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What: Shares of brand management company Iconix (NASDAQ:ICON) collapsed on Friday after the company released preliminary results for the third quarter, slashed its guidance for the full year, and announced that it would be restating previous financial statements. At noon Friday, the stock was down 55%.

So what: Following an accounting review by a special committee of the company's board of directors, Iconix announced that it would need to restate some of its financial results from fiscal 2013, 2014, and 2015 in order to correct accounting errors. According to Iconix's press release, operating income in 2014 will be reduced by $6 million, while operating income in the first half of 2015 will be increased by $1.6 million.

Inconix also provided preliminary results for the third quarter, which will include three special items. First, the company will take a $12.2 million charge to increase reserves related to its accounts receivables. Second, a $3.8 million tax-related charge will be taken to correct an error in the company's 2014 federal tax return. And third, the company will take $7.1 million in charges related to the accounting review, correspondence with the SEC, and severance costs related to the transition of the company's management.

Lastly, Iconix slashed its guidance for the full year. Licensing revenue is expected to be between $370 million and $380 million, down from a previous range of $410 million to $425 million. Non-GAAP EPS is expected to be between $1.35 and $1.40, down from previous guidance of $2.00 to $2.15.

Now what: Iconix CEO Peter Cuneo had this to say: "While we are disappointed in the restatement of our results and revision to our guidance, we believe the actions being taken will create a more solid foundation for Iconix and represent a positive step toward the future of the Company. As we look forward, Iconix continues to have significant business strengths from which to build, including its diversified portfolio of consumer brands, profitable business model and strong free cash flow generation. All of us at Iconix are focused on capitalizing on these strengths and better positioning the Company so that we improve our results and enhance value for shareholders."

The amount of bad news being thrown at Iconix shareholders is staggering, and it's no wonder that the stock has been more than cut in half. The stock now trades at about five times the low-end non-GAAP earnings guidance for the full year following Friday's collapse, a price that reflects some serious pessimism regarding the company. Accounting issues should never be taken lightly, and investors are severely punishing the stock for the massive guidance cut.

Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.