The one step forward, one step back dance continues at Nortel after the company said yesterday that its third restatement in as many years – unveiled last month – will now be expanded to include additonal revenue. The company said it won't know how much more revenue is involved but it has to do with incorrectly booking sales too early. As a result, these sales will have to be deferred to future periods. While it's embarassing for Nortel, there is a silver lining for CEO Mike Zafirovski's management team. The restatements are being done to rectify mistakes made by executives who have been fired or left Nortel. The revenue being shifted from the past to the future could actually make Mike Z. and his new team look good because previous years' results will look worse while Nortel's performance going forward will be better. If you're looking for reasons why Nortel is being so diligent about making sure it's results are totally correct, this is one of them. There's also the issue of Sarbannes-Oxley which forces executives to sign off on their results.
Stop the Restatement Insanity
The one step forward, one step back dance continues at Nortel after the company said yesterday that its third restatement in as many years – unveiled last month – will now be expanded to include additonal revenue. The company said it won't know how much more revenue is involved but it has to do with incorrectly booking sales too early. As a result, these sales will have to be deferred to future periods. While it's embarassing for Nortel, there is a silver lining for CEO Mike Zafirovski's management team. The restatements are being done to rectify mistakes made by executives who have been fired or left Nortel. The revenue being shifted from the past to the future could actually make Mike Z. and his new team look good because previous years' results will look worse while Nortel's performance going forward will be better. If you're looking for reasons why Nortel is being so diligent about making sure it's results are totally correct, this is one of them. There's also the issue of Sarbannes-Oxley which forces executives to sign off on their results.