Barely out of the gate, Openwave Systems (NASDAQ:OPWV) today updated guidance for its Q4 and FY 2006, which ended June 30. That quick-draw action is the good news for fans of the handset-software and wireless-infrastructure specialist. The bad news? Well, that might take a minute or two.

Earnings are expected to land significantly lower than previous guidance and analyst estimates, approximately breaking even on a pro forma basis. Wall Street wanted to see something like $0.22 per share of pro forma earnings. That figure roughly equals the official full-year guidance minus the results from the first three quarters, and management has done nothing to better line up investors' expectations with reality. The guidance and the analysts agree: Results will be way below expectations.

Sometimes earnings drift lower on higher sales, bringing a silver lining to the cloud. Not this time, though. Revenues should take a 25% hit, coming in about $30 million lower than the $120 million forecast by both the company's guidance and its analysts. I find it hard to believe that insiders saw nothing wrong with such a huge miss on the horizon, yet all the corporate communications have put on a brave face, with no hint of this belly flop. Today's announcement lowered 2007 guidance, but how much we can trust even those numbers?

There are other troubling issues to deal with. During the quarter, CEO David Peterschmidt exercised a significant chunk of his options in company stock, then immediately sold the shares. It happened to take place on the same day that Openwave was accused of options backdating, halfway into the quarter. Again, this makes me wonder whether Peterschmidt knew something the rest of us didn't.

When the first backdating lawsuits were brought against Openwave, the company joined a rather respectable club that includes Motley Fool Stock Advisor pick UnitedHealth Group (NYSE:UNH) and Juniper Networks (NASDAQ:JNPR). Other generally upstanding businesses have since joined, too, including Apple (NASDAQ:AAPL) and Marvell Technology (NASDAQ:MRVL). Chances are that at least some of these allegations won't lead anywhere.

But the conduct of Openwave's management regarding this massive underperformance, especially the lack of transparency about it, has me wondering what else might be amiss under the covers at this company. I'm not alone in my concern, either: The stock is down more than 30% today, with more shares traded in the first hour today than usually change hands in a normal week.

Some observers feel that Openwave is due for a management change. I hate to bash a Motley Fool Rule Breakers recommendation like this one, especially one in a field as promising as cell-phone software, but in the light of recent events, the current leaders have some explaining to do if they want to convince me otherwise.

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Fool contributor Anders Bylund owns none of the stocks discussed here, though UnitedHealth is his health insurance provider. Foolish disclosure is a model of transparency.