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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Q. who wrote (8811)	10/29/1999 4:33:00 PM
From: Daniel Chisholm	Read Replies (1) \| Respond to of 78858

re: DEFERRED CONTRACT REVENUE, my understanding is that they have already received cash (or booked an A/R amount) for work that has not yet been performed. The amount of this liability balances out the amount of the cash or A/R item. When the work is performed, no additional cash is received or A/R produced, the liability is reduced by the amount of work performed, and that is recognized as income at that time. Microsoft does this. It is an attempt to smooth out product sales over the life cycle of the product. - Daniel

To: Q. who wrote (8811)	10/29/1999 8:50:00 PM
From: Bob Rudd	Read Replies (1) \| Respond to of 78858

Ñ ISTN 'DEFERRED CONTRACT REVENUE' That one caught my eye too. My best understanding is that they set up a reserve to cover claims against the warrantees and this deferred revenue is that reserve. I believe they've played it pretty conservatively so far. One check on accruals is cash flow from operations. Here's a $26 million market cap that's on track to generate nearly $13 million CFO this year. Oh, and they not only sell cars on the web...they sell the warranties too [the main biz]... warrantydirect.com This web stuff, if it gets noticed, could be a catalyst. bob