Liberate Technologies Inc’s revenue-recognition problems have turned out to be far more serious than the company expected, and it has placed COO Donald Fitzpatrick on leave pending the results of an investigation.
While the company announced last month that it was holding an inquiry into a questionable single-transaction license fee of $1.84m in the fourth quarter of its 2002 financial year, it has now uncovered questionable transactions totaling around $10m during 2002 and the first quarter of 2003. Other suspect transactions are also under investigation in a probe conducted with its auditors PricewaterhouseCoopers.
As if this were not bad enough, the interactive TV software vendor has warned that it is withdrawing its revenue and earnings guidance for future quarters and that pro forma revenue for the current quarter will be materially below its previous forecast of $15m to $20m, while the pro forma net loss per share will be materially greater than its previous guidance of $0.12 to $0.16.
San Carlos, California-based Liberate reported spectacular growth last year with revenue increasing 55.3% to $80.3m. Revenue has fallen back sharply in the current financial year as debt-laden cable TV companies reduce spending.