Options Expensing Casualties?
Mercury Interactive (MERQ) shot up 10% today on a press release which gave partial and selected Q4 results.
Why partial and selected? Because Mercury in under investigation and ordered by the SEC to restate Q2 and Q3 results. The deadline for the restatement was January 3rd, 2006 which was an extension date granted by NASDAQ for Q2 and Q3 statements.
Mercury could not meet the deadline and subsequently was notified by NASDAQ that they would be delisted. Why couldn't they meet the deadline? Three words: Stock Options Expensing.
January 3rd brought this press release:
"Mercury Interactive Corporation (NASDAQ: MERQE) today announced that its stock will be traded on the Pink Sheets after receiving notification from NASDAQ that the Company’s stock will be delisted from The NASDAQ National Market effective as of the opening of business on January 4, 2006."
Funny how they got delisted for the very same thing that Fannie Mae has been pulling for over two years. Will there be more of these companies going to pink sheets because of options expensing? And why would any investor hold this stock pending an SEC investigation and the spectre of a 25% reduction in the companies earnings by the expensing of options?
From Mercury's Website: items that could impact valuation.
1) the timing of completion of the Company’s review, restatement and filing of its historical financial statements and the filing of its Forms 10-Q for the second and third quarters of fiscal year 2005, 2) the impact of the expensing of stock options and stock purchases under Mercury’s employee stock purchase program pursuant to Financial Accounting Standards Board’s Statement 123 including, without limitation, the impact of the restatement.
Due to the pending restatement, Mercury is not able to give GAAP net income or fully diluted earnings per share, and non-GAAP net income or fully diluted earnings per share for 2005 at this time. Mercury expects to report complete financial results for the fourth quarter of 2005 following the completion and filing of its restated financial statements and SEC filings.
Why partial and selected? Because Mercury in under investigation and ordered by the SEC to restate Q2 and Q3 results. The deadline for the restatement was January 3rd, 2006 which was an extension date granted by NASDAQ for Q2 and Q3 statements.
Mercury could not meet the deadline and subsequently was notified by NASDAQ that they would be delisted. Why couldn't they meet the deadline? Three words: Stock Options Expensing.
January 3rd brought this press release:
"Mercury Interactive Corporation (NASDAQ: MERQE) today announced that its stock will be traded on the Pink Sheets after receiving notification from NASDAQ that the Company’s stock will be delisted from The NASDAQ National Market effective as of the opening of business on January 4, 2006."
Funny how they got delisted for the very same thing that Fannie Mae has been pulling for over two years. Will there be more of these companies going to pink sheets because of options expensing? And why would any investor hold this stock pending an SEC investigation and the spectre of a 25% reduction in the companies earnings by the expensing of options?
From Mercury's Website: items that could impact valuation.
1) the timing of completion of the Company’s review, restatement and filing of its historical financial statements and the filing of its Forms 10-Q for the second and third quarters of fiscal year 2005, 2) the impact of the expensing of stock options and stock purchases under Mercury’s employee stock purchase program pursuant to Financial Accounting Standards Board’s Statement 123 including, without limitation, the impact of the restatement.
Due to the pending restatement, Mercury is not able to give GAAP net income or fully diluted earnings per share, and non-GAAP net income or fully diluted earnings per share for 2005 at this time. Mercury expects to report complete financial results for the fourth quarter of 2005 following the completion and filing of its restated financial statements and SEC filings.
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