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Calm down
TheBoyTrader
(36/M/Wall Street)
Aug 14 1998
2:36PM EDT
=Daou Sys Stk-2: CFO Says Rumors False, 2Q Remains Unchanged
NEW YORK (Dow Jones)--Daou Systems Inc. (DAOU) stock plunged 38% Friday on rumors the
company will be revising its second-quarter results, market sources said, but the
company's chief financial officer refuted the talk.
"I hear that there is some question here about accounting adjustments," one analyst
said.
Another market source said SG Cowen & Co. had reported that the company filed a 10Q
form with the Securities and Exchange Commission revising its accounting for general and
administrative expenses for the period
According to the source, SG Cowen said the increased expenses could negatively impact
Daou's second-quarter results by 4 cents a share for the period.
One New York trader confirmed that SG Cowen & Co.'s comments were helping push the
shares south.
"Cowen went out on their sales call with an interpretation we don't support," Daou's
chief financial officer Fred McGee said.
McGee explained that there was a misunderstanding concerning the company's
second-quarter filing with the SEC.
"Nothing has changed from the time we issued our press release," the executive said,
referring to the company's earnings statement released on July 29.
McGee believes the confusion stemmed from merger and acquisition expenses which were
recorded under the general and administrative expenses line of Daou's second quarter
earnings table.
"There are not restatements on any of the financials and the 12 cents a share is
correct," McGee added.
Daou Systems reported an operating net of 12 cents a share for the second quarter, in
line with analysts' estimates. After merger-related expenses, the company recorded a loss
of 4 cents a share for the period.
McGee said Friday's decline was intensified by investors with short positions in the
shares.
SG Cowen would not confirm the existence of or provide a copy of its comments. The
firm declined to comment.
A spokeswoman for the SEC confirmed that a 10Q filing regarding the quarter ended June
30 had been filed by the company late Thursday.
The San Diego company's shares recently changed hands at 11 9/16, down 6 15/16, or
37.5% on Nasdaq volume of 6.6 million, compared with average daily volume of 347,200.
Earlier, the shares hit a 52-week low of 8 7/8, eclipsing the low of 13 5/8 set on June
12.
-Nicole Ridgway; 201-938-5174
(END) DOW JONES NEWS 08-14-98
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