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Technology Stocks : MicroStrategy Inc. (MSTR) -- Ignore unavailable to you. Want to Upgrade?

To: Rupert who wrote (573)	6/9/2000 2:28:00 PM
From: LTK007	Respond to of 717

relevant part from upside article---company pumped this sky high on PHONY earnings reports<<Biz \| <<MicroStrategy fights back page 3: Murky waters A brief article in Forbes in early March noted that in several instances, MicroStrategy had announced deals after a quarter was closed yet the revenue had somehow found its way back into the previous quarter. Clearly, the company needed a more sophisticated, granular set of accounting techniques. As an enterprise software vendor it had generated a single revenue stream and reported each deal as a single transaction. But with a services and hosting model it was generating multiple ongoing revenue streams that would accrue over the period of the contract. The accounting problems came dramatically to light after PricewaterhouseCoopers executives in New York flew down to Virginia to go over MicroStrategy's books, which were being kept by the regional PwC office. The New York contingent reportedly had been alarmed by the Forbes report, especially with the secondary offering imminent, and wanted to make sure all was kosher. It wasn't. MicroStrategy had finally hit its threshold. At the prompting of PwC National, MicroStrategy announced it was restating its finances. Instead of generating $205 million in revenue for 1999 and a diluted per share net income of 15 cents, it had, by these new measures, only done $151 million with a diluted net loss of 44 cents. The previous year showed similar declines. The stock, which had been pumped way up by the approaching secondary offering and Saylor's evangelism, went into free fall. Soon after, MicroStrategy was hit by myriad class-action suits filed by law firms on behalf of angry shareholders. Then, in late March, the Securities and Exchange Commission (SEC) announced it was launching an investigation into the matter and had requested documents related to the revisions. (The Wall Street Journal reported May 24 that federal prosecutors are monitoring the SEC's civil probe to see if separate criminal action is warranted.)>>