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 : IFMX - Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: Gregg who wrote (9454)	2/13/1998 9:44:00 AM
From: Lou	Read Replies (2) \| Respond to of 14631

Can someone interpret the significance of this....... reposter's interpretation of the IFMX financial report? This has some heady accounting content. I have a reaction that suggests we all knew some revenue was going to be thrown forward, and is probably why the stock had some stability at 4 & 5. An off the top of my head reaction is that this is known, but not understood as to detail. I hope someone better grounded in accounting and the recent financial reports of Informix would react to the comment I that I am making, and especiallly the reposting below. I would like to think that this knowledge is built into the stock price as of 2/12/98. Lou (8 7/8) at 9:37 EST ************************************************ I've enjoyed reading the comments on the Informix thread for the past several months. While much progress has been made in repositioning and focusing the company, a lot of the turnaround is accounting magic. The little understood "Advances on Unearned License Revenue" liability account tells a lot of the story of how accounting helped the turnaround. If you remember, this is where past recorded revenue became deferred revenue, a liability, in the November re-statement. At December 31, 1996 this account stood at $239,507,000 in the restatement. At December 31, 1997 this account had been reduced to $180,048,000. In the just completed 4th Quarter, $30,248,000 was pulled out of this account ($210,296,000 at the end of Q3 and $180,048,000 at 12/31/97) and pulled into License Revenue. This is old business being recognized currently as revenue as the licenses are deployed by the OEM's who bought them. If you pull out these items, License Revenues from new business in the 4th Quarter was $74,708,000. If you do the same analysis on the 3rd Quarter numbers, the $77,164,000 of License Revenue is decreased by $16,807,000 for a net of new License Revenue business of $60,357,000. In other word, of the $31,241,000 of revenue growth from the 3rd to 4th Quarter, $13,441,000 or 43% came from "banked" and not new revenue. In the November conference call, we were told that the deferred revenue coming back into revenue each quarter would be in the $15-20 range. The difference between the $30,248,000 recognized in the 4th Quarter and the $16,807,000 recognized in the 3rd Quarter or $13,441,000 provided the company with an unexpected windfall. If you apply a cost of software distribution of 9% you are left with an additional $12,097,000 Operating Income. Without this item Income before Taxes would have been a $1,898,000 loss. While I enjoyed the spin about the significant revenue progress and the revenue traction on the top line, recognize the contribution of the accountants who made a lot of this all possible. I'm currently a CFO in the software industry so I would appreciate being "background" for the time being. I spent most of my career in Big 8 consulting and more recently have been using my financial and operational background working with software startups.

To: Gregg who wrote (9454)	2/13/1998 10:08:00 AM
From: Mark Finger	Read Replies (3) \| Respond to of 14631

>>The talk is that it may take itself private rather than be taken >>over," he said, adding that the company has been at the center of >>takeover speculation for months. This rumor forgets that one of the primary ways of keeping employees at a software company is through stock options. If a company is not publically traded, these lose a lot of their value for keeping employees, and the company would have to come up with an acceptable alternative. I really discount this "private" rumor, because it would appear disastrous for keeping the key programmers. Mark