Data base software vendor and full time accounting headache, Informix Corp, has finally revealed the full extent of the trouble caused by its optimistic revenue recognition policies. Having been forced to completely restate 14 quarters worth of results stretching right the way back to 1994, the Menlo Park, California-based company has seen a cumulative reduction in revenues of $278m and a reduction in reported earnings of $236m. The problems center around exactly when and where Informix booked revenues from sales of software to its resellers, and having carried out an extended audit, the policy is now to recognize income only when there are no longer any significant remaining uncertainties related to the earnings process, the company said. Quite where this leaves the original policy wasn’t made entirely clear. In August, Informix broke the news that its 1996 figures were likely to be adjusted downwards by $70m-$100m. The reality is that last year’s revenues have been chopped by $211m while the $97.8m profit has metamorphosed into a $73.6m loss. The news was announced alongside the disastrous third quarter results. For the three months to September 28, losses came in over three times higher than the consensus of analysts estimates at $0.73 per share. In total, third quarter losses were $110.7m on revenues of $149.9m, and due to the restatement, the company declined to provide comparative figures. The incumbent chief executive officer responsible for the mess, Phill White, was replaced in July by the former president of 3Com Corp, Robert Finocchio. And unsurprisingly, the chief financial officer has also gone, replaced by former Octel Communications Corp man, Jean-Yves Dexmier. Finocchio said the third quarter results were weak but not a surprise; to him at least. Analysts had failed to account for a restructuring charge of $49.7m in the quarter. In terms of Informix’s liquidity problems, the company was able to announce at least some good news. A $75m credit facility has been arranged with the Bank of Boston, $60m worth of land originally earmarked for a new HQ has been sold at cost to Intel Corp, and $50m worth of private equity investment has been raised. Finocchio said he believed his company would now avoid the disastrous threat of a de-listing from the Nasdaq exchange – and late Wednesday his belief was confirmed. The Nasdaq Listing Qualifications Panel found the company to be in compliance with its requirements for continued listing, and the stock symbol moves back from IFMXE to IMFX from today (Thursday). Unhappily, however, the past irregularities can’t yet be consigned to history. The US Securities and Exchange Commission has now woken up and having spotted the stable door flapping wildly in the wind, it has ordered a formal investigation. In the light of the restatement, we are not surprised there is an SEC investigation, said Bob Finocchio.
