RSA Security shares take a hit on SEC probe

[R. A. Hettinga]

 http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3ISGYEZWC&live=true&tagid=IXLI0L9Z1BC

RSA Security shares take a hit on SEC probe
By Paul Abrahams in San Francisco
Published: January 27 2002 22:05 | Last Updated: January 27 2002 23:59


Shares in RSA Security tumbled 28 per cent on Friday after the company
revealed that the Securities and Exchange Commission had launched an
investigation into the group's apparent failure to disclose changes in the
e-security company's accounting practices, as well as certain trades in the
company's securities.

Art Coviello, chief executive and president said he did not believe there
had been any wrong-doing at the group and that the Massachusetts-based
company was cooperating fully with the investigation. Shares closed at
$11.86.

However, after the market closed, the group put out a statement saying the
investigation would not require any change to its financial statements.
That helped the shares climb 5.4 per cent in after-hours trading to $12.50.
The collapse of Enron, the power trading group which is the subject of
federal investigation, has made investors hyper-sensitive to accounting
issues.

The SEC is looking into whether a change in RSA's method of estimating
distributor revenue should have been disclosed earlier in a press release
rather than being buried in a footnote in its first-quarter results last
year. At that time, the company said it had begun recognising revenues when
they shipped products to customers rather than when it received evidence of
sales to end-users.

On Thursday, the company announced its fourth-quarter results, and in a
conference call, it told analysts that the change in accounting procedures
had added $3m in revenues. In 2001, the group generated sales of $282.6m,
an increase of 0.9 per cent. Without the change, revenues would have
fallen, year on year.


 
 
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-- 
-----------------
R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'



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