Bad mix, more red ink for Informix
Disastrous might not be strong enough to describe Informix Corp.'s pathetic third-quarter results as the database software developer on Tuesday announced losses of $111 million, or 73 cents per share, on sales of $150 million for the quarter ended Oct. 28.
Worse yet, the embattled firm also announced that it included yet another fiscal year in its restatement of past results. Company officials said it added 1994 to the audit of financial results for 1995, 1996, and the first half of 1997.
"It's ugly -- real ugly," said Jim Meyer, an analyst at Janney Montgomery Scott. "Not just from an execution standpoint, but from an operations standpoint. Let's just say that its credibility is obviously in question and so is its future."
Hear Chairman and CEO Robert Finocchio defend his turf.
Once all the smoke and mirrors are put away, Informix officials concede the audit reveals that it actually did $278 million less in revenue than in the period stated, and took a $236 million hit to profits.
A company statement said the adjustments "were primarily the result of lack of compliance with the company's procedures and controls, and more conservative application of its revenue recognition policy."
On Tuesday, Informix shares actually gained 47 cents per share to $8.03.
But it was this careless and, some say, deliberately sloppy accounting practices that beckoned the wrath of Securities and Exchange Commission executives who had initiated delisting proceedings against the Menlo Park, Calif.-based company last summer.
The firm's painful yearly financial breakdown hints at the underlying weaknesses that have made Informix more of an also-ran than a true competitor to hated rival Oracle Corp.
"Hopefully, the new administration in there now will get things straightened out," Meyer said. "At least they're attempting to come clean and show just how bad things have been there in the past few years."
As for the latest quarterly loss, CEO Bob Finocchio said it was weak and expected "in light of the uncertainty caused by the announcements of our extended financial review process and the financial restatement we made during the period."
First Call consensus expected Informix to report a loss of 21 cents per share.
Operating expenses, however, dropped from $235 million in the first quarter to $195 million in the third quarter as the company has trimmed its payroll by more than 1,000 employees since the end of last year.