Vitesse Woes Worsen
Vitesse Semiconductor Corp. (Nasdaq: VTSS) has declared its earnings from the past three years are unreliable and will have to be restated, an ugly discovery amid the company's investigation into the timing of stock options.
Shares of Vitesse plummeted on the news, which was released late last night. The stock was down 59 cents (23.5%) at $1.92 midday.
Three Vitesse executives -- CEO Louis Tomasetta, executive vice president Eugene Hovanec, and CFO Yatin Mody -- were put on leave earlier this month as the board began its investigation into the timing of stock option grants. Due to the investigation, Vitesse had to cancel the earnings call scheduled for early this week. (See Vitesse Cancels Earnings Call.)
Vitesse was one of several companies pegged in a Wall Street Journal article about the suspicious timing of some stock-option grants. Covering multiple U.S. companies in varying industries, the article noted several executives who appeared to have back-dated their options to maximize their own profits.
Analysts had believed Vitesse's earnings wouldn't be substantially changed by the options investigation. But now the company's board is saying its quarterly earnings reports for the past 13 quarters shouldn't be relied upon -- and earlier reports may be troublesome as well.
All this came up during the options investigation, as the board uncovered some accounting issues it didn't like (and didn't previously notice, apparently). Some were related to "credits issued to or requested by customers," according to Vitesse's press release; others related to the accounting behind some payments received. The evidence led the board to believe revenues and accounts receivable could be incorrect for certain periods. (See Vitesse Restates Earnings.)
The board has named Shawn C.A. Hassel as acting CFO. He's a managing director with Alvarez & Marsal LLC, a financial services firm that lists "crisis and interim management" among its specialties.
— Craig Matsumoto, Senior Editor, Light Reading