S3 stock rises after restatement
Shares of S3 rise more than 10 percent after the company issues a restated financial performance that came in below the high range of its earlier warning.
S3 shares traded as high as 7-1/2, up from a close of 6-3/4 yesterday. The stock has recovered slightly from its 22 percent drop earlier this month, which followed the company's disclosure that it would have to restate its financial report from prior quarters due to the accounting department's failure to adhere to the company's accounting policies for booking revenues.
The graphics chip maker said that, for the first nine months in 1996, it restated its revenues downward by $22 million, to $311.3 million. S3's net income for the period was pushed downward by $5.9 million, to $27 million.
The company's review of its financial reporting procedure is still in progress. But company officials estimate that the cumulative downward effect will be $58 million on revenue. The figures issued in the company's warning earlier this month pegged a range of $40 million to $70 million.
S3's net income is expected to have a cumulative drop of 23 cents a share, within the range of 14 cents to 29 cents a share issued in its earlier warning.
S3 is going through its books after it discovering that revenues were being booked upon sales to resellers, rather that at the time the sale is made to end users. The company said it has implemented measures to ensure that its more conservative approach of accounting for revenues is followed in the future.