Booking Errors Will Impact Veritas Results

Veritas last week announced it was delaying filing its 10K after an internal investigation showed improper booking of revenue in 2001 and 2002. Company executives said the errors will result in a decrease in reported revenue and a loss for 2001, and an increase in revenue and a decrease in income for 2002. The adjustments will be reflected in Veritas' financial report for fiscal 2003 ended Dec. 31.

The accounting discrepancies occurred under the direction of Veritas' former financial management team, which included then-CFO Kenneth Lonchar, who was dismissed from the company in October 2002 for providing false information on his resume.

In a statement, Veritas President, Chairman and CEO Gary Bloom said the problems will not impact the company's business. "While [this] announcement is unfortunate, it does not change the fundamental strength of our business as we drive the company to a target of $2 billion in revenue in 2004," he said. "We remain comfortable with our guidance for the first quarter."

Two solution providers noted that four years ago Veritas tried to take advantage of financial difficulties at Legato Systems, then its main competitor. "[Veritas] cared about it when this happened to Legato," said Pat Edwards, vice president of sales at Alliance Technology Group, Hanover, Md. "It's karma. Veritas jumped all over it back then, with some [Veritas] people telling customers that Legato people would go to jail."

One VAR who requested anonymity said the tactic is effective only if it is compounded by other negative events. "It only works if [a customer is] on the fence and has something else on them," the solution provider said. "Legato had a lot of other things going on at that time."