Interactive television software maker Liberate Technologies
suspended its chief operating officer Friday after revealing
that as much as $10 million in revenue generated in the past five quarters
may be questionable.
The firm also pulled its economic guidance for forthcoming quarters as a
result of the revelation.
Liberate has been conducting an internal audit into its books since Oct.
15, questioning the appropriateness and timing of the recognition of $1.84
million in revenue from a single transaction recorded in its fiscal fourth
quarter 2002. At that time, the company said it would file a restated Form
10-K/A and a delayed first-quarter Form 10-Q when it completed the review.
The firm used its independent auditors, PricewaterhouseCoopers, and Latham
& Watkins, independent counsel retained by the Audit Committee, to help it
go over its books. The company said it found that a number of its fiscal
2002 and first quarter fiscal 2003 transactions — amounting to about 11
percent of its revenues for that period — were questionable, and said it
is continuing to investigate additional transactions.
Liberate said it placed Chief Operating Officer Donald Fitzpatrick “on
leave pending the conclusion of the investigation.”
After withdrawing its previous guidance, Liberate said it expects pro forma
revenues for the current quarter to be “materially below” the $15 million
to $20 million it had forecast.
The company said it now plans to file its restated Form 10-K/A and its
first quarter 10-Q in December 2002.