BearingPoint's Financial Reports Still To Be Delayed

The McLean, Va.-based IT consulting firm has been up-front with the delays, which were caused by the implementation of a new financial system when the company was split from KPMG, a BearingPoint spokesman said. The company also had training issues with the new system, which was being put in place the same time that Sarbanes-Oxley reporting rules took effect. KPMG spun off its consulting arm as KPMG Consulting in early 2000, and the company was renamed BearingPoint in late 2002.

The BearingPoint spokesman said the company realizes the delay has been an embarrassment, since the firm helps customers implement financial systems. He added that the company also assigns its "best and brightest" consultants to work with customers and not on internal issues.

Jeff Matthews, general partner at Ram Partners, a Greenwich, Conn.-based financial analysis firm, said the fact that BearingPoint has delayed its financial reporting so long should be an issue with customers.

"I haven't heard of customers walking away because of the issue," Matthews said. "But heck, if I were a large company, I wouldn&'t ask them in. It's like someone who has a dirty home being your housekeeper."

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At a meeting with financial analysts last month, BearingPoint discussed its issues and gave guidance for the first time in several years. Some of the analysts said that although BearingPoint&'s reporting delay is troubling, the company seems to be doing well in the market.

Despite a slowdown in BearingPoint's sales pipeline and the financial restatement, "we believe [BearingPoint] is actually on an upswing, and . . . our confidence has increased in the turnaround taking hold," Goldman Sachs analysts Julio Quinteros and Vincent Lin wrote in a report.

UBS Investment Research analysts Adam Frisch and Jason Kupferberg said BearingPoint's cost-cutting plans and 2006 revenue forecast of $2.7 billion to $2.85 billion, with projected earnings of $180 million to $250 million, offset any credibility issues from the financial reporting delays.