They are going to have to reprice those options again. :) The situation continues to implode, though CPTH may survive if they can cut their burn. The convertible debt is not due until 2005. I bought this one for a bounce that never occurred and bailed at 2 3/8 for a 25% loss.
dailynews.yahoo.com
Thursday April 5 9:03 PM ET
Critical Path Results Revised Down Again
By Lisa Baertlein
PALO ALTO, Calif. (Reuters) - Critical Path Inc. (NasdaqNM:CPTH - news), the subject of shareholder lawsuits and a regulatory probe, said on Thursday software sales, without a clear basis, accounted for a full third of the $19.3 million by which the company had overstated last year's earnings.
The San Francisco e-mail infrastructure software vendor restated its results for the second half of last year on Thursday, the same day it disclosed that the U.S. Securities and Exchange Commission (news - web sites) had opened an investigation into its accounting practices.
It was the company's second downward revision to fourth-quarter results and one analyst said the admission of such deeply ingrained accounting problems had begun to threaten Critical Path's underlying business.
``It's kind of like, where do you stop with the uncertainty and problems. I can't believe that customers aren't shying away from Critical Path products,'' said Robert W. Baird & Co. analyst Dan Renouard.
``The extent of the final revisions is greater than originally estimated,'' the company said in a statement.
Critical Path reduced its recorded fiscal 2000 revenues by $19.3 million to $135.7 million after determining that $6.3 million in sales, primarily in the fourth quarter, were ``non substantive,'' or without any clear basis.
Another $7.1 million in sales related to software licensing transactions was excluded from the tally because the accounting principles that had been applied at the time were found to be questionable, the company said.
The remaining $5.9 million was revenue that was recognized in 2000, but which should have been, or could still be, recognized in later accounting periods, the company said.
``You can pretty much conclude that the company was getting a lot of pressure internally to meet their goal for profitability,'' said George Chandler, of Frost Securities in Dallas.
In mid-February, Critical Path revised its fourth-quarter loss to nearly double what it had previously reported after determining already recorded sales would not result in revenue. In subsequent months, it said it was also looking into certain transactions in the third quarter and that the people involved, including a former chief executive officer, were no longer working for Critical Path.
``It's our expectation that our actions in the last two months will close the books on this once and for all,'' Larry Reinhold, Critical Path's chief financial officer, said in a conference call.
Critical Path said its net loss per share for the third quarter, excluding special charges, was restated to $18.6 million, or 30 cents a share, versus the previously reported loss of $8.7 million, or 14 cents a share.
The net loss for the fourth quarter, before charges, was revised to $23.3 million, or 33 cents a share, compared with the net loss of $11.5 million, or 16 cents per share, reported previously.
Fiscal 2000's net loss, after charges, grew to $78.9 million, or $1.31 a share, from the previously reported loss of $57.2 million, or 95 cents.
``The restatements are pretty dramatic,'' said Renouard.
Critical Path also said it wrote down about $1.3 billion in goodwill and other intangible assets because of a decline in the value of its stock and acquisitions.
The company, which had $216.5 million in cash and debt of $300 million on Dec. 31, did not give analysts any clues about how its business was faring in the current quarter.
Critical Path shares, which hit a year-high of $87 last May, were halted in trade Thursday on Nasdaq at $1-17/32 ahead of the announcement. |
