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

To: Robert Hughes who wrote (716)	1/26/2000 11:54:00 AM
From: Edwarda	Read Replies (2) \| Respond to of 1138

It's a bit more complicated than your posting suggests and a good deal less frightening. There are three different contracts involved. One, for approximately $10 million in the fourth quarter, is with Storage Networks, a privately held company in Massachusetts. Although Storage Networks is a relatively new company, it has somewhere between $50 million and $100 million in capital and an installed fiber-optic network valued at around $100 million. The company is providing network storage and management to its customers the way application service providers do for their customers. Since the company is currently signing up customers for its Internet services and the payment schedule expands over the four quarters of this year, the auditors held that the revenue recognition should match deployment of the solution by Storage Networks. There was no question about Storage Networks' ability to pay Legato. The second order in the fourth quarter was with a VAR supplying a solution to one end-user, a Fortune 50 company. The $3 million of revenue from this deal will now be recognized on final deployment by the end user during the first half of this year. The third, which occurred in the third quarter of last year, was originally for $5.8 million but was expanded and will be recognized in the first and second quarters.