ReveNews
-
NAVIGATION
-
TOPICS
-
THE REVENEWS BLOGGERS
-
QUICK CONTACT
Think Partnership Announces 40% Revenue “Oops”
CGI Holding Corporation d/b/a Think Partnership Inc. (”THK”) (AMEX:THK) quietly announced a significant accounting mistake (they call it a restatement) impacting reported revenue for as far back as 2003. So far trading is light and they’re off only by 1% during the most laid back, distracted week of the year for investors.
The company says that its 2004 revenue was actually 60% of what it reported… or $17,621,100 rather than $21,473,565. Whoops. In 2003 it says it was actually 48% of what it stated ($5,781,946 not $7,095,101).
Apparently the boys over in Northbook were keen on how PrimaryAds booked its revenue. That is, on a gross basis (meaning not subtracting out the cost of… oh, I dunno… paying affiliates or the cost of traffic buys they did to arbitrage stuff). Makes ya wonder if they noticed before the acquisition doesn’t it? Hard to tell with all that cigar smoke in the room perhaps.
Also relating to PrimaryAds the company says it now changed how it reported, “the useful life and value of the Customer Relations intangible asset for this subsidiary.”
I’m sorry but I just wet myself laughing at that. The intangible asset relating to customer relations? Wholly smokescreen batman. Someone please help me translate that. Pray tell, THK, how is that intangible asset reported better today in terms of tangible dollars?
More help needed on this one. The company is also restating “a change in the method the Company recognizes revenue generated from its Search Engine Enhancement business segment, WebSourced, Inc., from the proportional performance model to straight-line.”
Apparently a proportional performance model is one that recognizes revenue as the service is performed as opposed to stated all in one lump sum. Not exactly a bone tickler but interesting.
7 Comments
Leave a comment
-
We Support New York Affiliates
-
Subscribe to ReveNews
How ironic. In terms of Intelligence Quotient 40% is the difference between genius and mental retardation.
Since when is a press release considered to be a “quiet” way of making an announcement?
Fairly simple actually… considering they are a public company that must make announcements with press releases (they don’t have a choice do they?).
In my opinion there isn’t a single week more popular (among people like politicians, Enron execs and such) to make very public announcements and have them not noticed by those who normally pay attention.
Well, I don’t normally pay attention, and this release caught my eye before I saw coverage on ReveNews.
I guess it wasn’t quiet enough.
Is this big news, or just a final announcement with real numbers from the much earlier releases from October and November? I have been expecting this restatement based on those earlier announcements, and I assume this also explains the markets reaction and stock price (increase).
Hi, Brad. Yup. Not sure if big or not but it’s interesting to me. Also interesting that it’s trading higher although I’d not directly attribute too much of that rise to this press release. Still, it surprised me to see a 7% uptick.
BTW, why would you assume that an error this big would explain higher market valuation? The market was expecting *worse* news the last few months perhaps? Interested in your perspective.
One possibility is that the Market does not like uncertainty. Now that they have both the restatement and ideas about the future, they actually like the stock more than before. If earnings were not as good as they were before, then (perhaps) projected growth is better. Of course, this only applies if they have confidence in the company and management…