From the course: Running a Profitable Business: Revenue Recognition
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The MicroStrategy story
From the course: Running a Profitable Business: Revenue Recognition
The MicroStrategy story
- MicroStrategy sells business intelligence software. The early foundation of MicroStrategy's product line was its corporate data mining program. The program comes through terabytes of data in an unwieldy corporate database looking for interesting relationships. - This data mining program was very successful. And MicroStrategy doubled its revenues each year from 1994 through 1998, growing from 1994 revenues of 5 million to 1998 revenues of 106 million. - The company went public in June of 1998 with shares opening at 12 dollars per share and ending the first day of trading at 21 dollars per share. - With its rapid past revenue growth and rapid expected future revenue growth, MicroStrategy share price eventually reached 333 dollars per share. - But a substantial amount of this apparent rapid revenue growth was due to overly aggressive revenue recognition practices. - Subsequent S.C.C. investigation confirmed that MicroStrategy had overstated its revenue, and the inquiry incurred a…
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