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CNN Live Today
Xerox Reaudit $1.4 Billion Short
Aired June 28, 2002 - 10:25 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CATHERINE CALLAWAY, CNN ANCHOR: Let's return now to the accounting worries at Xerox.
To explain the discrepancies and the immediate impact, were joined by CNN Financial news reporter Bruce Francis.
Lots to talk about -- Bruce.
BRUCE FRANCIS, CNN FINANCIAL CORRESPONDENT: Indeed. It looks like Pork Chop isn't the only pig in the news today, Catherine.
Yes, Xerox is out with some results today of a reaudit that they're doing, and it's not one that theyre going to want to copy anytime soon. What they are saying is that over the past five years, Xerox, when you net everything out, they took in $1.4 billion less than what they have been telling the shareholders.
Now, this involve the complicated treatment of equipment leases, and we won't go into all of that here. But the SEC has charged Xerox, and the company agreed to pay a $10 million fine, back in April. The SEC said, Hey, you weren't recording this properly on your books. And Xerox eventually did have to give in to this to put the matter to rest. They did say that back in April. But now were finally getting the details of what Xerox is actually finally telling investors the real story was over the past five years.
Xerox is saying, Hey, this is different from the other accounting scandals. We're not Enron. We're not WorldCom. These are real revenues for real products that will eventually show up on the books. It depends on how you actually treat it. You have to book it over time, and you have to do it properly. Xerox says the revenues will all, eventually, all show up on its books, its just a matter of when.
Let's see if investors will agree with that. Right now Xerox shares are falling about 18 percent in very active trading on the New York Stock Exchange. So it will -- it doesn't look like right now this is being given the same treatment as, for example, WorldCom was, or certainly the disaster that Enron was. Nevertheless, Xerox has had plenty of problems over the past few years, and it does face lots of competition, some eroding market share in key markets.
So this company isn't out of the woods, but -- and it looks like investors arent really lumping it in with the other accounting scandals. Nevertheless, Catherine, in this kind of environment, it doesn't look good, and it does -- its certainly another black mark on a very storied American company -- Catherine.
CALLAWAY: Yes, and it doesn't do much for confidence, consumer confidence, as well. All right, Bruce, thank you.
FRANCIS: Absolutely.
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