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Technology Stocks : Siebel Systems (SEBL) - strong buy? -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (1930)	7/16/1998 10:29:00 PM
From: Dapper Dan	Respond to of 6974

Personally, I read nothing but positive things in the report (except, perhaps, for the depletion of cash). Has anyone heard what's happening in after-hours trading? (By the way, I have been long Siebel for 18 months and intend to keep on going!)

To: Lizzie Tudor who wrote (1930)	7/17/1998 12:15:00 AM
From: Melissa McAuliffe	Read Replies (3) \| Respond to of 6974

Well I just got finished listening to the conf. call and wanted to make a comment about the deferred revenue. When I first heard about it going up significantly I thought it probably had to do with some contingent deals which would have made sense. But when Howard was asked about it, he commented that it had to do with a number of new customers with whom sebl has no prior payment history and they did this in effect to be safe. I guess that could be reasonable and might be the only answer he could give but now I'm actually wondering if they actually had too much revenue. Now I know that might sound ridiculous in how can a company have too much revenue. But I think it's either that or contingent deals. The contingent deals thing doesn't bother me at all since I think it's to be expected given all the stuff that's gone on and is going on, i.e. the product integration issues, the upcoming sebl 99 release (which they say is on target for the fall), etc. Plus if it was from contingent deals it would mean that this new product integration stuff isn't impeding companies from licensing the software now which is really good. Well I guess the great news in any case is that they had enough revenue to be able to book a significant chunk in deferred and still grow license fees by more than 100%. That's even more awesome...knowing there was actually more. Actually the good thing about increasing deferred revenue is that there are $ there to help manage future quarters which is good. PSFT has tons of $ in deferred and I think that's why they haven't missed a quarter yet.

To: Lizzie Tudor who wrote (1930)	7/17/1998 4:06:00 PM
From: j_b	Read Replies (1) \| Respond to of 6974

From reading Kitty's post, the implication is that Siebel keeps reserves (deferred revenue, bad debt, etc.) that may not be managed exclusively by "rational" estimation techniques, but also by determining how much revenue or earnings they need to show. If you need more earnings, estimate expense reserves on the low side (but still within legitimate levels). If you need more revenue, be more aggressive in your recognition policies. If you are well above expected revenues, salt away a little for a rainy day by being very conservative and including more sales in deferred revenue. That would not be unusual behavior by any means, but it has nothing to do with managing your earnings growth, and everything to do with window dressing. It's not illegal, immoral, etc. but it does take management time away from actually running a business. If the results were material, the outside auditors would eventually make them stop fiddling with the numbers, but these games can affect the top-line growth as well, so you shouldn't discount Kitty's comment. FWIW, the growth pattern looks good to me too. It's just that, being an accountant myself, I know the games that can be played with the numbers, how little difference it actually makes, and how much time management wastes trying to make analysts happy.