Critical Path Says Financial Problems Confined to Fourth Quarter

Share this article:
The financial irregularities that led Critical Path Inc. to restate its earnings for fourth quarter 2000 and to fire two executives are confined to its fourth-quarter sales in the United States, the company said Friday.


The San Francisco company had said earlier that based on preliminary financial results of an investigation conducted by a special committee, it expects to report revenues for fourth quarter 2000 that are $6.5 million to $8 million lower than previously announced. Critical Path expects $4.2 million of that amount to involve transactions that will not result in revenue.


For the fourth quarter, the messaging and e-mail software company now expects its net loss to increase to between $19 million and $21.5 million.


Critical Path's founder and executive chairman, David Hayden, told The New York Times last week that the company is confident it knows what happened and why. He said the company made some overly ambitious financial projections as a result of pressure from Wall Street to show profits.


"There was a lot of internal pressure on the company to fulfill its promises," Hayden said. "However, in hindsight, it looks like we were unnecessarily and unduly aggressive in forecasting profitability for the fourth quarter."


On Jan. 18, Critical Path released fourth-quarter results, including revenue of $52 million and a net loss of $11.5 million. Two weeks later it said it had formed a special committee to look into possible financial irregularities and that the results may have been materially misstated.


As a result of the financial irregularities, the company fired president David Thatcher and William Rinehart, its vice president of worldwide sales. Critical Path still has to deal with more than a dozen class-action lawsuits filed by shareholders.


Share this article:
You must be a registered member of Direct Marketing News to post a comment.
close

Next Article in Digital Marketing

Follow us on Twitter @dmnews

Latest Jobs:

Featured Listings

More in Digital Marketing

How Amazon Ads Might Change the Game

How Amazon Ads Might Change the Game

Will the Great Recommender introduce "pretargeting" to the menu? Is it destined to become the King of Conversion? Or will its ad business simply settle in between Google's and Facebook's?

Less Than Half of Marketers Say the C-Suite "Gets" Digital

Less Than Half of Marketers Say the C-Suite ...

The long road to digital marketing leadership starts with organizational alignment, a study finds.

Candidates Hook Into Twitter

Candidates Hook Into Twitter

A digital agency for politicians puts the power of presidential electioneering into the hands of Congressional campaigns.