Investors in business software and service provider Sapient
Although the company has provided preliminary results, it's often had to adjust those reports and has frequently revised them down. With the quarterly reports -- going as far back as last June -- now filed, along with the 2006 annual report, shareholders will be able to get a better sense of how their company was really operating. They'll need to wait a couple of days yet, however, to get the 2007 quarterly reports.
It certainly seems that the accounting mess was more of an operational distraction than a business one. For the first quarter of 2007, Sapient said that service revenues jumped 39% to $121.3 million, well ahead of analyst forecasts of $118 million. It was also able to swing a profit this year and reported a $0.01 per share gain, compared to a comparable loss in the year-ago period.
Unfortunately, the business of Sapient was overshadowed by its internal woes. Last year was marked by significant turmoil, not least of which was the installation of a revolving door in the CFO's office. The company went through three separate financial officers in 2006; at the same time it was also dealing with a stock options-backdating scandal and moving accounting and administrative functions to India.
Its CEO also resigned just before the audit committee announced that both he and the CFO had actively engaged in backdating the options, though it was not so bad that he could sign onto the company with a consulting contract. The cost to the company was $47 million on a pre-tax basis from 1996 onward.
According to the preliminary reports, revenue growth has been strong; operationally, though, it was still a loss on a GAAP basis. On a non-GAAP basis it says it recorded a $7.7 million profit. To do so, it needed to remove stock-based compensation expenses, along with restructuring and audit charges. Some of those expenses are indeed one-time, or at least shouldn't be recurring, but an options charge will remain a cost of doing business.
Over the past three months, Sapient's stock has been performing well, particularly when compared to Accenture
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