Autodesk drawn into stock option 'scandal'

CAD company has reported 'excellent' quarterly results, but can't reveal its profits while it investigates stock option allocations
Written by Colin Barker, Contributor

Computer-aided design and manufacturing company Autodesk announced a 21 percent growth in revenue in its second financial quarter on Thursday, only to find its share price hit by the ongoing probes into tech stock options.

The stock fell three percent after Autodesk revealed that, like many other companies, it had begun a review of its stock option grant practices. As a result, it is only releasing selected financial results until it completes the inquiry, which means profit figures for the quarter are not available.

Of the figures released, Autodesk said that licence revenue rose by 12 percent to $346m (£184m) from $309m a year ago and maintenance revenues rose very strongly by 64 percent to $104m from $64m a year ago.

Total revenues were up 21 percent at $450m, from $373m a year ago.

Europe, the Middle East and Africa (EMEA) is now the company's strongest region, the company said, with 24 percent growth taking it to $174m.

But this good news was marred by a statement from chief executive Carl Bass, explaining that the company was reviewing its share options. Bass was at pains to point out that the review was initiated by the company because it wanted to ensure that there were no outstanding issues around shares options.

A raft of tech companies has recently been hit by issues around stock options. On Wednesday, Geoff Tate, a director and former chief executive of Rambus, announced he was quitting the company as more details emerged of his role in the allocation of stock options.

Juniper Networks, Brocade, Comverse and Nvidia have faced, or are facing, inquiries into the disposal of share options and especially the timing of such disposals. Even Apple has faced an inquiry on the stock option issue.

But the situation at Rambus was possibly unique as Tate was both chief executive and the only member of the committee overseeing the award of share options, during a crucial quarter under review.

According to Ovum, the situation at Autodesk is quite different. "Based on what we know so far, Autodesk's performance in the quarter was excellent," the analyst firm said in a statement. "Presuming the options review gives the company a clean bill of health, the profit numbers for the quarter should be good too."

Autodesk's review of options "was initiated by the company itself because it wanted to ensure that it was clean", Ovum said. According to the analysts, Bass said "it would be wrong to read anything into the company's decision not to report profits, while other companies in a similar position were publishing profit numbers".

Ovum takes a dim view of the overall stock option situation, but suggested that "the scandal over back-dated share options is affecting the software industry disproportionately". Options, they point out, are widely used across the business sector to motivate top management.

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