& cplSiteName &

Optical Companies Challenged by SEC

Light Reading
News Analysis
Light Reading
7/30/2002

The CEOs and CFOs of ten of the 40 companies on the Light Reading Index have been asked by the U.S. Securities and Exchange Commission to vouch for their financials. So far, only Corning has responded positively.

On June 27, the SEC issued an order requesting senior officers at 947 publicly traded U.S. companies with greater than $1.2 billion in annual sales to sign statements under oath that all their financial reports, including yearly and quarterly SEC filings, proxy statements, and any amendments to these, are accurate. Alternatively, execs who can't swear to the accuracy of their books must explain why they can't. Companies have until August 14 to respond to the order, unless they have an extension. CFOs and CEOs of each company must sign separate certifications, they can't file jointly.

The SEC's list includes the following optical networking companies:



Some non-Index firms involved in the optical market also made the SEC's list, including Acterna Corp. (Nasdaq: ACTR). A range of carriers are included as well, such as AT&T Corp. (NYSE: T), BellSouth Corp. (NYSE: BLS), Broadwing Inc. (NYSE: BRW), Genuity Inc. (Nasdaq: GENU), Level 3 Communications Inc. (Nasdaq: LVLT), Qwest Communications International Inc. (NYSE: Q).

Conspicuously absent are some firms that do large amounts of business in the U.S. but are headquartered internationally, including Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Fujitsu Ltd. (KLS: FUJI.KL), Marconi PLC (Nasdaq/London: MONI), Nortel Networks Corp. (NYSE/Toronto: NT), and Siemens AG (NYSE: SI; Frankfurt: SIE).

Companies on the list say they're doing all they can to get their certifications in on time. "We'll meet the requirements. I think it's important to reassure investors," says Rob Clark, a spokesman for ADC. But he says ADC has until September to submit its certification thanks to its fiscal calendar, in which the year starts in November.

Some responses seem vague. "We are fully confident in our financials and are working to comply with the order," says a spokesperson for Lucent.

At first glance, however, it seems the vouchers aren't going to materially affect investor activity in index companies. Despite being among the first handful of respondents to the SEC's order, Corning shares fell more than 20 percent today, trading at $2.48 late this afternoon.

Corning's case indicates that investors aren't too concerned that their main companies report back to the SEC. Indeed, some analysts say the reports are virtually meaningless as far as Wall Street's concerned.

Indeed, Corning's sworn statement that its earnings are accurate hasn't made a dent on Wall Street. The company's latest earnings report (see Corning: 'We'll Do What It Takes') and news of a dilutive stock sale (see Corning Makes Stock Offering) left investors cold. Moody's Investors Service and Standard & Poor’s have cut its debt rating (see Moody's Cuts Corning), and analysts such as Morgan Stanley Dean Witter & Co. have downgraded its stock.

Still, some analysts see the SEC's move as an important one. "It is encouraging to see management vouch for their financials. I do think that in this environment that is very important to investors," writes Max Schuetz of Credit Suisse First Boston Corp. in an email. "I believe that Corning is a company where very few would question their integrity -- just their end market demand and their cost structure."

The SEC is keeping a running tally of the respondents and will post their vouchers as they come in. See the full list here.

— Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com
(16)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 2   >   >>
next-gen-wisdom
next-gen-wisdom
12/4/2012 | 10:01:52 PM
re: Optical Companies Challenged by SEC
Headquartered Internationally!

That means take American's money out of the US before the SEC catch you?
Nomoredemo
Nomoredemo
12/4/2012 | 10:01:52 PM
re: Optical Companies Challenged by SEC
Are they on the list or they are part of the international club ?
BuckStopsHere
BuckStopsHere
12/4/2012 | 10:01:51 PM
re: Optical Companies Challenged by SEC
Nortel = NORthern TELecom, as in WAY northern, as in Ontario, Canada. Contrary to popular belief, Canada is not one of the United States of America.

