Revenue restatement causes PictureTel woes

Revenue restatement causes PictureTel woes

Videoconferencing vendor PictureTel had an eventful September. Just weeks after announcing that it would restate some of its recent financial results, the company announced that it would restructure its executive line-up and that it had been hit with a shareholder lawsuit.

On Sept. 19, the Andover, MA-based company reported that it would restate its financial results for the first quarter of 1997 and the second half of 1996. The decision to reverse or defer some revenue was made after reviewing leasing and certain other indirect-channel transactions, according to the company.

PictureTel estimates that revenue in its 1997 fiscal first quarter will drop by approximately $1.5 million from its previously reported revenue figure of $118.2 million. Profit before tax will dip by approximately $1.7 million, about 35% of the previously reported quarterly profit of $4.7 million. The vendor will release the final restatements during the third week of October.

Fiscal 1996 revenue will decline by approximately $12 million, or about 2% to 3% of previously reported full-year revenue of $482.5 million. Profit before tax will drop approximately $3 million to $4 million for the year, or about 6% to 8% of its previously reported figure of $51.7 million.

Shortly after the restatements were revealed, PictureTel said it would be restructuring its management team. Dr. Norman Gaut, chairman of the board and CEO, will step down as CEO, although he will retain his role as chairman. President and COO Dom LaCava has decided to leave PictureTel to pursue new career opportunities and to spend more time with his family, according to the company.

In addition, the restatement triggered a class-action lawsuit filed on behalf of all shareholders who purchased PictureTel common stock between Oct. 17, 1996 and Sept. 18, 1997. PictureTel is in the process of reviewing the allegations in the complaint and will respond to them in due course, according to the company.

PictureTel is the videoconferencing market leader, and its stock was once a high-flyer on Wall Street, hovering in the $40 range as recently as August 1996. It began falling shortly thereafter, and hit a low of $8.25 in April. It was trading at $11.25 in early October.