It's only Tuesday, but it's already been a long week for CyberGuard.
The enterprise security firm's stock continued to plummet today after the company was slapped with a shareholder lawsuit. The legal action was disclosed just one day after news that the CyberGuard will restate its third-quarter financial results and that its chief executive and financial officers had been suspended.
CyberGuard stock was down more than 25 percent in midday trading, after having plunged 70 percent yesterday. CyberGuard shares have traded as high as 18.38 and as low as 1.5 during the past 52 weeks.
The company's audit committee announced yesterday that CyberGuard will restate its financial results for its third fiscal quarter ended on March 31. The committee said the restatement was necessary because of a review of its revenue-recognition policies relating to distributors and resellers.
CyberGuard currently estimates the restatement will be about $2.5 million and it expects most of the revision to be reflected in the third fiscal quarter results. But there is a possibility that some portion of this amount would be reflected in a restatement of the first and/or second fiscal quarter.
Expectations for fourth fiscal quarter revenue will also be impacted negatively due to the application of these software revenue recognition policies, the company said.
CyberGuard also announced that a special committee consisting of its four outside directors has assumed executive control of the company. Shelly James has been appointed chairman of this committee and has been named acting chairman of the board of directors.
In addition, the company announced that Robert Carberry, chairman and chief executive officer, and Bill Murray, chief financial officer, have been temporarily suspended from management pending the completion of the Special Committee's review. In additional Brad Lesher, vice president of international sales, has announced his retirement.
The company also announced that KPMG Peat Marwick, a consulting company, had unexpectedly resigned at close of business on Friday August 21, 1998 as CyberGuard's independent auditors. CyberGuard is reviewing the situation and stated that it is considering legal action against KPMG, and is now seeking new auditors to complete the audit for the fiscal year ended June 30, 1998.