Business intelligence software vendor Business Objects SA is facing legal action from the Securities and Exchange Commission over its failure to disclose its backlog of unshipped orders.
The move could herald a crackdown on the software sector, which traditionally does not reveal backlog.
Business Objects, which said it would vigorously defend its position on the issue, insisted that the proposed action would not assert claims under the anti-fraud provisions of the securities laws. None of the company’s officers or directors are named as defendants.
The company revealed in May that the SEC was conducting an informal inquiry into its accounting practices with respect to backlog. It now says that the inquiry does not involve revenue-recognition issues.
The company believes its disclosures are compliant with the securities laws and are consistent with industry and general practice with respect to disclosing backlog, it said in a statement.
Business Objects, which is currently in the throes of absorbing Crystal Decisions Inc, has had a difficult year, and news of the SEC’s action pushed the shares down 5.56% to $19.55. First-quarter revenue was well below analysts’ expectations, and last month it warned that third-quarter figures would be below market estimates.