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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: JakeStraw who wrote (57214)	2/7/2002 9:05:42 AM
From: RetiredNow	Respond to of 77400

Very true, but Cisco doesn't do that. They book revenues when the product is installed. Many projects include a bunch of gear that needs to be installed in a viable network configuration. So when those products get sold through a reseller (two-tier) sales arrangement, then Cisco does not book the revenue immediately. It can't according to GAAP. Here's a quote from their 10K: "Sales adjustments primarily relate to reserves for leases and structured loans, deferred revenue, two-tier distribution, and other timing differences" So you can see they defer revenues shipped to their distributors and resellers until the product is sold to the end customer. Here's another quote: "REVENUE RECOGNITION The Company generally recognizes product revenue when persuasive evidence of an arrangement exists, delivery has occurred, fee is fixed or determinable, and collectibility is probable. Service revenue is generally deferred and, in most cases, recognized ratably over the service period obligations, which are typically one to three years. The Company makes certain sales to partners in two-tier distribution channels. These partners are generally given privileges to return a portion of inventory and participate in various cooperative marketing programs. The Company recognizes revenue to two-tier distributors based on estimates that approximate the point products have been sold by the distributors and also maintains accruals and allowances for all cooperative marketing and other programs. The Company accrues for warranty costs, sales returns, and other allowances based on its experience. Cash payments received in advance of product or service revenue are recorded as deferred revenue."