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Technology Stocks : PALM - The rebirth of Palm Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Win-Lose-Draw who wrote (3924)	2/27/2001 10:43:42 PM
From: Mang Cheng	Read Replies (1) \| Respond to of 6784

WLD, Palm books revenue as soon as they are shipped. For example, Judy said all Christmas stocks were shipped by November. So eventhough this qtr includes the December month, Christmas sales won't be in this Qtr's number since what they shipped in December would be used in Jan. on (which was a slow month). But of course, I have to ask what does it mean by "ship" - the date it goes out of the warehoues ? The date the store receives the shipment? or when the store pays for the shipment ? So for Tom's example, for the stores received the shipments in the last few days, Palm obviously had to start "shipping" the stuffs quite a few days before. So the stocks "shipped" out tomorrow won't arrive at the store until next week but theoretically should still count as this qtr's. Mang

To: Win-Lose-Draw who wrote (3924)	2/28/2001 10:41:11 AM
From: David E. Taylor	Read Replies (1) \| Respond to of 6784

WLD: From the 2000 FY 10K: REVENUE RECOGNITION Revenue is recognized when earned in accordance with applicable accounting standards, including AICPA SOP No. 97-2, Software Revenue Recognition, as amended. Revenue from sales of handheld device products is recognized when a purchase order has been received, the product has been shipped, the sales price is fixed and determinable and collection of the resulting receivable is probable. Provisions are made at the time the related revenue is recognized for estimated product returns, price protection, warranty, royalties and post-sale telephone support. Essentially, once the product is shipped to a (hopefully) credit worthy customer, the revenue gets booked. If the sceptics dig up the data Tom has been reporting, they'll likely make a big thing out of the fact that Palm generated over 50% of its Q3 revenues from the shipments of 500,000 each of the Palm VII's and V's in the last few weeks of the Q. As long as Q4 shipments and revenue stay strong for Palm with new models etc., and assuming the "glut" of V's and VII's can be moved out quickly by the rebate programs (particularly the VII's which will generate significant additional Palm.net revenues), then this shouldn't be a problem for Q4's results. OTOH, if retail/online sales are slow over the next few months and Palm's distributors cut back orders in Q4 to move all the inventory, watch out. I recall back in early 1998 when CPQ got stuck "borrowing" revenues from future Q's by "channel stuffing" to make a December Q (and get their DEC acquisition done), they eventually had to "fess up", and the stock paid the price by getting chopped in half. The same thing repeated by CPQ in early 1999 led to CEO Pfeiffer and the CFO getting the axe. I think Carl Y is a cut from a different mold and knows how to manage these product transitions well, but he's probably feeling the pressure to produce some upside surprise in Q3. We'll see. If Tom is right in his channel shipping data, Q3 could be a nice surprise, but even if it is, Q4 will bear watching to avoid a potentially nasty surprise. A lot depends on how well the III/V/VII promotions go and certainly on how well the new models ship/sell. David T.