Nvidia Says SEC Is Investigating Accounting Practices (Update3)
By Greg Chang 02/14 17:48
quote.bloomberg.com.
Santa Clara, California, Feb. 14 (Bloomberg) -- Nvidia Corp., whose stock was the best performer in the Standard & Poor's 500 Index last year, said the U.S. Securities and Exchange Commission and the U.S. Attorney's office are investigating its accounting.
The computer graphics-chip maker's shares slid as much as 11 percent. The SEC is reviewing the recording of reserves in the fourth quarter of fiscal 2000 and first quarter of 2001, and product costs recorded in the second and third quarters of 2001, Nvidia Chief Executive Jen-hsun Huang said on a conference call.
The U.S. Attorney's office and SEC have interviewed at least one former employee for the latest investigation, Huang said. Nvidia has started an internal review with assistance from auditor KPMG LLP and law firm Cooley Godward, he said.
The SEC last year investigated company employees for trading based on inside information that Nvidia had won a contract to provide chips for Microsoft Corp.'s Xbox video-game console in March 2000. A former employee was fined $250,000 in December for insider trading.
Nvidia shares fell as low as $55.40 following the report, after rising 76 cents to $62.16 in regular trading. The shares rose more than fourfold last year.
Part of the current investigation is about the possibility that $3.6 million in product costs booked in the second and third quarters of 2001 should have been recorded in the first quarter, Huang said.
Nvidia replaced Enron Corp. in the S&P 500 index on Nov. 29.
Audit Committee
The chipmaker's internal investigation is being led by its audit committee, consisting of directors James Gaither, a venture capitalist; William Miller, a consultant; and Brooke Seawell, a venture capitalist, Huang said. The investigation will cover periods in addition to the ones highlighted by the SEC, Huang said.
The SEC first contacted the company about the investigation on Jan. 14, he said.
On the conference call, Huang read from a company statement and said he wouldn't comment further or take questions about the investigation.
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