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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Zanga56 who wrote (14527)	1/18/1999 8:53:00 PM
From: t2	Respond to of 74651

The unearned revenue is a pool of funds that at the end of last quarter was at 3.1 billion. Every qtr they put in money and they use some of the money. the net affect is that at the end of the qtr it stood at 3.1 Billion. This is what i understand. I may be wrong? As I understand it, you are right. However the 3.1 billion represents the cummulative amount for the past couple of years. The increase in each quarter is the netting of amounts put into the unearned revenue minus what becomes "earned revenue" and reported in the EPS. Therefore it is the change. I think you have to determine the change in this account over the last 4 quarters (or last 3 plus your current quarter estimate), in order for this number to enter into your "trailing PE" calculation. The rest of it should be included in periods more than 4 quarters ago. They got into this unearned revenue business in a big way about 1 1/2 to 2 years ago. A lot of stupid investors did not see through this and believed what the company had to say. I think times are different these days---you don't want to make the same mistakes again.

To: Zanga56 who wrote (14527)	1/18/1999 9:22:00 PM
From: Exacctnt	Read Replies (1) \| Respond to of 74651

Zanga, <<<The unearned revenue is a pool of funds that at the end of last quarter was at 3.1 billion. Every qtr they put in money and they use some of the money. the net affect is that at the end of the qtr it stood at 3.1 Billion. >>> Just so there is no misunderstanding, the Unearned Revenue account is a liability on the balance sheet, it is not a pool of funds. Any proceeds collected from Unearned Revenue transactions is applied to the Cash Account. You are correct in saying that there is a net affect in the account. However, the amount that is removed or used from the account is applied to the current income for the period. The net affect to the account is therefore the incremental change for the period. The total $3.1B in the account is cumulative, not incremental. Regards, Bob