Following the pounding Baan Co NV’s stock endured after its first quarter results announcement, the Dutch enterprise resource planning company suffered further pain this week when its shares plummeted 12% on the news that an annual filing with the Securities and Exchange Commission contained unusual items, including a high volume of transactions with affiliated parties. Shares trading on the Nasdaq exchange initially dropped to around $42, a far cry from the year’s high of $55.50 in April prior to publication of its first quarter results. These results showed first quarter net income down by 81% to $2.4m on turnover up 32% to $176m (CI No 3,395) falling well short of Wall Street’s expectations. The latest filing with the SEC shows that Baan put $11.6m worth of software licenses through its books in 1997, but that these licenses hadn’t actually been sold by the end of the year. The filing states that the licenses were sold by the end of the first quarter of 1998, but prior to this they were held in inventory by ‘independent third parties’. The filing also suggests Baan recognized $13m in revenue in 1997 from an arrangement it has with Baan Midmarket Solutions, a distributor in which Baan Co NV holds a 15% stake. It has been suggested that this revenue represented the value of potential future license revenue. The company’s shares have now fallen by a total 25% since the first quarter results were published, closing on Wednesday at $43.50, and prompting chief executive Klaas Wagenaar to call the reaction overblown. The company said it will release a statement addressing the matters raised by the filing. á
