Micromuse expects financial restatement

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Micromuse expects financial restatement

Telecommunications network and service management supplier Micromuse has launched an internal inquiry into its accounting practices.

The software company began examining its accounting practices in September, prompted by "questions about past accounting treatment of a small number of discrete and seemingly unrelated accounting entries", said Mike Luetkemeyer, Micromuse's chief financial officer.

The company expects the inquiry to result in a restatement of the company's earnings for the last four financial  years.

Although he declined to give specific examples of the types of errors that occurred, Luetkemeyer said they would not have a material impact on the company's reported revenue or on existing cash balances.

Luetkemeyer blamed the errors on the company's speedy growth and equally speedy downsizing during the years 2000 to 2003.

"During that rapid growth we probably didn't grow our resources in financial control as rapidly as we should have and during the rapid cutbacks we probably cut too fast and too far, and some of the internal discipline broke down."

Micromuse expects its first-quarter 2004 revenue to slightly exceed the $34m to $35m it had previously predicted it would earn, but the company will now incur approximately $2m in expenses relating to the inquiry.

Robert McMillian writes for IDG News Service


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