MRV Dismisses & Replaces CFO After Financial Error
Optical vendor MRV Communications has dismissed CFO Stephen Garcia and replaced him with board member Mark Bonney, after the company admitted problems with a series of business transactions in Italy that were not correctly reported to the SEC. The reporting snafu caused MRV to file its second-quarter earnings late, company officials explained during MRV's earnings call this week.
After MRV CEO Dave Stehlin briefly acknowledged that late earnings filing and welcomed Bonney aboard on the earnings call, he left it to the new CFO to explain what happened: "It was determined that Tecnonet, our Italian network integration business, recorded revenue on some transactions that customers had asked to be billed for, but [asked MRV] to hold the inventory." While so-called bill-and-hold practices are allowed under generally accepted accounting principles in Italy and the US, the transactions failed to meet SEC reporting requirements, Bonney said.
Bonney described the revenue effect on MRV as "immaterial." Accounting corrections result in a roughly $2 million revenue reduction for MRV, a $200,000 loss of gross profit and a $1.8 million inventory increase.
An MRV spokeswoman offered no further details on the exit of Garcia, who had been CFO since April 2012. Termination of Garcia's employment was mentioned in an SEC filing this week, just two weeks after Garcia's name was listed atop MRV's notice of late quarterly report filing with the SEC. Bonney, former CFO of consumer marketing company Direct Brands, will continue to be an MRV board member, and will also carry the title of executive vice president.
The reporting problem overshadowed what looked to be a decent quarter for MRV, which has been making strides throughout this year to overcome a long period of poor performance and indecisiveness related to its optical strategy. Stehlin has refocused MRV on optical, guiding the company to revamp its products, while also remaking its sales team and efforts. (See BTE Bits: A Packet-Optical Review, MRV Unveils Senior VP of Sales and MRV Bounces Back.)
For the most recent quarter, MRV reported a revenue increase of 13% compared to the second quarter last year, to just more than $43 million.
With its new products, like its OptiDriver and OptiPacket platforms, the vendor has been winning over a range of customers, including Telstra, whose MRV-powered Carrier Ethernet 2.0 services made the short list of Leading Lights award finalists this year, but also several data center operators. (See Leading Lights Finalists 2014: Most Innovative Ethernet/Optical Service and i3D.Net Picks MRV's OptiDriver.)
— Dan O'Shea, Managing Editor, Light Reading