Liberate Suspends COO Over Accounting
Saying that as much as 11 percent of the revenue it recorded in thepast five quarters may be questionable, the interactive television softwaremaker suspends its chief operating officer.
Interactive television software maker Liberate Technologies suspended its chief operating officer Friday after revealing that as much as $10 million in revenue generated in the past five quarters may be questionable.
The firm also pulled its economic guidance for forthcoming quarters as a result of the revelation.
Liberate has been conducting an internal audit into its books since Oct. 15, questioning the appropriateness and timing of the recognition of $1.84 million in revenue from a single transaction recorded in its fiscal fourth quarter 2002. At that time, the company said it would file a restated Form 10-K/A and a delayed first-quarter Form 10-Q when it completed the review.
The firm used its independent auditors, PricewaterhouseCoopers, and Latham & Watkins, independent counsel retained by the Audit Committee, to help it go over its books. The company said it found that a number of its fiscal 2002 and first quarter fiscal 2003 transactions — amounting to about 11 percent of its revenues for that period — were questionable, and said it is continuing to investigate additional transactions.
Liberate said it placed Chief Operating Officer Donald Fitzpatrick “on leave pending the conclusion of the investigation.”
After withdrawing its previous guidance, Liberate said it expects pro forma revenues for the current quarter to be “materially below” the $15 million to $20 million it had forecast.
The company said it now plans to file its restated Form 10-K/A and its first quarter 10-Q in December 2002.
