Thursday, September 13, 2012

STEC, Inc. (NASDAQ:STEC) Slumped As Auditor PwC Resigned

The auditor to STEC, Inc.(NASDAQ:STEC) PricewaterhouseCoopers resigned on late Tuesday sending the shares of the company down 6 percent on Wednesday.

In a regulatory filing with the Securities and Exchange Commission, solid-state drive maker STEC said that its auditor had resigned but added that there were no disagreements between the company and PwC on any accounting principles or practices.

The filing also included a letter from PwC which said that it agreed with STEC's statements. However it refused to comment any further on the development.

"I certainly have never seen a situation in which an auditor resigned and specifically said they had no accounting or other disagreements with the company," Craig Hallum analyst Richard Shannon told Reuters.

Will STEC Bounce Back? Find Out Here

He added that the audit firm may have decided from a branding and risk-reward perspective that it just wasn't worth keeping STEC as a client.

The U.S. SEC had filed a civil complaint in July against STEC chief executive Manouch Moshayedi on insider trading charges.

Analysts are seeing the currnt development as a fallout of this investigation.

Benchmark Co analyst Gary Mobley also said PwC may have simply decided that the situation at STEC was "too messy" but added that PwC dropped hundreds of clients a year for reasons ranging from a lack of profitability for PwC to dissatisfaction with how PwC personnel are being treated.

"According to a brief conversation we had with management, STEC was not given a reason why PwC resigned," Mobley said in a client note.

Shares of STEC, which reported a 51 percent fall in revenue last month, were down 5 percent at $7.12 on the Nasdaq on Wednesday.

No comments:

Post a Comment

Privacy Policy | Legal Disclaimer