Ravisent Technologies (Nasdaq: RVST) fell 8 percent Wednesday after the company restated its second and third quarter results and reported lower revenue in its fourth quarter. A class-action lawsuit against the company was also announced.
Shares in the software supplier to the personal computer and Internet appliance markets were down 1 3/8 to 16 7/8 . The stock soared in December when the company announced a partnership with Mindspring -- which has since merged with Earthlink (Nasdaq: ELNK) -- to offer Internet access using TV screens.
The company said Tuesday that it restated its second and third quarter results and posted a narrower loss in the fourth quarter compared to the year-ago period. The recently public company, formerly Quadrant International, and Divicore, got a big boost from its second qaurter results in August.
The company said the restatement was needed due to an interpretation of accounting rules related to revenue recognition.
Under contracts which provide for the future deliveries of technology, revenue cannot be recognized from customers who have received, accepted and paid for Ravisent's current products, even if those payments are non-cancelable and non-refundable.
Ravisent decided that two transactions in the second quarter should be revised. One reduced revenue in second quarter by $2.2 million and the operating margin by $300,000. The other will reduce the revenue and operating margin reported in the second quarter by $1.1 million and $200,000, respectively.
The company also reported fourth quarter results: net loss totaled $1.9 million, or 12 cents a share, compared to a pro forma net loss of $1.2 million, or a 36 cents a share in the year-ago period.
For the fourth quarter, Ravisent posted total revenue of $5.7 million, down from $12.5 million in the year-ago period. The company said the lower revenue was due to the company's transition from a combined hardware and licensing model to a licensing only model.
The law firm of Faruqi & Faruqi, LLP, issued an announcement Wednesday that on February 29, a class action lawsuit was commenced on behalf of all purchasers of Ravisent stock between July 15, 1999, and February 17.
Ravisent is being charged with violation of federal securities laws, which includes, among other things, "that defendants issued a series of materially false and misleading statements in press releases and SEC filings concerning Ravisent's revenues and earnings," leading to the inflation of Ravisent's stock throughout the Class Period.
Reuters contributed to this report.