Sonus Networks Backdating

Revenue is solid, though.
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Sonus Networks (SONS) says it has found backdated stock options and will have to restate its financial reports in the wake of its internal review.

The Chelmsford, Mass., Internet phone switchmaker didn't give any details of its restatement plans. The news comes as Sonus released a partial report of its third quarter results.

Sonus says it had $75 million in total sales for the quarter, but the company shared only a limited update on its financial performance. Analysts were looking for sales of $66.4 million, according to Reuters Research.

The company says "third quarter net income increased meaningfully from the second quarter of 2006," according to a press release.

Sonus is among dozens of companies that are being probed for instances of stock option backdating. Investigators, regulators and auditors are examining whether companies dated grants to enhance the value of stock options to executives and key employees.

The company's audit committee has concluded that backdating did occur between 2000 and 2003. Sonus says the review found no improper conduct.

Sonus also says that it will not meet its Nov. 9 filing deadline for its third quarter financial report. The company has received a delisting notice from the Nasdaq for prior deadline filing violations and says it has met with a Nasdaq panel. The panel has made no ruling about Sonus' status.

"We are very pleased with our record financial performance in the third quarter, which reflects our market leadership," says CEO Hassan Ahmed in a press release.

The stock rose 6 cents to $5.17 in after-hours trading.