Telecom Firms Get Twisted & Delisted
The companies getting delisting notices lately include service providers McLeodUSA Inc. (Nasdaq: MCLD) and YAK Communications Inc.; optical systems vendor Sycamore Networks Inc. (Nasdaq: SCMR); components maker Digital Lightwave Inc. (Nasdaq: DIGL); wireless networking equipment supplier Proxim Corp. (Nasdaq: PROX); broadband gear supplier Carrier Access Corp. (Nasdaq: CACS); and B-RAS vendor CoSine Communications Inc.
Analysts say at least two of the companies -- Proxim and CoSine -- are in various stages of selling off their assets. Another few are struggling to restate past earnings or simply to report current earnings on time (see CoSine: 'Come & Get Us', Proxim Sells Assets for $21M, and Sycamore Gets Delisting Notice).
Still others, analysts say, may be having trouble coming in line with recent regulations. Susquehanna Financial Group analyst Joe Chiasson says: “It pertains mostly to... a failure to fully comply with the requirements of Sarbanes Oxley...
“I think you see companies submitting their financial statements late or they are submitting them without the full signoff by their auditors."
Optical networking company Sycamore says its delisting notice resulted from delays in filing its 10-Q for the period ended April 30, 2005. The official word out of Sycamore is that it is studying the numbers around the valuation of “certain stock options” granted between 1999 and 2001. Sycamore says it is appealing the notice.
Carrier Access’s May 4 delisting notice stems from the filing of incomplete 2004 10-K and a late filing of a 10-Q for the first quarter of 2005. Carrier Access is appealing the Nasdaq’s delisting threat and the company’s stock will remain listed pending a decision.
Delisting notices don't necessarily mean a company is toast and often they don't lead to delisting. Nasdaq affixed an "E" to the end the YAK's trading symbol after the company was sent two delisting notices for the late filing of earnings from the December 2004 and March 2005 quarters. YAK has since filed both 10-Qs, bringing it into compliance with Nasdaq requirements. The "E" was removed June 9.
Beyond filing difficulties, analysts say, there is little uniformity in the sources of the companies’ troubles with Wall Street.
McLeod is in trouble because it can't keep its stock price up to at least $1 per share. McLeod announced today that it would not appeal Nasdaq’s determination that the stock be delisted.
Digital Lightwave failed to comply with Nasdaq’s stockholders' equity, market value of shares, and net income requirements and was delisted June 3.
— Mark Sullivan, Reporter, Light Reading