Cramer: "Microsoft's Deferred Revenue Is a Red Herring&
Enviado: 23/1/2004 15:33"Microsoft's Deferred Revenue Is a Red Herring"
By James J. Cramer
RealMoney Columnist
01/23/2004 08:10 AM EST
"Don't you get suspicious when everyone focuses on a metric that doesn't seem important to you? I do.
I mean, I love looking at deferred revenue for some businesses, particularly businesses with big-ticket items that have to be amortized over time. I like looking at deferred revenue to see how big the numbers can be in the future!
But the maniacal focus on deferred revenue with Microsoft (MSFT:Nasdaq - commentary - research) is a bit mystifying, if only because the numbers for it are so small compared with the larger picture. In fact, even if the deferred revenue had been blown away, I don't know how much it would mean.
Still, I know that ignoring it is not rigorous, given that when deferred revenue disappointed last quarter, the stock also disappointed. Recent history says you should worry.
Yet somehow, I think it doesn't hold the key to the stock. On the positive side, the key is still held by the need to upgrade on the corporate front. On the negative side, I think the key is Red Hat (RHAT:Nasdaq - commentary - research) and the Linux challenge. In fact, I think the Linux challenge is what underlies the real weakness of the stock.
I keep thinking back to the interview I did on "Kudlow & Cramer" with Red Hat CFO Kevin Thompson. That guy was like a Vietcong guerrilla dedicated to the overthrow of the imperialist U.S. overlords. He was almost cartoonish in his desire to destroy Microsoft.
I don't own Microsoft stock. And it's hard to worry about a company with more money in the bank than any entity in the world. But to me, the deferred revenue is the sideshow; the Linux challenge is the real deal. It is the reason I simply am not tempted to buy the stock here. "
(in www.realmoney.com)
By James J. Cramer
RealMoney Columnist
01/23/2004 08:10 AM EST
"Don't you get suspicious when everyone focuses on a metric that doesn't seem important to you? I do.
I mean, I love looking at deferred revenue for some businesses, particularly businesses with big-ticket items that have to be amortized over time. I like looking at deferred revenue to see how big the numbers can be in the future!
But the maniacal focus on deferred revenue with Microsoft (MSFT:Nasdaq - commentary - research) is a bit mystifying, if only because the numbers for it are so small compared with the larger picture. In fact, even if the deferred revenue had been blown away, I don't know how much it would mean.
Still, I know that ignoring it is not rigorous, given that when deferred revenue disappointed last quarter, the stock also disappointed. Recent history says you should worry.
Yet somehow, I think it doesn't hold the key to the stock. On the positive side, the key is still held by the need to upgrade on the corporate front. On the negative side, I think the key is Red Hat (RHAT:Nasdaq - commentary - research) and the Linux challenge. In fact, I think the Linux challenge is what underlies the real weakness of the stock.
I keep thinking back to the interview I did on "Kudlow & Cramer" with Red Hat CFO Kevin Thompson. That guy was like a Vietcong guerrilla dedicated to the overthrow of the imperialist U.S. overlords. He was almost cartoonish in his desire to destroy Microsoft.
I don't own Microsoft stock. And it's hard to worry about a company with more money in the bank than any entity in the world. But to me, the deferred revenue is the sideshow; the Linux challenge is the real deal. It is the reason I simply am not tempted to buy the stock here. "
(in www.realmoney.com)