Shares in interactive-TV player Liberate Technologies dropped 23 percent
Wednesday after the company said it will restate financial results for the
fourth quarter and its fiscal year ended May 31.
Liberate said it recently discovered 'facts calling into question the
appropriateness and timing of revenue recognition involving a single transaction
license fee of $1.84 million.'
While the license-fee payment represents just a small chunk of the $21
million in pro-forma revenue Liberate reported for the fourth quarter, the news
was disconcerting, as it came about one week after upbeat Liberate executives
hyped the company at a New York meeting with Wall Street analysts and the
Liberate officials declined to say when the company discovered the accounting
problem or which customer the license fee came from.
The company said its audit committee hired outside counsel to conduct an
inquiry, and it expects to deduct $1.84 million from its total fourth-quarter
revenues and 'reclassify some or all of this revenue as deferred revenue.'
Liberate stock, far off the high of $12.74 apiece hit in
January, closed at $1.47 Wednesday, down 42 cents. The stock closed Thursday at