Microsoft EDD – Q1 FY 09 – end Sep 30, 2008 – SIMPLE ANALYSIS

[bumidan]

this is my understanding from EA's explanation (i actually talked to investor relations long time ago)..

So, if Madden (for example) cost $60 (assume you bought it directly from EA)
and it has an online component that EA will have to pay for (eg servers)..

at an estimated time of 6 months..

THEN EA, with their GAAP reporting has to report (and they should have a formula) like this:

Revenue
Month 1 = 20
Month 2 = 10
Month 3 = 10
Month 4 = 8
Month 5 = 8
Month 6 = 4

Total = $60

bec EA has to "pay" or has the expense of running servers for 6 months, then they have to match revenue with expenses at the SAME TIME they are incurred.

thats y when u look at EA's books there are a wide disparity between their PUBLICLY REPORTED GAAP financial statements vs their OTHER financial statement for comparison

hope that is simple enough.