What happened

Shares of Amdocs (NASDAQ:DOX), a provider of software and services to communications and media companies, slumped on Wednesday after Spruce Point Capital Management released a negative report on the stock. Amdocs stock was down about 9% at market close.

So what

Spruce Point believes Amdocs stock could decline between 25% and 50% in the intermediate term, to as low as $30 per share. The reasons behind that expected decline include flat to negative organic growth, mergers and acquisitions used to prop up the growth rate, and various accounting gimmicks.

A declining chart with lists of numbers behind it

Image source: Getty Images.

Spruce Point pointed to "a jumble of IT and media businesses" acquired over the past decade that are "only tangentially relevant to Amdocs' core services" to make its case that Amdocs was using questionable acquisitions to drive growth. It also accused the company of aggressive accounting, using "a playbook nearly identical to that which it used during the dot-com boom to create an illusion of healthy growth."

Now what

Spruce Point Capital has a short position in Amdocs, so it has every incentive to sow doubt about the company's performance. Amdocs has not responded to the report as of market close Wednesday.

While reports from short-sellers can sometimes be over the top, it's always worth considering the points being raised.

Check out the latest Amdocs earnings call transcript.