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Revenue Recognition and SAB 101 The rise and fall of MicroStrategy encapsulates the boom and bust, sprinkled with accounting scandal, associated with the high-tech economy from 1998 through 2002. At its peak, MicroStrategy was worth $31.1 billion and was trading at a price-to-sales ratio of 152 and a price-to-earnings ratio of 2,220. But in a sell-off precipitated by a revenue-related accounting restatement, the shares reached a low of $0.47 on July 9, 2002, down from their peak of $333.00 on March 10, 2000 (a 99.9% drop). In the wake of this price collapse, MicroStrategy’s CEO was fined by the SEC, and the company’s auditor was sued by outraged investors. An outline of MicroStrategy’s rise and fall is given below. Many people have described Michael Saylor as the smartest person they know. [Footnote: Mark Leibovich, “MicroStrategys CEO Sped to the Brink,” The Washington Post, January 6, 2002, p.A01. This article was the first in a four-part series by Mr. Leibovich that ran January 6-9, 2002 in The Washington Post. All four articles serve as source material for this brief history of MicroStrategy.] He grew up outside Dayton, Ohio, the son of an Air Force sergeant, and entered MIT on a ROTC scholarship, intending to become an Air Force pilot. While at MIT, Saylor developed skills in computer simulation, and he wrote his undergraduate thesis using a computer simulation to model the reactions of different types of government systems to catastrophes such as wars or epidemics. Since a heart murmur had cut short his chances of becoming a pilot, Saylor became a computer modeler for DuPont. In 1989, Saylor started his own computer modeling business, called MicroStrategy, in partnership with his MIT roommate, Sanjul Bansal. The foundation of MicroStrategy’s product line has been its corporate data-mining program. The program combs through terabytes of data in an unwieldy corporate database, looking for interesting relationships. For example, MicroStrategy customers McDo