Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : PEGA - Pegasystems -- Ignore unavailable to you. Want to Upgrade?

To: Geof Hollingsworth who wrote (259)	11/11/1997 2:27:00 PM
From: Trader Dave	Respond to of 504

<<The big problem with the way they run the business is that it is hard (impossible?) for us to be sure of what's going on, and apparently it can even be difficult for them to keep it all straight.>> I agree with most of your comment. The issue really is with your last statement. To really recognize everything in line with standard procedures in the industry they'd have to change their entire model. I'm just not sure how I feel about the company. If E&Y approved the accounting treatment for the FDC transaction, how come the company didn't know how it was going to treat the payment from pega to first data in the september q? To me, that inconsistency is a major credibility gap.

To: Geof Hollingsworth who wrote (259)	11/11/1997 3:55:00 PM
From: Clam Clam	Read Replies (1) \| Respond to of 504

Geof, why not just treat the lease revenue for what it really is. Other companies sell perpetual licenses and then do upgrades to sell into their installed base. Just treat it like an upgrade. The fact that PEGA's license runs out in 3-5 years is nice but, IMO, isn't enough to warrant throwing out the entire issue of timing. I say just be conservative and treat it like a perpetual license. IMO, the income statement should relate to a period of time and should represent what happened over that 3-month period, not the simple math of $50 million / 20 quarters (or whatever the length of the contract). Booking revenues on non-current receivables completely ignores the issue of timing. I understand the argument for "guaranteed minimum revenues," I just have a problem with it given the nature of contracts (legalese, footnotes etc...).