Enterasys Networks revises revenue expectations

Networking company Enterasys Networks is to revise its revenue estimates for its financial first quarter, which ended 30 March.

Networking company Enterasys Networks is to revise its revenue estimates for its financial first quarter, which ended 30 March.

The US Securities and Exchange Commission is already conducting a formal, non-public investigation into financial reporting issues at Entersasys and its affliates, including Aprisma Management Technologies.

The company had discovered financial accounting irregularities relating to the terms of a $4m (£2.5m) sales contract recorded by its Asia Pacific operations. Three senior employees were fired as a result of the investigation into the accounting practices.

Enterasys said that its fiscal first-quarter revenue is now estimated at $122m (£78m) to $127m (£81.3m), up from an original estimate of $110m (£70.4m) to $120m (£76.8m).

Because of the financial review, the first-quarter numbers still have not been finalised and the company has not yet filed its annual accounting for 2001 with the US Securities and Exchange Commission.

The company also reported a preliminary revenue estimate of $120m to $125m (£80m) for the second fiscal quarter ending 29 June.

Enterasys said it expected "significant adjustments," including changes to revenue recorded during the 10-month period ending 29 December 2001 and the financial year ending 3 March 2001.

The adjustments will primarily involve revenue recognised in connection with investment transactions, the amount and timing of revenue associated with sales to distributors who were granted rights of return or extended payment terms, and other matters affecting revenue recognition.

Gerry Haines, executive vice-president of strategic affairs for the company, said the two time periods are being reviewed separately because Enterasys changed its fiscal-year reporting calendar during the period.

"We would anticipate certain downward adjustments to revenue," but the final results won't be fully known until the internal review is done, he said.

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