Tony,
> What he means is that if today you spend $500 on a Delphi upgrade, > $500 appears in the January profit& loss - it's a product sale. If > you spend $600 on SA - it's a payment for a service so $50 appears > this month, then $50 per month for the next 11 months. At the end > of month one the other $550 appears on the balance sheet as a > liability - which it is, to provide support over the contract > period, or - in theory anyway - to return a pro-rata amount if you > are no longer able to offer the contracted service. > > If you're not already confused, assume that the current split is > 50% new sales, 50% upgrades (say $500). Then Nick waves a wand and > next month all the upgrades turn into $600 SA. But in Feb only $50 > of this is taken + the same $500 for new sales, and the headline > figure is a 45% collapse in sales! Of course the rest of the money > will be drawn down but banks are vastly more impressed by sales > revenue not expectations.
I'm already confused. That's why I have some questions:
1. Why is there a bank of investors? In the German news Embarcadero has been advertised as a normal software company. Is Embarcadero a bank of investors or is there someone else who invested a lot of money?
2. I do understand the issue with the SA. But normally after one year the effect is blown away, the SA repeats periodically. AFAIK they are offering SA for many years. Why is the splitting now a problem?
-- Roman