Veritas CFO Resigns Over Falsified Resume
Updated from 8:24 a.m. EDT
In Latin, veritas means truth. While Kenneth Lonchar may have known that, he didn't learn it at Stanford University.
Lonchar, Veritas Software's (VRTS) chief financial officer and executive vice president, resigned Thursday after the company learned he misstated his educational credentials, including falsely claiming to hold an MBA from Stanford.
Veritas Chairman and CEO Gary Bloom said the misstatement "has no bearing on the accuracy of our financial results or the quality of our financial procedures and controls." The company affirmed its guidance on expected third-quarter results, saying it expects revenue of $350 million to $370 million and earnings of 11 cents to 13 cents a share on operating margin of 21% to 23%.But jittery investors quickly responded by hammering Veritas shares. The stock sank $2.09, or 14.4%, to $12.41 in recent trading. "The announcement certainly reduces the Street's confidence in the company's financial statements," Deutsche Bank Securities analyst Sabrina Ricci said in a note Thursday morning. Ricci, who noted that CFO Magazine awarded Lonchar the CFO Excellence Award last year, downgraded her rating on Veritas to a hold from a buy. Her firm hasn't done any banking with Veritas. "The market is really starting to take down names in a manner that is pricing in not only current problems but much larger issues down the road, and whether those issues materialize is anybody's guess," said Bryan Perry, head trader and stocks editor for ChangeWave Research. ChangeWave has been short Veritas shares for the last six months, in part because its survey of about 350 to 400 executives has shown IT spending in data storage continues to deteriorate. "It is a candidate to go under $10 very easily," Perry said. "It could take several days if not a couple weeks for institutional shareholders to unload the stock," he added, noting that October is when many mutual funds jettison positions for tax purposes. Lonchar served as Veritas CFO since 1997, when the company acquired OpenVision. He had been OpenVision's finance chief since 1995. "I regret this misstatement of my educational background," Lonchar said. "Under the circumstances, I believe my resignation is in the best interests of both the company and myself." Jay Jones, senior vice president and chief administrative officer, has assumed the role of acting chief financial officer.
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