it has to do with sarbanes oxley and new financial controls that have to be put into place. these new controls also require that the ceo and cfo sign off.
it's being overdone price wise but it's coming in at the tail end of a long drop;
even if they have to restate prior quarters for some issue ... this is NEW law/requirements; new PEOPLE are responsible personally ...
IDT and NTOP are each companies full of attorneys:
Sarbanes-Oxley Act,
The Company is reporting preliminary financial results because it recently identified deficiencies in its internal financial controls, two of which may impact the financial information for the second quarter of fiscal 2005. The first of these relates to fixed assets and depreciation expense.
New systems have been designed and are currently in service; however, prior balances of fixed assets and accumulated depreciation are being reviewed to assess whether there is a need for adjustments.
The second financial control deficiency relates to deferred revenue, which is the accounting liability booked to record prepayments by customers. Controls are in place to evaluate the adequacy of the Company's deferred revenue liability as reflected on its balance sheet. However, management believes those controls may not have adequately reflected certain terms and conditions related to some of the Company's products.
If that is the case, an adjustment may need to be recorded to increase the deferred revenue liability resulting in an equal decrease to reported revenue. None of the aforementioned potential adjustments will impact the Company's cash position.
The law changed.
Do a search for the companies doing the same thing right now. This is what those companies are reporting, now:
“Management believes the systems previously in place to track blah blah blah were "significantly deficient" as defined by Public Company Accounting Oversight Board's Auditing Standard No. 2 ("AS No. 2").
startribune.com
thelawyer.com
Under the SEC's rules, an issuer must: maintain internal control over financial reporting; evaluate, with the participation of the chief executive officer (CEO) and the chief financial officer (CFO), the effectiveness of internal control as of the end of each fiscal year; and evaluate, again with the participation of the CEO and CFO, any change in its internal control that occurred during the fiscal year that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting.
……………
Factors which may affect the Company's results include, but are not limited to … the Company's ability to satisfy in a timely manner the requirements of Section 404 of the Sarbanes Oxley Act and the rules and regulations adopted pursuant thereto …
Ntop, and everyone else, must now have certain new practices in place; and those practices audit past practices. At the end, Jonas has to sign off. I don’t think that is a bad thing.
1) audit
2) put the new controls in place
the key is here ... ntop is financially understaffed. It relies on idt, and can't. As ceo, alroy is now liable, and he wasn't there. even if they restate, it's because new controls are mandated by everyone, and they're not alone in enacting the different, tighter standards.
The Company is examining the impact of these deficiencies and will review their conclusions with its independent registered public accounting firm, Ernst & Young. While adjustments that may be recorded as a result of this process may result in changes to the preliminary financial information for the second quarter fiscal 2005 results and/or restatements of the financial results of prior periods, at this point, the Company has not concluded that the financial results of prior periods will need to be restated.
As a result of the two aforementioned control issues, and additional process related deficiencies, which primarily relate to its financial statement close process and the adequacy of its finance department staffing levels, the Company has determined that, even if the identified deficiencies do not result in material adjustments to its financial statements this quarter, the deficiencies, taken in the aggregate, are significant enough to be reported as a "material weakness" in the Company's financial controls as defined in AS No. 2.
***
i typed a response to the rest of it, but it's not helpful. you are you, and it's easy to say in a few words to someone do something else, but there was no sense of personal responsibility for your part in that solution. sorry.
idt has a very different style to their conference calls. it's a committed, group effort. in this last one, they were asked about ntop .. and the response was a recognition that the company has poor public recognition (i too think management has repeatedly kicked the share price down, through things it could manage better, as well as had the share price come down because of things it does not control.) i have learned through this experience to also look at competitors .. if the share price of eght is down, and the share price of ntop is down, .... and the prices are about the same when a few weeks ago they were not, then there's also a market problem going on. they are leveled out to the lowest common denominator, no matter what is going on.
idt management said that net2phone has the best voip tech out there. that's an opinion from someone who isn't often asked, who has a vested interest and inside knowledge of what goes on, and i too think that that is what they have, and i've thought about it ... looked frequently at the complaints on other voip boards by shareholders. there's a letter that went to packet8 management about getting a new ceo.
the issue is signing up msos or telecoms. that is what it was a year ago, that is what it is now. they've moved off the edge, but have to keep going. they don't burn cash fast enough to go out of business, before they get enough customers to keep going. so coming back to the issue, they have to accrue enough cable telephony subscribers to get a different sort of public recognition. get some different initiatives going. i look at that stuff every day.
the global services division is not going to grow fantastically; they don't want to do away with it. if they could pull in more money thru it and keep the margins, they would. they can't, and they won't go back to wholesale. itxc (teleglobe) is now worth less than a dollar a share. this is where the market is at, and what it is doing.
better voip tech means something, or it doesn't. and i absolutely believe that longs in eght or dddc, believe they have the right voip ... but it's not. but that doesn't mean they don't have subscribers, the subscribers are both satisfied and disatisfied, and the share price reflects the fact that nothing significant has happened to move those companies off their share price base, and keep them off.
because those companies aren't going away, we have to move further into this ... where differences come out. Vonage wins the PR game; it doesn't win the QoS game. Vonage fights cable. Vonage is famous, and doesn't file public reports. ntop, eght, dddc, ibas, itxc are infamous according to their shareholders, and file publicly. |
