BMC Software?s shares plunged on Thursday after the systems management software supplier restated its 1998 and 1999 figures to reflect a change in the way it wrote off an acquisition last year.
The move follows the Securities and Exchange Commission?s (SEC) recently adopted tough new line on how organisations? write off their acquisitions, but BMC?s shares fell $5.44 to $41.56 on the news. Prudential Securities also cut its rating to accumulate from strong buy.
BMC purchased BGS Systems at the start of last year for $285 million (see VNU Newswire, 3 February, 1998), but the situation would appear to have threatened the firm?s proposed merger with Boole & Babbage (see VNU Newswire, 2 November, 1998).
The company said in a statement: "At the time of the BGS acquisition, BMC Software did not restate its historical financial statements to include the prior period BGS financials because we believed the acquisition was an immaterial pooling transaction." It continues: "BMC Software continues to believe this was correct, but has agreed to include the BGS financials to allow us to close the Boole and Babbage transaction in March."
It added that it would send a third amendment to its Form S-4 registration document, which related to the Boole merger, to Boole shareholders in the next few days.
BMC has restated its fiscal 1998 turnover to $788 million, up 7.8 per cent on the previously reported figure of $731 million.
The first nine months of 1999 were also restated to a 33 per cent revenue growth rather than 44 per cent, which means the firm?s full year growth rate is now estimated to be 32 per cent, down from former predictions of 42 per cent. Analaysts now expect sales to full year sales to amount to $1.04 billion.
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