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Technology Stocks : LEGATO SYSTEMS LGTO -- Ignore unavailable to you. Want to Upgrade?

To: Box-By-The-Riviera™ who wrote (707)	1/25/2000 1:29:00 PM
From: Chuzzlewit	Respond to of 1138

So what is the street missing here? Everything? Joel, I don't know about the outlook going forward. So far I have been looking at the numbers and it seems to me that if the analysts have been basing their downgrades on the numbers they are missing quite a bit. If anything, it looks as if LGTO's real top-line growth is accelerating. Now here's an important point that may be overlooked by many: Suppose you have a company that receives a contract for $10MM, and receives $5MM cash. If the transaction were booked under the old revenue recognition rules, $10MM would have been recognized as revenues. But, under the new guidelines this transaction is not viewed as a sale. Now you would have a $5MM increase in deferred revenues offsetting the receipt of $5MM in cash. No A/R is created because there is no sale. As a result, depending upon the proportion of A/R to sales that may have been included in the reclassification, the sum of the revenues plus the increase in deferred revenues understates the growth potential, although it gives greater visibility to future growth. Unfortunately, LGTO did not restate earnings for the past several years, so the change in accounting methodology does not give us a consistent picture. TTFN, CTC