Thursday, May 04, 2006

From Bad, to Worse, to Really, Really Bad

Sometimes the news really does keep getting worse. Just ask Comverse Technology, Inc.

Back on March 14, the company announced that it was creating a special committee of its board of directors to review matters related to stock options grants and indicated a possible need to restate prior results.

Barely a month later the bad news wagon was picking up steam as Comverse announced on April 17 that the company was going to delay filing its 10-K and would restate its historical financial statements for fiscal years 2001-2005 and for the first three quarters of the fiscal year 2006.

In the wake of those announcements, at least six derivative actions have been filed according to this 8-K - four in the New York State Supreme Court and two in the United States District Court for the Eastern District of New York and several securities class actions, also in the United States District Court for the Eastern District of New York.

Then on Monday the company announced the resignations of Kobi Alexander, the company's Chairman and CEO, David Kreinberg, the CFO, and William F. Sorin, a director, Senior General Counsel, and Corporate Secretary.

Then, fast on the heels of the resignations, according to press reports (W$J here and AP via Yahoo! here), Comverse received a subpoena this week from the U.S. attorney's office for the Eastern District of New York regarding a continuing probe into potential backdating of stock option grants at the company.

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