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Technology Stocks : Network Associates (NET)
NET 210.59-1.3%Nov 14 3:59 PM EST
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To: AlienTech who wrote (4466)3/24/1999 12:17:00 AM
From: Chuzzlewit  Read Replies (1) of 6021
 
I find most of the report credible with the exception of two areas:

First, Here is a fundamentally sound company ... Given the spate of acquisitions, it would take a superhuman effort to come up with a reliable fundamental picture of the company. And I'm not talking about the problems with the SEC. It is very difficult to assess a company in the throes of massive corporate digestion. I think Edwarda alluded to this problem in a previous post.

We believe DSOs will climb approximately five to six days to the mid-90s and to stabilize in this range. We do not find this disconcerting due to overseas sales where closure is longer. While I agree that the increase in DSO is not, in itself disconcerting, the explanation makes no sense. The length of time a deal takes to close is irrelevant to DSO. If cash is received prior to completion of the sale it is treated as a liability ("deferred revenues") rather than an income item. The only time an income item is recognized is when there is revenue recognition. Since the definition of DSO is (A/R)/Sales*no. of days in the period, the time it takes to close a deal is irrelevant. The only relevant factor is the time it takes to receive cash to retire the receivable.


TTFN,
CTC
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