughts to management (CEO or CFO) statements?

Thanks,

Jerry
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News