IBM accounting concerns drag down market
Concerns about the manner in which the world's largest computer maker IBM calculated its 2001 fourth-quarter earnings have dragged down a Wall Street, already jittery from post-Enron accounting fears.
Concerns about the manner in which the world's largest computer maker IBM calculated its 2001 fourth-quarter earnings have dragged down a Wall Street, already jittery from post-Enron accounting fears.
IBM stocks slumped $5 to $102.89 at close of trading on Friday, pulling down the blue chip Dow Jones industrial average by one percent.
According to reports from across the pond, the fall in share price is due to investor concerns about whether IBM used gains from the sale of one of its business units at the end of 2001 to meet earnings expectations.
In December, IBM sold its optical-transceiver business to Canadian company JDS Uniphase Corp for $340m in stock and cash. According to its 2001 financials, the computer giant included this sale as intellectual property income and licensing royalties.
IBM has since defended its accounting policies, principally from a report in the New York Times which claimed the sale of the optical business should have been identified as a one-time gain.
In the past, the newspaper has questioned the accounting policies at IBM, including its inclusion of pension fund gains in earnings and lack of visibility on items.
In response, IBM spokeswoman Carol Makovich said: ‘IBM’s accounting is conservative and fully compliant with all regulatory standards.’
IBM is audited by PricewaterhouseCoopers LLP.
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