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Strategies & Market Trends : Roger's 1997 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Pancho Villa who wrote (7041)	11/15/1997 10:59:00 AM
From: Roger A. Babb	Read Replies (3) \| Respond to of 9285

Pancho & Shoe, re CTXS 10q CTXS received 75 million from MSFT in May of 1997 which they are recognizing over time, including $3,750,000 this quarter. They have not yet received any of the $100 million potential royalty from MSFT on Hydra. There is some funny accounting going on with the deferred revenues and taxes that makes it hard for me to understand the earnings this quarter. As CFO of two very conservative private companies, I have a very simple way of measuring the cash profit of my companies as follows: profit = dividends + change_in_cash + change_in_investments I ignore everything else because such things as receivables, payables, and inventories can be manipulated. Note that debt is included in cash as a negative number. The cash profit for CTXS last quarter was a negative $8 million. I love to short companies which are reporting large earnings while cash is declining as they almost always have a bad surprise in their future. But I should note that professional analysts are very high on CTXS with strong buy ratings and predictions of $100+ price, so I am very much in the minority here.

To: Pancho Villa who wrote (7041)	11/15/1997 5:25:00 PM
From: Daniel Chisholm	Read Replies (1) \| Respond to of 9285

Pancho, you wrote: >Current-portion of deferred revenues on contract with stockholder >15,000,000 (did not change versus June so no revenue regognized) Actually, they did recognize 1/4 of that (current portion means that portion due within a year). They also added back 1/4, since this $15 million is just a one year window that slides over the $75 million payment from Microsoft, until it is completely amortized. Until there is less than one year left, they (effectively) take that amount out of the long term portion: $54,125,000 vs. $57,875,000 the previous quarter. This is the source of the: > >Net revenues attributable to a stockholder 3,750,000 > So, this item _is_ the deferred revenue from Microsoft. Note that the short term portion ($15 million) plus long term portion ($54.125 million) equals the item in the cash flow statement labelled: > > Deferred revenue on contract with stockholder 69,125,000 > To get the original $75 million, add back in the $3.75 million amortized this quarter, and the $2.125 million amortized in the previous quarter (the quarter in which the deal took place). - Daniel