Xerox Tumbles On News Of ProbeSep 25, 2002 | AP
Xerox Corp. stock fell 11 percent yesterday after the company announced that the US attorney's office is investigating its accounting practices.
The practices were previously reviewed by federal authorities in a probe that led to a record $10 million civil penalty.
The company's stock fell 71 cents a share to $5.96 yesterday on the New York Stock Exchange, but an analyst said he didn't think the probe would hurt the company in the long term or affect its operations.
''We are in a market that says `Show me,' and Xerox has to show that it can deliver. So far, so good,'' said Ulysses A. Yannas of Buckman, Buckman & Reid.
''I don't think they'll be going after the company itself. They might be going after certain individuals,'' he said.
The Stamford, Conn.-based document giant issued a statement Monday night announcing the new investigation and saying it would cooperate with federal prosecutors. Delcie Thibault, spokeswoman for the US attorney in Connecticut, would not comment.
Xerox spokeswoman Christa Carone also declined to comment yesterday.
Xerox settled allegations by the Securities and Exchange Commission in April. The SEC alleged that the company used a variety of what it called ''accounting tricks'' and ''accounting opportunities'' to boost its earnings by some $1.5 billion and hide its true performance from investors. SEC officials said Xerox had used improper accounting techniques to accelerate the recognition of equipment revenue.
The findings came after a former Xerox executive, James Bingham, accused Xerox of firing him for warning executives of accounting irregularities.
The SEC said the company's senior management ''orchestrated'' a four-year scheme to disguise its operating results and that the company had failed to fully cooperate in the investigation.
Under the settlement, the world's largest copier company agreed to pay the fine, restate its financial statements for 1997 through 2000, and adjust previously announced 2001 results.