The Securities and Exchange Commission in USA has opened a formal investigation into the way International Business Machines Corp. booked revenue in 2000 and 2001, the company said in a statement yesterday.
The computer giant said the probe arises from a separate investigation the SEC has been conducting of a customer of its retail unit. IBM spokesman Joe Stunkard declined to name the customer or to say how long the investigation has been open.
IBM's Retail Store Solutions unit makes and sells products such as cash registers and other items used in checkout counters at retail stores, Stunkard said. He said the Armonk, N.Y., company is cooperating with the investigation.
“IBM believes that its business and accounting policies comply with all applicable regulations and is committed to maintaining the highest standards of compliance relating to its financial reporting,” the company said in a prepared statement.
SEC spokesman John Nester declined to comment.
An analyst at SoundView Technology Group, which rates IBM as an “outperform” and which holds no IBM stock, said it's difficult to determine the scope and the importance of the SEC probe. “Our view of IBM in general is that they don't get involved in funny business,” said the analyst, who spoke on the condition that her name was not used.
Burton Schlichter, an analyst and senior market strategist at Lind-Waldock, a Chicago-based division of Refco LLC, which sells financial services and products, said the IBM announcement is “disappointing.” Schlichter, who does not hold any IBM shares, predicted that the news “will probably push the market down tomorrow. It's disappointing to trader confidence.”
IBM shares fell $2.23, or 2.6 percent, to $85.10 in after-hours trading yesterday.
The SEC last year opened and then closed without bringing any charges a separate investigation of how IBM booked $300 million from the sale of a business line to JDS Uniphase Corp.