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Terayon Communication Systems, Inc. (TERNE) engages
in the development, marketing, and sale of equipment to
broadband service providers for delivering broadband
voice, digital video solutions (DVS), and data services to
residential and business subscribers in the United States.
On March 1, 2006, after the close of trading, the Santa
Clara, California-based company disclosed that it was
restating its financial statements for the year ended
December 31, 2004 and the first two quarters of the year
ended December 31, 2005. The Company revealed that
it was restating its financial statements because it
improperly recognized revenue.
More specifically, Terayon determined that it was improperly
recognizing revenue from a customer under a series of
contracts for delivery of products and services. The
Company indicated that it should have treated these
contracts as a single contract and should have deferred
recognition of revenue until all Company obligations under
the contracts were completed. The Company determined
that all revenue and expenses should have been deferred
to the fourth quarter ended December 31, 2005.
In addition, the Company reviewed its revenue recognition
policies relating to the recognition of sales of software and
products with “post customer” service contracts and
determined that, during 2004, it did not establish
vendor-specific objective evidence for its post contract
service revenue recognition. Instead, revenue that was
recognized during 2004 should have been deferred and
recognized over the life of the customer service contract.
Finally, the Company also disclosed that the SEC issued a
formal order of investigation concerning the Company’s
accounting.
Not surprisingly, this news wasn’t welcomed by Terayon
investors and its stock declined approximately 13% after
this news.
It appears that investors who purchased Terayon between
April 29, 2004 and March 1, 2006, are affected.
PHH Delays SEC Filings
PHH Corporation (PHH) provides mortgage and fleet
management services in the United States and Canada.
Shares of PHH fell last week after the New Jersey-based
Company announced that it would be delaying filing of its
Form 10-K with the SEC because of accounting adjustments
related to its spin-off from Cendant Corp. The Company did
not know when it would it would file its Form 10-K.
Regarding its delay, the Company indicated that it had
undertaken "an internal reorganization which required
significant accounting adjustments, and certain allocations
were made that are now the subject of additional review
by PHH and its independent auditors as part of the on-going
audit of its 2005 financial statements."
It appears that investors who purchased PHH between
May 12, 2005 and March 1, 2006, are affected.
If you are an affected investor in Terayon, PHH or any of
the other cases listed below that are under investigation,
you may wish to contact us at info@securitiessleuth.com
or 877.511.4717.
Cases Under Investigation
H&R Block (HRB). H&R Block Inc. stock plummeted
after the Company announced it will restate earnings
for fiscal years 2004 and 2005, as well as the first two
quarters of fiscal 2006, to correct accounting errors.
It appears that investors that purchased H&R Block
between August 26, 2003 and February 22, 2006
are affected.
ProQuest Company (PQE) On February 9, 2006, the
Company announced that it had discovered material
irregularities in its accounting and would have to restate
certain of its previously issued financial statements. Its
stock plummeted on this news. Investors who purchased
ProQuest between January 9, 2003 and February 8, 2006
are affected.
Dot Hill Systems Corp. (HILL) On February 3, 2005, the
Company announced its preliminary Fourth Quarter financial
results and that it would be restating its 2004 unaudited
financial results due to a data entry error that the Company
attributed to “the material weaknesses in its internal control
over its financial closing process.” Investors who purchased
HILL between April 23, 2003 and February 3, 2005 are affected.
Chicago Bridge &Iron Company (CBI) On February 3, 2006,
CBI fired its Chairman, President and Chief Executive Officer
and disclosed that its expects to issue revised guidance
regarding its results of operations for the year ended
December 31, 2005 and that all previous earnings guidance
issued by the Company for 2005 is no longer operative.
Investors who purchased CB&I between March 9, 2005 and
February 3, 2006 are affected.
Applica Inc. (APN) On April 20, 2005, the Company revealed
that its business was suffering and that it was marking down
inventory and experiencing increased warranty expenses.
Investors who purchased Applica between November 4, 2004
and April 28, 2005 are affected.
Amkor (AMKR) The Company’s stock plunged 25% after its
was disclosed that its gross margins had declined materially
and that its “product mix” had turned unfavorable. Investors
who purchased Amkor between October 27, 2003 and
July 1, 2004, are affected.
Take Two Interactive Software (TTWO) Since January 18, 2006,
Take Two investors have been stung by a series of negative
announcements. On January 25, 2006, the Company’s audit
committee chairwoman resigned and stated that management
failed to keep the board informed of key issues. Among other
things, the Company is currently being investigated by the FTC
for possibly engaging in unfair or deceptive practice in the
sale of its Grand Theft Auto video game. Investors who
purchased between October 25, 2004 and January 27, 2006
are affected.
Now with respect to settled cases. If you are an affected
investor – you purchased any of these stocks during the
relevant class period, you may wish to contact the claims
administrator to obtain additional information. Remember,
if you don’t submit your claim form, you won’t receive your
proportionate share of recovery.
Bristol-Myers Squibb (BMY)
Class Period: October 19, 1999 to March 20, 2002
Claims Deadline: June 30, 2006
Claims Administrator: Garden City
Eaton Vance Corp. (EV)
Class Period: May 25, 1998 to March 15, 1999, and
March 13, 2000 to March 2, 2001
Claim Deadline: May 5, 31, 2006
Claims Administrator: Complete Claims
Eagle Building Technologies (EGBT)
Class Period: November 21, 2000 to February 14, 2002
Claims Deadline: May 1, 2006
Claims Administrator: Berdon
eFunds Corporation (EFD)
Class Period: July 21, 20000 to October 24, 2002
Claims Deadline: May 5, 2006
Claims Administrator: Gilardi
Uniroyal Technology Corp.(UTCIQ)
Class Period: February 8, 2000 to May 13, 2002
Claims Deadline: June 28, 2006
Claims Administrator: Garden City
Solectron Corp. (SLR)
Class Period: June 18, 2001 to September 26, 2002
Claims Deadline: March 28, 2006
Claims Administrator: Garden City
Again, if you are affected by a settled case, then you should
contact the claims administrator (rather than us). However,
if you are an affected investor in any of the companies under
investigation, you many wish to contact us so that you
can consider your options.
Likewise, if you happen to be aware of corporate restatements
or other financial fraud -- especially if you're a victim --
you're encouraged to contribute to the Sleuth by giving your
own tip-offs at www.securitiessleuth.com or by e-mailing
info@securitiessleuth.com. You can also call Mark McNair
at 877-511-4717. If you have a friend or colleague you
think would benefit from The Sleuth, please pass along
this issue and ask them to sign up at
www.cartville.com/app/join.asp?MerchantID=47994.
Warmest regards,
Mark McNair
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