Critical Path Inc. said that based on preliminary financial results of an investigation being 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. Of that amount, the company expects $4.2 million to involve transactions that will not result in revenue.
For the fourth quarter, the San Francisco-based company now expects its net loss to increase to between $19 million and $21.5 million.
On Jan. 18, the company, which provides messaging and e-mail software and services, 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.
The company said it is reviewing “certain specific transactions” that were reported as revenue during third quarter 2000 and that it is looking into “new facts that may bear on the initial accounting judgment that revenue was properly recognized” in the quarter.
Critical Path also said its previously reported results for the third quarter should not be affected by more than $2 million.
The company subsequently fired president David Thatcher and William Rinehart, its vice president of worldwide sales.
As a result of having to restate its financial results, Critical Path was hit with more than a dozen class-action lawsuits by shareholders.
Trading in Critical Path's stock on the Nasdaq composite index was halted Feb. 2 about 10 minutes after the market opened. The company's stock had plunged more than 60 percent in pre-opening trading after trading as low as $3.88 overnight. Trading in its shares was halted at $10.06 shortly after the market opened Feb. 2. Its shares resumed trading Feb. 16 and closed at $3.03, down 3 cents on the day.