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 : MRV Communications (MRVC) opinions? -- Ignore unavailable to you. Want to Upgrade?

To: Andrew Furst who wrote (7934)	3/29/1998 10:31:00 PM
From: Sector Investor	Read Replies (3) \| Respond to of 42804

<<While MRVC's A/R represents future cash to the company (assuming they get paid), I think that all of the A/R in this case has already been booked as "revenue" by MRVC. >> So you are saying the same dollars were shown both as revenue AND as A/R on the earnings report? I find that hard to believe. I would think that would have to violate good accounting practices. Anyone?

To: Andrew Furst who wrote (7934)	3/30/1998 1:34:00 AM
From: Sowbug	Respond to of 42804

Other companies might actually wait until well after payment has been received to recognize revenue. For example, a company which allows customers to return merchandise within a 90 day period might wait the full 90 days before booking it as "sold" (revenue), even though the product has been shipped and payment received. Microsoft is even more conservative, allocating a certain percentage of monies received to the product, and some to the continuing obligation to provide technical support. It's one reason why investors love the stock -- if MSFT recognized revenue as it were received, the company would be something like six to nine months ahead of its current position in growth. This deferred recognition also helps smooth out volatile periods of high/low revenue. P.S. Sector, switch to accrual. It's better.

To: Andrew Furst who wrote (7934)	3/31/1998 5:00:00 PM
From: J. Conley	Respond to of 42804

Andrew, I agree with your comments regarding A/R. I think many viewed the quarter as an earnings shortfall due to the high A/R and DSO. The good news, if any can be found, is that MRVC's A/R as a percent of sales has in the past been higher. The 2nd and 3rd quarters of 1996 were higher, and A/R as a percent of sales has always been relatively high. If MRVC were stuffing the channel, or shipping product at the last minute to make a quarter, you would assume that there would have been a major earnings shortfall in the quarters going forward. That was not the case in 1996. The other "shoe" never dropped. In fact, the company worked the numbers down in the next couple of quarters. So, in MRVC's case a high DSO or A/R number does not necessarily mean a shortfall going forward. FWIW. jc