IBM Didn't Disclose One-Time Gain Cut 4Q Op Costs
Dow Jones News Services
NEW YORK (Dow Jones)--International Business Machines Corp.'s (IBM) fourth-quarter outlook, given in mid-January, didn't disclose that the $300 million sale of its optical transceiver unit to JDS Uniphase Corp. (JDSU) was used to lower its operating costs, the New York Times reported Friday.
The article suggested the sale should have been booked as a one-time gain.
Rather than cite the gain, IBM said its fourth-quarter profit grew because of increased productivity and sales of certain products, the Times said.
"We considered the transaction as the ordinary course of business," an IBM spokeswoman told the newspaper. "This is not an unusual practice. Our auditors have reviewed it and approved it."
IBM slides in pre-market on NYT article (IBM)
By Michael Baron, CBS MarketWatch.com
Last Update: 8:16 AM ET Feb 15, 2002
IBM (IBM) is down $2.14, 1.9 percent, at $105.75 over Redibook ECN after a New York Times article published Friday called attention to the fact that Big Blue used the sale of a business unit to lower its operating costs. The article says IBM "did not provide details of the transaction to investors or account for it as a one-time gain, as is the practice." The sale in question, that of its optical transceiver business to JDS Uniphase (JDSU), generated $300 million for IBM. It was only disclosed in a brief reference during IBM's conference call in mid-January. The article notes that IBM has not yet filed its fourth-quarter and annual financial statements with the SEC and that it has until March to do so. IBM beat Wall Street earnings expectations by a penny a share in the fourth quarter, despite sales that came roughly $1 billion below the consensus view. The NYT article quotes an unidentified technology analysts as saying that using the gain to offset expenses, taking into account the company's tax rate, could have boosted earnings by as much as 12 cents a share. |
