Briefs: September 25, 2006

HP EXECS FEEL STING OF LEAK PROBE

Lockyer's office is investigating whether HP used illegal tactics to identify the source of boardroom leaks to media linking back to 2005.

Hurd faces greater scrutiny following published reports that he was more involved in the company's probe than previously thought. The Washington Post said Hurd approved a "sting" operation on a reporter to find the source of company leaks. If so, Hurd may follow in the footsteps of HP Chairman Patricia Dunn, analysts said.

Dunn was inducted last Wednesday into the Bay Area Council's Hall of Fame. "Please be aware I am fully alive to the irony of being inducted into the Bay Area Council Business Hall of Fame," Dunn said at the awards event. "I look forward to the time in the near future when I can set the record straight."

NASDAQ BEGINS DELISTING PROCESS FOR NOVELL, DELL
The Nasdaq stock market has alerted tech stalwarts Dell and Novell that it is starting delisting procedures for the two companies.

Nasdaq told Dell it has failed to meet requirements for continuing to be listed on its exchange. In a statement, Dell said it plans to seek a special hearing before a Nasdaq panel to explain its position. The request delays any action by Nasdaq for several months.

"The letter was issued in accordance with Nasdaq rules due to the delayed filing of the company's Form 10-Q for the quarter ended Aug. 4, 2006. Pending a decision by the panel, Dell shares will remain listed on the Nasdaq stock market," the company said in a statement.

Under Nasdaq rules, a company must issue a press release announcing it has received a delisting letter from the stock exchange or it can be delisted immediately without a hearing.

Other technology companies also are dealing with the Nasdaq delisting process. Previously, Apple said it would seek a hearing after Nasdaq sent it a delisting notice, and Novell issued a press release last Wednesday saying it had received a delisting notice from Nasdaq because of its decision to delay filing of its 10-Q.

Apple and Novell have delayed those filings as their companies review the potential impact on past earnings of stock-based compensation to some executives and employees.

Dell faces several investigations into its financial reporting and accounting methods.

The Securities and Exchange Commission is conducting an "informal" investigation, the Audit Committee of Dell's board is investigating, and the U.S. Attorney for the Southern District of New York also has subpoenaed Dell's records going back to 2002, the company has said.

On Sept. 11, Dell issued a statement, saying early investigations "have indicated the possibility of misstatements in prior period financial reports, including issues relating to accruals, reserves and other balance sheet items that may affect the company's previously reported financial results."

Earlier this month, Dell Chairman Michael Dell said he anticipated a delisting process to begin because his company has not filed its required, quarterly 10-Q report with the SEC as mandated by Nasdaq rules. The company said it cannot file the report while certain of its financial records and past financial reporting are under review.

IPO RAISES $85 MILLION FOR RIVERBED TECHNOLOGY
WAN optimization startup Riverbed Technology debuted on the Nasdaq Global Market last Thursday following an initial public offering that raised nearly $85 million.

The company brought in more money through the IPO than had been anticipated after raising both the price and amount of shares to be issued.

Riverbed offered 8.7 million shares of common stock at $9.75 per share, well above the forecast of $7 to $8.50 per share for 8.4 million shares.

Shares closed up nearly 57 percent at $15.30 last Thursday after the first day of trading. The company is listed under the symbol RVBD.

Riverbed's lineup of Steelhead network appliances helps improve the performance of branch office applications over the WAN, recently revamped its product line and has been garnering praise from solution providers for the strength of its channel partnerships and product portfolio.

Riverbed reported a loss of $17.4 million on revenue of $22.9 million for 2005. That compares with a loss of $9.8 million on revenue of $2.6 million in 2004, according to the company's filings with the Securities and Exchange Commission.

WESTCON GROUP JOINS GTDC
The Global Technology Distribution Council welcomed Westcon Group as its newest member at the annual GTDC Summit last week in San Francisco.

Westcon, a privately held distributor that generates more than $2 billion in revenue annually, becomes the GTDC's 13th member and the council's ninth member based in North America.

"They were our No. 1 missing hole, especially in the networking and security space," said GTDC CEO Tim Curran. "We are delighted by their commitment to the group. It's exciting that we have another member to have a common voice on common issues."

Westcon, which has talked to the GTDC for several years about membership, aims to leverage the group's lobbying power—especially in Europe, where new asset-disposal laws are expected to impact the channel, said Westcon Group Chairman and CEO Tom Dolan.

Westcon Group also believes the GTDC can help introduce the distributor to new vendors, Dolan added.

"We're very interested in new vendors, particularly in video. We've seen quite a bit of interest in physical security as that moves to an IP platform," he said.

SYNNEX DISTRIBUTION REVENUE UP 15 PERCENT IN 3RD QUARTER
Synnex beat Wall Street estimates for its third fiscal quarter due to better-than-expected performance in its distribution business, according to the company.

Sales increased 14.4 percent to $1.59 billion in the quarter ended Aug. 31, compared with $1.39 billion in the year-ago period. Net income was $13.8 million or 43 cents per share, compared with $9 million or 29 cents per share last year.

Distribution revenue was $1.46 billion, a 15.4 percent increase year over year, while Synnex's contract assembly sales accounted for $134.4 billion, a 4.9 percent increase for the same period.

Analysts had expected earnings of 37 cents per share on $1.55 billion in revenue, according to Thomson Financial/First Call.

For the current quarter ending Nov. 30, Synnex expects earnings between 44 cents and 46 cents per share on sales between $1.67 billion and $1.72 billion. Analysts were forecasting earnings of 43 cents per share on sales of $1.71 billion.