Wayne Niddery wrote:

> "Joe Demartino" <✉thanks.com> wrote in message 
> news:✉forums.codegear.com...
> > 
> > Someone already pointed out that before this line of
> > thinking ('we cant tell you or it will risk sales'), we got the 'we
> > cant tell you because of SOX' line for a number of years.
> 
> While that did concern publication of roadmaps, it was otherwise a
> totally different issue and, until it was figured out, stopped them
> from publishing a roadmap period since doing so, under SOX, could
> have required them to credit purchases only to the future,
> not-yet-released, version. That would've consequently caused them to
> go broke even while they were making sales.

SOX has had a profound affect on all corporate accounting (public *and*
private). The primary one being that you cannot book revenue for a
product until it is delivered *in full* to the customer. As soon as you
release an update with a new "feature" then that triggers accounting
rules such that the "revenue" has to be recognized over the period of
time between the first sale and the update. It is *really* bad if
you've already booked the entire sale price as revenue. You now have to
go back and *restate* earnings if it crossed a quarterly boundary.


Even if you have the cash in the bank, you cannot count it as real
revenue! Under these rules, you could have $2B in cash from sales in
the bank, yet are only able to account for 1/4 of it on your balance
sheet. Also, you cannot spend or otherwise *use* that money because it
isn't *operating capital*. You can only take your expenses out of the
booked revenue. This is the true measure of the health of a company;
can they "operate" profitably? IOW, after you account for all your
expenses against the booked revenue, is there anything left over as
profit?


Yes, SOX SUX ;-) but it is a reality in which we live and we have to
make the best of it.


-- 
Allen Bauer
Embarcadero Chief Scientist
http://blogs.embarcadero.com/abauer