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Technology Stocks : S3 (A LONGER TERM PERSPECTIVE) -- Ignore unavailable to you. Want to Upgrade?

To: Parker Benchley who wrote (8904)	1/22/1998 9:42:00 AM
From: stock talk	Read Replies (1) \| Respond to of 14577

There must be something in the water out there in Calif. < PALO ALTO, Calif., Jan 21 (Reuters) - Sybase Inc. said on Wednesday it would have to restate its 1997 results and lower revenue previously reported by at least $60 million because of "improper" sales contracts written by five salespeople based in Japan. The database software company, which was on the verge of reversing a three-year decline in sales, also will have to report a substantial loss for the fourth quarter and the year. "This is a pretty severe blow to the company," said James Pickrel, analyst at investment bank Hambrecht & Quist in San Francisco. "They were ready to show some positive momentum." Sybase Chief Executive Mitchell Kertzman said he was "shocked and disappointed" about the revelation. He said the salespeople had real customers lined up and had signed genuine sales contracts. But they also included so-called "side letters" that promised, among other things, to allow the customers to return the products. The side-letters invalidated the contracts, violated Sybase's revenue recognition policy and will force the company to take back $60 million to $65 million in sales reported over the previous four quarters. "This small group of people willfully violated our policy and lied to us," Kertzman said. "It drives me crazy." All of the individuals, who were not identified, were fired or resigned, he said. In a conference call with analysts to discuss the revelation, Sybase executives gave a bleak outlook for sales from Asia because of the region's economic woes, Pickrel said. Sybase, based in Emeryville, Calif., was expected to report fourth-quarter results on Wednesday. Because of the discovery, the company will postpone the announcement of its final results for a week. For the first nine months of the year, Sybase had reported net income of $13.1 million, or 17 cents a share, on revenue of $723.7 million. With the fourth-quarter loss, the company likely will report a big loss for the year, Pickrel said. Earlier this moNth, Sybase had warned analysts to expect results ranging from a loss of 7 cents a share to a profit of 12 cents on revenue of $245 million to $250 million. Wall Street had expected Sybase to earn 13 cents a share, according to a recent analyst survey by Zacks Investment Research. Sybase is the second-biggest independent publisher of database software, a niche that has been suffering amid management turmoil and declining demand in the past year. Sybase itself has been struggling for three years to get its momentum back. The company stumbled in 1995 when it released a product that had several technical shortcomings. In November, Informix Corp., a Sybase rival, also had to lower reported revenues for the past three years. The company blamed its restatement on over-aggressive revenue recognition policies. Oracle Corp., the biggest database vendor, watched its stock plunge in December after it reported it had run out of potential customers in some industry segments because of market saturation.