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It must be earnings season. InformationWeek is up with its quarterly article filled with wonderment that enterprise-software companies book more services revenue than license revenue. If the link in the last sentence is busy, read essentially the same InformationWeek article from back in April 2010.

OK, here's the reason for InformationWeek repeating this tired meme. It's summer here in the Northern Hemisphere and we bloggers can all get to the beach or the golf course or the dime novel a lot quicker if we just regurgitate something we wrote earlier this year.

Normally I would not stoop to that tack (add sailing to my list above) but it is important that you do not depend on technical journalists for your investment research. When InformationWeek got so breathless about this observation back in April, I wrote:

"Evans article's breathless wonder about these accounting practices when it comes to Oracle (NYSE:ORCL) and by extension to SAP (NYSE:SAP) and other enterprise software suppliers is beyond a little odd. I'm thinking he might be purposefully trying to mislead readers except I don't know why or about what.

"The revenue splits the articles talk about among software licenses, maintenance subscriptions, and professional services for companies that follow Oracle's former and SAP's still current business model is decades old. If you adopt that business model and are good at it, the only time license revenues exceed maintenance and services revenues is early in your existence."

That information is still true in July for the same reason. It applies to IBM (NYSE:IBM) with a little different twist that much of its software revenue is really bundled into a mainframe lease agreement rather than a service contract. It is less true of Microsoft (NASDAQ:MSFT) but Microsoft wishes it were otherwise.

Fore!

Disclosure: No financial interest in companies mentioned except the $12 a year I pay Microsoft for Office

Source: Enterprise Software: Don't Believe Everything You Read