Feeds

Oracle: spreading rumors

Questionable revenue recorded

  • alert
  • submit to reddit

Build a business case: developing custom apps

Oracle claims the way PeopleSoft accounted for some software revenue recorded in the third quarter may be questionable, due to the controversial Customer Assurance Program refund offer PeopleSoft had in place. Oracle could benefit from any uncertainty generated, but probably only if the SEC became involved.

During a conference call, Oracle CFO Jeff Henley said he believed PeopleSoft had a revenue recognition problem. He claimed that certain CAP terms in contracts may have created liabilities that would prevent revenue being immediately recorded.

The CAP offers PeopleSoft buyers a refund of between two and five times their license fee if PeopleSoft is acquired and there's a subsequent reduction in product support. CAP has been offered in three quarters, including this one, but with different terms in each.

In Q3, the CAP was apparently changed to include a board coup as an acquisition event that could set the ball rolling for possible refunds. According to Oracle, this created potential liability for PeopleSoft itself, rather than an acquirer.

"Since the revised plan can be triggered without an acquisition, the contingent obligation under the customer refund program could be an obligation of PeopleSoft," Mr Henley said. "You should not book revenue until that refund or cancellation right terminates."

Mr Henley argued that under American Institute of Certified Public Accountants accounting rule SOP 97-2, which deals with software revenue reporting, it's possible some revenue should not have been recorded until after the CAP terms in contracts had expired. A PeopleSoft spokesperson said the company was confident that all its revenue was recognized appropriately.

Oracle, naturally, could stand to benefit from any fear, uncertainty and doubt accompanying accounting uncertainty at PeopleSoft. If PeopleSoft suffered these problems, its share price could be reduced, making a takeover easier. But it is likely the SEC would have to become involved before Oracle's claims started being taken seriously.

PeopleSoft's market capitalization is currently above what Oracle is offering, and Oracle, if anything, is talking about PeopleSoft being worth even less due to the liabilities CAP refunds could impose on an acquiring company.

Source: Computerwire/Datamonitor

Related Research
Oracle vs. PeopleSoft: Shakeup in CRM

Build a business case: developing custom apps

More from The Register

next story
Sysadmin Day 2014: Quick, there's still time to get the beers in
He walked over the broken glass, killed the thugs... and er... reconnected the cables*
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
Microsoft says 'weird things' can happen during Windows Server 2003 migrations
Fix coming for bug that makes Kerberos croak when you run two domain controllers
Cisco says network virtualisation won't pay off everywhere
Another sign of strain in the Borg/VMware relationship?
VVOL update: Are any vendors NOT leaping into bed with VMware?
It's not yet been released but everyone thinks it's the dog's danglies
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Backing up Big Data
Solving backup challenges and “protect everything from everywhere,” as we move into the era of big data management and the adoption of BYOD.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.