Shares of Comverse Tech (CMVT) plunged Wednesday, a day after the company announced it uncovered additional accounting errors in connection with its internal review of stock options practices.
The stock was recently off $2.59, or 12.8%, to $18.05.
The company said late Tuesday that its board identified errors in recognizing revenue related to certain contracts, errors in recording certain deferred tax accounts and misclassifications of certain expenses in earlier periods.
In addition, areas of financial reporting under investigation include the possible misuse of accounting reserves and the understatement of backlog in fiscal 2002 and prior periods. Comverse previously had disclosed its preliminary conclusion that the actual dates of measurement for certain past stock-option grants for accounting purposes differed from the recorded grant dates for such awards.
The company said it has substantially completed its investigation of employee stock-option practices and has made a preliminary determination of the effect on its previously issued financial statements. The investigation by a special committee of the board continues, and the company is unable to estimate the effect of the other accounting issues on its previously issued financial statements or the time it will take to complete the necessary restatements.
As a result of the expanded investigation, the company expects it will require additional time to file its periodic reports with the
Securities and Exchange Commission
. The company does not know whether the newly identified accounting issues or resulting delay in the company's ability to be current in its periodic filings will result in a lifting of the stay and a delisting of the company's shares from the
Earlier this month, the company's former general counsel pleaded guilty to a count of criminal conspiracy in connection with the company's options backdating practices.
The company's former chief executive, Kobi Alexander, fled the country and was arrested in September in Namibia. He's fighting extradition to the U.S., where he awaits a 35-count indictment for various charges including securities fraud and bribery.
Comverse is one of nearly 150 companies being investigated by federal authorities for manipulating options prices to benefit insider recipients of grants.