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

To: rkral who wrote (65444)	5/12/2004 3:44:29 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 77400

Ron 1) the $71M is a net income number and $3,420M is a revenue number, so I was assuming NPM = 100% That's not an unreasonable assumption when you are dealing with financial engineering. The thing with deferred revenue is that the cash has been received. Merely recognizing revenue and spending money are often (almost always) two different things. Period boundaries mean cost can go in one quarter while revenue goes in the other. Over the two quarters, net margin is net margin... but in one quarter it could be "adjusted" significantly higher (or lower) with the compensating adjustment to come in the following quarter. Then one has a whole 90 days to come up with another trick (e.g. alter the rate of increase in revised guidance). Rinse, lather, repeat... The point isn't that the whole chunk is 100% margin, just that due to the depth of the cookie jar, it's more than possible to skim off enough cream to dredge up phantom pennies when necessary. 2) I had no justification for assuming an annual time period for Cisco "earning" the deferred revenue .. and still don't. "Current" in accounting speak means "within 12 months". So the "Current portion of deferred revenue" is equal to deferred revenue scheduled to be recognized within the next 365 days. By definition. So you've got all the justification you need to assume an annual time period... for that deferred revenue. There is another 937 M$ of non-current deferred revenue. John