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To: frank doolittle who wrote (10233)	4/8/1998 10:47:00 AM
From: Lou	Respond to of 14631

Interview with Mr. Finocchio/Re:Oracle Mouth/Acct. Rules/repost April 06, 1998, TechWeb News An interview with Robert Finocchio, Informix By The chairman and chief executive of Informix Corp. talked with CRN West Coast Bureau Chief Shawn Willett last week about how Oracle Corp. rhetoric and how new accounting rules will affect the software industry. CRN:Are you bothered by assertions by Oracle [Corp.] officials, particularly Ray Lane and Larry Ellison, that you are no longer a viable company and that you "cooked the books," for years. Robert Finocchio:I guess it just strikes me as strange, the sanctimony of his [Ray Lane's] comments. I mean, this industry was built in large part on the image and likeness of Oracle. So I think it's kind of interesting because most companies, including Oracle, have had these types of problems. What I care about is, yes, we are a company that has had significant problems, [and] we have addressed them head-on. We are in business, we are out there aggressively competing for and winning business. The fact that we posted $188 million in revenue shows we have the ability to compete with Oracle. I just don't think the statements [by Oracle officials] appropriately reflect what is going on in the company. CRN:Some observers say you are being extraordinarily conservative in how you now recognize revenue. Finocchio:Well since the restatement, we are following this new regulation [Statement of Position] SOP 97-2. We think it is going to have an immense impact in the industry. There [are] going to be a lot of changes in how revenue is recognized. In the past, if you look at where revenue came from in this business, it was from these large, multiyear, all-you-can-eat deals. That is going to be a lot more difficult to do. You are not going to be able to recognize these transactions in a single year. I think it would be an interesting question to ask Oracle how it is going to deal with it. CRN:How do the new regulations affect sales into the channel? Finocchio:We are basically not recognizing sales until the channel sells the product. This also applies to large partnership agreements. How we recognize this revenue is in large part how the deal is structured. This also includes deals with integrators and even end users. I think, overall, this is going to have a positive effect because [I find] some of the business practices in the software industry a little strange. I come from a hardware background, and when I was at 3Com [Corp.] we never went to anyone and said, 'Hey, do you want to buy five years worth of routers? Here is the deal.' CRN:When will Informix burn through the licenses that are already in the channel or with OEMs and ISVs? When can you then start new deals with these companies? Finocchio:Well you have to understand that this is not revenue that went away. What we did when we restated [was] count this as advance on unearned revenue. They are not sales until the burn happens. So I think we said we have $210 [million] or $211 million in such revenue. And every quarter, I think we said we are burning between $15 [million] and $20 million. So you might say, 'OK, you have two and a half years of revenue in the channel.' But it's not as simple as that because the burn will happen at different rates. This doesn't mean there won't be new sales to ourpartners because these arrangements are only for part of our product line. CRN:Why do you think the Unix database market is slowing down? Finocchio:There has also been a lot of pricing pressure with Unix. A lot of this has been in the packaged application market, really the high end of the market. So I don't think the reason is Microsoft's entry into the market. Copyright (c) 1998 CMP Media Inc.