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PictureTel sinks after SEC begins probe

Shares of PictureTel Corp. (Nasdaq: PCTL) fell more than 7 percent, down 11/16 to 8 7/8, on Friday after the Securities and Exchange Commission said it had begun a formal investigation into the company's restatement of results in 1997.

In 1997, PictureTel restated three quarters.

The videoconferencing systems maker reorganized and cut its staff in 1997 to focus on the low-end market. Also that year, PictureTel bought multi-location server maker MultiLink. The subsequent restating of results brought on a torrent of shareholder lawsuits and the eventual retirement of its leader, Norman Gaut.

PictureTel said in a statement that it is cooperating with the inquiry.

In April, the Andover, Mass. company warned it would report a "significant" loss in its first quarter. Picturetel officials said it will lose about 68 cents a share in the quarter, much more than the 9-cent-a-share loss predicted by First Call analysts. Last year the company posted a first-quarter loss of 6 cents a share on sales of $101 million.

PictureTel said lower sales and a temporary suspension of distribution of its SwiftSite II compact videoconferencing system were responsible for the shortfall.

In February, the company tapped Bruce Bond as its chief executive, who replaced Gaut, who stayed on as chairman.