Tech wreck ’caused by accounting irregularities’

The resignation of the co-founder of US-based online media company CNet from
her position as chief executive came as the company revealed it found errors in
how it accounted for stock-option expenses.

While CNet said some instances of ‘backdating’ options occurred from the
company’s initial public offering in 1996 through to at least 2003, the firm’s
special review has not concluded that any current or recent employees ‘engaged
in intentional wrongdoing’.

CNet chief executive Shelby Bonnie is the second high-tech industry executive
to step down, after CEO of security-software maker McAfee also ‘retired’
following a similar probe.

McAfee said that with its review now mostly complete, it plans to file
restatements with the Securities & Exchange Commission as soon as possible.

CNet and McAfee are just two of several companies accused of pricing options
in a way unusually beneficial to the employees receiving them. Analysts say
several companies in the US are being accused of improperly accounting for the
cost of options in financial statements.

CNet’s stock slumped yesterday nearly 8% to $9.15, dipping to $8.80.

CNet will issue restated results after its internal review is complete. The
company also said it would not be able to file its quarterly report with the
Securities & Exchange Commission on time.

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