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

To: H. Wai who wrote (10981)	5/26/1998 11:02:00 AM
From: Mark Finger	Respond to of 14631

>>You said for this particular deal, the money has been received >>already. Does it mean that Octel (and other IM) has already paid >>informix, but the revenue will be recognized within 2 years? Is >>there a chance Octel will claim the money back in case the product >>is not sold? If you look at the restatement, the money was backed out of licenses and out of A/R. Therefore, at end of Q1, the stuff had been booked but not actually paid for. Normally, these deals are for long term (more than 1 year), but only the first 12 months expected revenue was booked under the old accounting system (and anything that moved into the 12 month time frame would be booked in succeeding quarters). For these to actually be counted under the accounting rules, there could be no refunds (Sybase got into trouble because there were extra letters attached that said they could get refunds for unsold product--in their Japanese group). Note that IFMX may actually get money ahead of the time--before the product is sold to the end users. Contracts can be written in a number of ways. The cash would be available, but would be accounted as a "liability" (see the "Advances on unearned license revenue" entry on the balance sheet). Mark