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Technology Stocks : Gemstar Intl (GMST) -- Ignore unavailable to you. Want to Upgrade?

To: 100cfm who wrote (1957)	2/11/2000 9:49:00 AM
From: DownSouth	Read Replies (1) \| Respond to of 6516

IF Stephens is accurate in its speculation that flexible recognition of revenues was used, then I agree. GMST may have the option of busting out of the gate after margin in a very big way. I just hope that speculation was based on facts rather than "benefit of the doubt."

To: 100cfm who wrote (1957)	2/11/2000 11:20:00 AM
From: Eric Jacobson	Read Replies (3) \| Respond to of 6516

100cfm: Here's how I read the statement. GMST has a certain amount of discretion as to when they record revenues. For example, do they record revenues when Thompson (A) orders an ASIC with GMST inside; (B) manufactures the end product; (C) ships the product to a store; or (D) when the product is bought by an end customer. Conservative accounting principles suggest you record it as late as possible for two reasons: (1) this delays paying taxes on the revenue until a later date; and (2)it also allows you the flexibility to move "deferred" revenue forward in the event your sales drop a little below expectations in any given quarter. This is how great companies like MSFT and CSCO have been able to manage expectations so well. So, the analyst is saying GMST could have recorded higher licencing fees based upon the number of units shipped. As you suggested, it sounds like they're sandbagging this number because, with the $18 million pop, they didn't need any additional revenues to meet expectations. As "deferred" revenue stacks up, this enables the company and analysts better visibility on what future revenues and earnings are likely to be.