12 April 2002 The US Securities and Exchange Commission (SEC) has announced that it has closed a preliminary inquiry into the finances of systems giant IBM.
In a rare move, the SEC yesterday issued a statement that read: “regarding the reports of a preliminary inquiry by the SEC into IBM, the SEC staff opened an inquiry and closed it without action shortly thereafter.”
The systems vendor has been under increasing scrutiny for weeks. In mid-February, the New York Times reported that IBM only met analysts’ expectations for its fourth quarter of 2001 because it booked a $280 million (€319.2 million) gain on the sale of its optical-transceiver unit.
IBM never publicly announced the sale, nor did it disclose its impact on net income in its January earnings release. But the event added to increased criticism about the opacity of the company’s finances, led by analysts such as Annex Research president Bob Djurdjevic.
On 8 April, the company issued a profits warning, further alarming investors. It said that in the first quarter of 2002, revenues would be around $1 billion (€1.14 billion) less than analysts were expecting, while net income will fall short by about 20%.
However, news that the SEC had closed the inquiry without taking action boosted IBM stock yesterday.