The thing that really concerns me about this, and Bush's new bill, is that I was under the impression that we already had laws in place that held these people responsible. If we are not enforcing the laws we have now, what good is it going to do to enact more laws? It gets votes for the politicans creating new laws amid public outcry, but these new laws will be overlooked as soon as the cycle turns up just as the existing laws have been overlooked up to this point. For that matter, why isn't the Chairman of the Board signing financial statements along with all the board members? Aren't THEY the ones who are supposed to be looking out for shareholder interests? Or did I misread that chapter in school?
Mary Jander
Mary Jander
12/4/2012 | 10:01:49 PM
re: Optical Companies Challenged by SEC
Nortel, headquartered in Canada, does not appear on the SEC's list.
manoflalambda
manoflalambda
12/4/2012 | 10:01:49 PM
re: Optical Companies Challenged by SEC
LR writes:
Some responses seem vague. "We are fully confident in our financials and are working to comply with the order," says a spokesperson for Lucent.


Pat wants to make sure Rich McGinn didn't leave her any presents prior to her arrival... :)

Salute,
Manoflalambda
hookedonphotonics
hookedonphotonics
12/4/2012 | 10:01:47 PM
re: Optical Companies Challenged by SEC
OK, I understand they're a Canadian company but shouldn't any company that is traded on the NYSE (specifically the NASDAQ) be scrutinized in equal ways whether or not they're American or not.
BobbyMax
BobbyMax
12/4/2012 | 10:01:46 PM
re: Optical Companies Challenged by SEC
Thev SEC has chosen a first good list of optical networking companies to be audited. There may be some prima facie evidence against some of the companies. I would suggest that these company filings should be posted on the internet for scrutiny by the public.

The stock options, loans, taking vacation at company expense and other forms of corruptions such as hiring crony Board Members are very common in the high-tech industry.

It is not cleasr what accompanying documents these companies will supply to the SEC. Some of these companies may have accounting software has the capability to totally change all the numbers making it harder to audit these accounts.

Recent bill from the US senate does not mandate posting of stock options on the company's internal web site. It is equally surprising that the US Congress has not mandated the refund of money by the CEOs and others for engaging in corrupt activities and benefitting financially.
puddnhead_wilson
puddnhead_wilson
12/4/2012 | 10:01:45 PM
re: Optical Companies Challenged by SEC
>The thing that really concerns me about this, and Bush's new bill, is that I was under the impression that we already had laws in place that held these people responsible. If we are not enforcing the laws we have now, what good is it going to do to enact more laws?

I think the critical difference is actually in what you wrote. We do NOT have laws that hold these PEOPLE responsible, at least CRIMINALLY. We have loaws tht hold the CORPORATIONS they work for responsible, and criminal prosecution is only possible if we can show they were actually complicit with the fraud (i.e. we can't just say your books are cooked," we have to say, "your books are cooked, you were aware of it, and [perhaps?) you were not only aware they were cooked, but explicitly directed what termperature the oven should be set to." In other words, burden of proof of involvement questions.
papabear
papabear
12/4/2012 | 10:01:45 PM
re: Optical Companies Challenged by SEC
If they make them refund the money then, they would not have it available to contribute to their campaign funds.
jamesbond
jamesbond
12/4/2012 | 10:01:44 PM
re: Optical Companies Challenged by SEC
I am more interested in how Cisco and Sun's
responses.
Page 1 / 2   >   >>
Featured Video
Upcoming Live Events
October 22, 2019, Los Angeles, CA
November 5, 2019, London, England
November 7, 2019, London, UK
November 14, 2019, Maritim Hotel, Berlin
December 3-5, 2019, Vienna, Austria
December 3, 2019, New York, New York
March 16-18, 2020, Embassy Suites, Denver, Colorado
May 18-20, 2020, Irving Convention Center, Dallas, TX
All Upcoming Live Events