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 : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: Tim McGee who wrote (24406)	11/12/1998 2:49:00 AM
From: joe	Read Replies (1) \| Respond to of 45548

Tim, Those seem like accounting type details. I don't have enough experience with that...yet. IMO, though, I've felt that COMS has had the last 3 quarters of this year heavily weighted to make sure there are no screw ups. AND also, to give it a good clean start for '99 with good momentum. I would think it's normal to keep part of a good quarter in reserve for the rest of the year. I think all the major companies with consistent earnings do this. Another words, more than a few are making sure that the "COMS plan" works out...all this in return for institutions getting nice bargain basement prices. I may be totally off base here, but I've suspected that Eric B. has had to sell a bit of his soul to make sure the company toughs out this difficult year with Wall Street. (This is just my conspiracy theory...fwiw) joe

To: Tim McGee who wrote (24406)	11/12/1998 9:49:00 AM
From: matt fahy	Respond to of 45548

>>The other thing the report says is that it is typical for the last month in qtr to be where most of the sales for the quarter happen. I just find it strange that a company can not even its results out a bit. << Not a big concern as this is the standard in tech industry for electronic device companies. I believe it is due to companies wanting to play with cutoff, meaning MYCO buys from 3Com end of qtr. 3Com ships on March 30, therefore 3Com gets to recognize revenues (using a calendar qtr. cutoff basis) and MYCo doesn't put it on its balance sheet until next qtr because it is not received until first week of April. The incentive for MYCO to buy end of qtr. is because 3Com needs the revenues (to beat #'s given to analysts) and will give a discount at that time. This is more pervasive in smaller companies and can have larger impact. I don't think it is that huge for COMS but it still is the enviroment they live in. As long as it is consistent qtr. to qtr. it smooths itself out and does not matter. Who cares if Jan., Feb., or March is biggest month of qtr. we only look at the qtrly results. This is an industry trend and that is it imo. >>Not sure the significance but the 1Q99 ends Aug 28 in this report as opposed to Aug31 (like last yr). 28th is a Fri, but what about that last day of the month.. peculiar. Looks like we start 2Q with $15M extra in the bag...<< It may matter if 3Com ships product over the weekend, maybe Steve can let us know this since he buys 3Com equipment. Aug. 31 last year was on a friday as well so it looks like a consistent practice to me. Companies have to keep cutoff consistent or their auditors and SEC will be all over them it is not the area they can "manage earnings". Most companies manage earnings or smooth earnings by adjusting significant estimates such as returns reserves and inventory reserves.