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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Dr. Jeff who wrote (173953)	6/19/2002 6:32:40 PM
From: reaper	Respond to of 436258

<<I ask again, what makes you believe their accounting is "clean"? Why do you believe the #'s are real? How do you know they haven't played revenue recognition games like many other software companies have (PSFT, PRGN, etc...)?>> Two things. One, the cash flow statement, which matches up nicely to their net income. And two, the fact that (other than little tuck-ins here and there) Oracle for all practical purposes does NO acquisitions. I don't KNOW that Oracle has not played revenue recognition games. But the signs are not there. Let's specifically take the two companies you mentioned, both of which I happen to know very well. It is interesting that you mention Peregrine, which I was short to about a dollar. Peregrine (i) had their long-time CFO, David Farley, unfortunately pass away and he was replaced by a very young kid, Matt Gless; (ii) was an acquistion machine, including buying a company called Harbinger which had itself exploded in an accounting scam about two years prior to the Peregrine purchase; and (iii) was showing massive cash outflows from the business in the cash flow statement even as they were reporting net "income". As far as PeopleSoft goes, their crime is not so much revenue recognition as it is/was their Momentum R&D spin-off, where people have accused them of taking R&D off of the P&L. Back a couple of years ago (in the 1998-1999 period) they also got a little ahead of themselves in selling too far up front (kind of like what CA does) which caused a big decline in the stock price. But again, have a look at the cash flow statement -- you will see a $600mm cumulative increase in accounts receivable in 1997-1998, which they kept off the face of their balance sheet by selling many of the receivables (they sold almost $250mm worth in 1998). So again, there was a really easy tell that they were being aggressive with revenue rec since they were recognizing revenue WAY in advance of when they were getting paid. So again, I ask you, other than invoking the spectre of Arthur Andersen or comparing them to software companies to which they are not really comparable and where the fact patterns do not match, can you point me to any statements or data in their financial disclosures that substantiate your accusations that there is something untoward going on at Oracle?? As far as the "pro forma" reporting goes, they really don't report pro forma. Come on, they excluded a 2 penny loss on their investment in Liberate (a crappy interactive TV company); to my knowledge this is the only pro-forma adjustment they have ever made. Are you going to compare this to John Chambers writing off $3 billion of inventory as if he never paid for it, or the annual 'non-recurring' charges Carley takes at HP? Not even in the same ballpark. Details matter. Cheers

To: Dr. Jeff who wrote (173953)	6/19/2002 11:37:02 PM
From: patron_anejo_por_favor	Read Replies (2) \| Respond to of 436258

"Big bottom, drives me out of my mind...how can I leave THIS behind?!" (From Fleck's Rap today): Comstock's Real McCoy: The good people at Comstock wrote a piece comparing a real bottom, 1974, with today's wannabe bottom. Have a look: "At the 1974 bottom, the S&P 500 sold at seven times earnings; 65% of the advisors in the Investor's Intelligence Survey were bearish; equity mutual fund cash was 11.7% of assets; and only 4% of stocks were above their 200-day average. Now, that's what a real downside extreme looks like. By way of contrast, the S&P 500 now sells at 43 times earnings; 35% of advisors are bearish; equity mutual fund cash is 5.3% of assets; and 60% of stocks are above their 200-day average." The Comstock report continues: "On a more anecdotal level, now most investors have held on to their stocks and want to know when to buy more. The leading financial magazines feature the stocks to buy in the recovery. In 1974, investors fled the market in droves and swore they would never buy stocks again, while the periodicals ran articles saying that the market would not come back for a long time." Name, Rank Speculation, and Series 7 Number: In any case, as I watched the events unfold last night, I just could not help being struck by the fact that it was such a beautiful example of all that is wrong, which is why I thought it worth expanding on this morning. It just goes to show you what rank speculation still exists among the "professional" community. The public is slowly getting disgusted, and so it is not sending the money to the mutual funds, but the people who have other people's money are still acting like the same drunks that they were during the mania.