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Microcap & Penny Stocks : Centura Software Corporation (NASDAQ:CNTR) -- Ignore unavailable to you. Want to Upgrade?

To: Matt Burton who wrote (1826)	11/6/1997 6:01:00 PM
From: MENSO	Read Replies (1) \| Respond to of 2428

Matt: Thanks for taking the time to post the links. Yes, I remember that conversation now that you have refreshed my memory so a-la-leo !... But I still don't see what it has to do with the issue of deferred revenue that David and I were bantering about yesterday. When I raised the issue of deferred revenue my argument was that deferred revenue was -- to quote from a friend -- "good for a software company like Centura" because it would eventually have to find its way to earnings-per-share. Hence it could either be used to prop EPS up during slow quarters, or to report higher-than-expected earnings at some point in time and thereby "work miracles with the stock". However, after discussing this with David both privately and online I realized that there was a dark side to it that I had missed completely. Yes, as David posted, Centura could in fact theoretically report a $0.60 EPS quarter; but no, it did not necessarily mean additional cash. I bold "necessarily" because, to be honest, I don't really know FOR SURE one way or the other. Sam offered to look at the accounting notes sometime ago to figure out what accounting method was being used by Centura, but I don't know if he's had a chance to do so yet. In the meantime and for whatever it's worth, I have already agreed with David that it would appear (after looking at the balance sheet quarter to quarter) that his analysis is right ===> Centura could in fact prop-up EPS on any given quarter, or even over a period of several quarters, but also likely run out of cash in the process. In other words, my question of whether deferred revenues were a good thing or a bad thing to have (I believe those are the words I used at the time) really doesn't seem to have a simple answer. It could be good if you are trading CNTR short term and believe Centura will be able to realize a big chunk of deferred revenue this quarter. $0.18 EPS would probably result in a nice short-term spike we could all profit from. But this is probably very unlikely to happen. It could also be good if Centura still had enough cash to operate another year or so (as it did a year ago when I started following the company), becaues deferred revenue could be used to smooth out growth during slow quarters. But this is even more unlikely for obvious reasons. And then of course, it could be bad (or should I say really bad?) in the sense that it is a liability that Centura has to carry because, while the cash has apparently already been spent, the products and/or services that generated that cash have not yet been provided. Until we hear from Sam and/or David regarding which accounting method Centura is in fact using I have no additional insight to offer into the issue of deferred revenues. Sorry. >>> what's restructuring? EPS before restructuring was .04; after, it was .01; what's the official EPS? << The official EPS is $0.01 but it is important to keep in mind the one-time restructuring charges when comparing quarters, or when trying to project future results. Restructuring charges are those charges which the company incurred as the result of a reorganization (or restructuring). For example, suppose the company reorganizes again this quarter as is being rumoured and Sam is forced to step down in the process. So he deploys his golden parachute which costs Centura a bundle. Centura subtracts the cost of the parachute from profits that would have otherwise belonged to us (the company's shareholders), and then tries to tell us again that had it not been for restructuring charges the current quarter would have been more profitable. That's how restructuring charges work to the best of my knowledge. Someone posted a thorough discussion of restructuring charges to the Borland thread several months ago. I'll see if I can find it and point you to it. Does this help in the meantime ?