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Technology Stocks : MRV Communications (MRVC) opinions? -- Ignore unavailable to you. Want to Upgrade?

To: Duffeck who wrote (38951)	5/10/2002 11:34:42 AM
From: Greg h2o	Respond to of 42804

<<The reported revenue (cash received, not trade) would be reported in gross revenues and the aggregate amount of all cash received in this manner reported>> admittedly, i haven't studied the telecom sector's accounting of revenue, but i would think it would be normal practice to book the revenue received as gross revenue and THEN deduct trade in allowances. if i have a few minutes, i'll take a look at it this afternoon.

To: Duffeck who wrote (38951)	5/10/2002 2:00:33 PM
From: akmike	Read Replies (1) \| Respond to of 42804

Hi Duff, Mike, I don't get it, why don't trade in's count as revenue? Or is it only "certain" trade in's that don't count. I am sure that you agree there is a difference between an automobile where there is a Kelly Blue Book published value and used tech equipment subject to obsolescence. What would the dialogue be between Cisco and their auditors about the value of the trade-in? I am not an accountant and have never been directly involved in manufacturing. That said, my understanding of GAAP is that revenue must have a clear path to being turned into cash within "reasonable and customary" timeframes and must have a discernible value. There are different standards within different industries on how these tests are applied. Greg's original post laid out a scenario where CSCO was pumping up revenue by aggressive use of trade-in and discounts. I simply do not believe that the facts and circumstances as reported by this large, extremely scrutinized public company lend any support to Greg's thesis. Cisco did write off some 2.7 billion of inventory last year which was not disposed of and which would create the potential for "gamesmanship" in future reporting. Rather than enter into any such gamesmanship they have, each quarter subsequent to the write-off, reported the extent of the "excess inventory benefit" that resulted from the recapture of portions of the written-off inventory. For the sake of this discussion, I have reviewed their reports and here are the reported results: QTR. Ending: Total Product Revenues EX. Inv. Benefit 9/30/01 3.656 bil. 290 mil. 12/31/01 4.022 bil. 195 mil. 3/31/01 3.997 bil. 27 mil. In the just recently completed quarter, they increased inventory turns, cash flow, and gross margins. I think Greg will have to admit that his postulation does not square with facts and circumstances. Best regards, Mike