VideoVeriFone Holdings said accounting errors will force it to restate its financials for the first three quarters of this year. The news nearly halved the company's stock price Monday morning, wiping out about $2 billion in market capitalization.
The company, which makes payment-processing equipment, said the errors related to the valuation of in-transit inventory and allocation of manufacturing and distribution overhead to inventory. As a result, it materially overstated inventories and understated costs of net revenues.
The restatement will reduce previously reported inventories by about $7.7 million, $16.5 million, and $30.2 million as of January 31, 2007, April 30, 2007, and July 31, 2007, respectively, and reduce previously reported pretax income by about $8.9 million, $7 million, and $13.8 million.
VeriFone noted that these estimates include corrections of other unrelated errors discovered during its review. It also said it is evaluating the anticipated effect of the restatement on after-tax income for those periods.
The restatement will cause the company to delay the scheduled December 6 release of fiscal fourth quarter 2007 results.
"I am very disappointed to have to bring you this news and am committed to ensuring that we promptly and thoroughly remedy this situation," said chairman and CEO Douglas Bergeron.
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