Two senior executives at e-commerce software maker Peregrine Systems resigned suddenly Monday after auditors raised red flags
concerning $100 million in accounting revenues.
The announcement of the potential accounting errors and the departures of
CEO Steve Gardner and chief financial officer Matt Glass sent Peregrine’s
stock into a tailspin, slipping below the $1.00 mark for the first time
ever.
Shares in Peregrine lost more than 65 percent of its value by the end of Monday on news that auditors KPMG had found potential inaccuracies in revenues recorded
during fiscal 2001 and 2002. Shares in Peregrine slipped below the $1.00
mark at press time, trading at 99 cents, down from the $2.57 close.
Peregrine said KPMG, which replaced disgraced auditors Arthur Andersen last
month, flagged potential errors on some transaction, which were first,
recorded as revenue from indirect channels but may have been written off in
later quarters. The potential accounting problems were flagged by KPMG,
which the company hired in April to replace Arthur Andersen to serve as its
independent auditor.
Peregrine said the channel transactions and other accounting matters under
investigation might impact financial results for periods in fiscal 2002 and
earlier. The Securities and Exchange Commission (SEC) has been apprised of
the audit committee’s internal investigation, the company said.
“The scope and magnitude of these matters have not been determined. Based on
the preliminary information reviewed to date, certain transactions involving
revenue recognition irregularities, totaling as much as $100 million, have
been called into question and may have been recorded during periods in
fiscal 2001 and 2002,” Peregrine said.
The San Diego, Calif.-based Peregrine also announced the resignations of CEO
Steve Gardner and CFO Matt Glass. Rick Nelson has been named to act as chief
executive officer and a director of the board from his position as
Peregrine’s executive vice president.
Peregrine also announced Fred Gerson would serve as interim chief financial
officer and Charles La Bella as executive VP and senior counsel. Gerson is
currently CFO of the San Diego Padres baseball franchise.
