Gateway (GTW) Message Board

STOCKTALK

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 : Gateway (GTW)

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: yard_man who wrote (7066)	2/24/1999 2:58:00 PM
From: NW Bronco Fan	Read Replies (2) of 8002

GTW may also run into accounting problems with this new promotion. If they sell a PC, let's say for $1500 and it comes with a year of free internet access, then wouldn't they have to defer a portion of the revenue from the sale and recognize it over the 12 month free internet access period? If that's the case, and they charge $20 per month for this service to anyone else, then they would need to defer $240 up front and recognize it over the year of free service. So if the PC they sold costs them $1200 (20% margin), then their initial margin on the PC is really cut to $50 with the rest of the margin being added over the following year. I guess they could defer a portion of the COGS as well, but the total COGS would need to be figured by adding the PC cost with the internet access cost, then deferring the internet access cost with the revenue and bringing both back into revenue and COGS over the following year. GTW just seems like a company that will have some accounting nightmares that are going to create all kinds of problems for them. This just might be the year of the mad cow.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next