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Monday, January 24, 2005

Ouch-o-Desk! Autodesk (ADSK) cracks...

Lots of crackin' going on these days in the tech market. I decided to comment on Autodesk today because they're supposed to be one of the boring tech stocks. These guys make 3D graphing software for kriminy's sake! But, today an analyst came out and refuted the marketing numbers. What are 'marketing numbers', you ask? Marketing numbers are the cheesy statistics that companies put on their press releases and marketing paraphenalia that are always artificially inflated. It's most commonly found in the 'About' section at the bottom of the press releases. When a company says they have 450 enterprise customers with 600,000 users, you can bet that it's more like 228 with 321,000. Why is this so commonplace? Well, first of all these numbers are usually generated by marketing departments -- business units not generally known for adherence to the truth and a bias towards the positive. Hey, it's their job! Considering that there aren't any CPA's or GAAP for marketing literature, these numbers are always wildly optimistic. I can't think of a company getting busted for inflating customer numbers.
Until now. Unfortunately, some companies begin to believe their own marketing and use the numbers when they're on the line during analyst calls. This is when it gets sticky because often analysts will keep track of the numbers in an attempt to gauge fundamental growth of the company. If possible, it makes sense to obtain other metrics from these numbers as well (Revenue per Customer). So, maybe this was a case where the company got a little enthusiastic and paraded the marketing numbers in front of the numbers guys. Tsk, tsk, everyone knows you don't put the marketing literature in front of the accounting department. Accountants actually count things (theoretically at least, unless you're engaged in company-wide fraud, which isn't that far-fetched) and they often can smell a rat (when properly incentivized).

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