"Thursday November 9, 1:35 am Eastern Time
Lernout & Hauspie founders resign, to restate results
(UPDATE: Adds details throughout, executive quotes paras 12 & 17)
BURLINGTON, Massachusetts, Nov 9 (Reuters) - Belgian voice recognition company Lernout & Hauspie (NasdaqNM:LHSP - news) said on Thursday cofounders Jo Lernout and Pol Hauspie had stepped down as co-chairmen and managing directors.
The company added that it plans to restate previous financial results amid a regulatory inquiry into its bookkeeping.
It also said revenues for the third quarter ended September 30, were likely to be at least $40 million below its previously published range of $165 million to $185 million.
The announcements are part of a wider executive shake-up at the company, whose shares have lost 75 percent of their value since the beginning of the year.
The U.S. Securities and Exchange Commission and the pan-European Easdaq stock exchange are investigating the company's statements following a number of articles in the Wall Street Journal raising questions about L&H's Asian revenues and other accounting practices.
The company said Lernout and Hauspie will now serve as vice chairman of the company's board and will chair its technology advisory committee.
Nico Willaert also will step down as managing director, though he will remain on the board, Lernout & Hauspie said.
John Duerden, named chief executive in August, has become sole managing director, according to the company's statement.
Chief financial officer Carl Dammekens will leave that post and take on another, unspecified, position in the company, it added. A new chief financial officer was not named.
Roel Pieper, formerly L&H's vice-chairman, has been appointed chairman, the company said.
``In light of the ongoing investigation by the US Securities and Exchange Commission, I remain committed to a policy of full and complete transparency and cooperation,'' Duerden said in a statement.
Hauspie has taken a leave of absence from his responsibilities as a director due to medical reasons, the company said.
L&H also said it established a new executive committee, consisting of Pieper, Duerden, Lernout, and one other independent director, who will be announced shortly.
``Roel and I believe these changes will enable us to build upon our strong position in the speech and language technology markets and to restore investor confidence,'' Duerden said.
RESTATED RESULTS
In a separate announcement, Lernout and Hauspie said it expects to restate financial statements for 1998, 1999 and the first half of 2000.
The restatement is the ``result of certain errors and irregularities identified in the audit committee inquiry,'' according to the company's statement. L&H said it commissioned the audit committee inquiry last August.
L&H said it it does not expect the audit and restatements to be completed by Nov 14, 2000, adding that it does not expect its quarterly report for the third quarter to be filed on time.
``We have significant resources committed to this task and we are making progress,'' Pieper and Duerden said in a joint statement. ``We share the desire of our investors, customers and employees to put this matter to rest quickly.''
Lernout & Hauspie shares finished off 17/32 at $6-7/32 on the Nasdaq Wednesday. The stock has a 52-week high of $72-1/2 and a 52-week low of $4-11/16."
biz.yahoo.com
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"Thursday November 9, 1:47 am Eastern Time
NEWSMAKER-Lernout co-founder built firm on farmers' funds
By Gilles Castonguay
BRUSSELS, Nov 9 (Reuters) - In little more than a decade, Pol Hauspie helped build Lernout & Hauspie (NasdaqNM:LHSP - news) (L&H) from a fledgling software firm nestled in Belgian farmland into a leader in voice recognition technology with the likes of Intel Corp (NasdaqNM:INTC - news) as a client.
The company said on Thursday that Hauspie and cofounder Jo Lernout had stepped down as co-chairmen and managing directors as part of a wider executive shake-up at the company, whose shares have tumbled 75 percent this year, partly due to questions about its Asian revenues and other accounting practices.
Such was the drive of Hauspie and Lernout to bring the technology to market that they managed to raise money from Flemish farmers years before going to Wall Street.
``They were good salesmen,'' said one scientist who helped develop some products for L&H, jointly founded and chaired by the two men. ``They exuded...a tremendous belief in the future of the technology.''
But a U.S. regulatory probe into alleged discrepancies in the way L&H booked sales has thrown the company into its worst crisis since its inception in 1987.
The probe is also looking into a web of cross-shareholdings by which Hauspie and Lernout have kept control over L&H.
The crisis has sent L&H's stock plunging more than 80
percent from its high of $72 1/2 in March to $6 7/16 on
Wednesday.
Hauspie and Lernout founded the company after spotting the
technology in gadgets that used a crude version of voice recognition in Asia.
Neither of them had expertise in the field, so they bought rights to similar technology from scientists at Belgian universities and hired them to help bring it to market.
Voice recognition technology lets people give commands to computers by using their voice.
Both men had been in the technology sector years beforehand.
Hauspie had owned a firm that developed software for accountants and fiscal advisers, while Lernout had worked in sales for a number of technology companies, including Wang.
L&H's initial years were lean, forcing Hauspie and Lernout to sell bonds to Flemish farmers in Ieper, a small town in western Belgium where the company has its headquarters.
The scientist, speaking on condition of anonymity, said the two would lug around a computer to people's homes to show how the technology worked in order to convince them to invest. ``They used to call themselves the biggest beggars of Western Europe.''
Piet Depuydt, author of a 1997 book on L&H entitled ``De Spraakmakers'' (The Speech Makers), said one of their first products was a voice box that announced promotions to passers-by in shopping malls.
The two men share a close partnership. Lernout promotes the vision of enabling people to converse with computers, while Hauspie, a 49-year-old former accountant, gets the money to finance that vision.
``One always knew what the other one was doing,'' said KBC Securities analyst Kurt Janssens.
Depuydt said Lernout was more charismatic, opening the door to potential deals and leaving the hard negotiating to Hauspie.
``It was like good guy, bad guy,'' he said.
Hauspie and Lernout got their big break in 1993 when they sold a five-percent stake in L&H to U.S. phone giant AT&T Corp. for $5 million, valuing the company at $100 million.
Two years later, Hauspie and Lernout listed L&H's stock on the U.S. Nasdaq market, a first for a Belgian company. The stock soared more than 40 percent on its first day of trade, making them and a lot of their hometown supporters rich.
``They were local heroes,'' said Depuydt.
The company's growth has accelerated through a series of acquisitions, culminating last spring with the purchase of Dragon Systems Inc and Dictaphone Corp, its two biggest deals.
The acquisitions secured its position as a leader in dictation, transcription, and voice recognition.
Hauspie and Lernout's latest project has been the construction of a technology park dedicated to developing new applications for voice recognition technology.
``They really wanted to do something for the region,'' he said."
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