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Non-Tech : Enamelon (ENML) - Does anyone follow this? -- Ignore unavailable to you. Want to Upgrade?

To: Q. who wrote (590)	5/18/1998 3:30:00 PM
From: chester lee	Respond to of 863

<<how does the accounting work on the giveaways? I might be mistaken, but I think that in a previous and smaller round of giveaways, a tube that was given away was recorded as revenue, with an offsetting expenditure recorded under marketing. I guess they really were selling the product to the retailers, and were just writing a bunch of big checks later to the consumers. >> You are correct. Sales, even via coupons for 100% of the retail price is still recorded as sales, and thus is recorded as revenues. The checks to the consumers are a part of the marketing expense, and will be expensed when paid. For shorts, this translates into good revenue numbers, but still a large net loss to the bottom line. <<If that's the case, shorts face the risk that the co. will issue news releases touting huge revenue increases (and not touting the corresponding expense and earnings hit).>> Not to worry, as everything has a way of evening out. I think it was Steinfeld who said that. Any rise in stock price will be temporary, as witnessed by GUMM and their ever growing phantom revenue, which was derived almost exclusively from bartering zero-value obsolete inventory. GUMM did this for a few quarters which helped inflate their stock price, until NASD made them restate their revenues. ENML will not have to restate their revenues, but the bottom line is that their reported revenues will not contribute to the bottom line. Chester