EFI stock plunges 45%

EFI stock plunges 45%
Stock plummets after concerns over internal accounting force postponement of results

EFI stocks have plunged in value by 45 per cent, falling from US$47.66 to US$26.05 following concerns over its internal accounting procedures. EFI says it expects to report a material weakness in internal control over financial reporting related to this matter.

The company - which has enjoyed stellar growth through the past decade, and recorded revenue of almost US$1bn in the last financial year - has delayed issuing preliminary second quarter results as a result of the concerns, citing the need to complete an assessment of the timing of recognition of revenue.

This assessment is related to certain transactions where a customer signed a sales contract for one or more large format printers, was invoiced, and the printers were stored at a third party in-transit warehouse prior to delivery to the end user.

In a statement released by the company says, ‘EFI is in the process of completing an assessment of the effectiveness of EFI's current and historical disclosure controls and internal control over financial reporting. EFI expects to report a material weakness in internal control over financial reporting related to this matter. EFI also expects to report that EFI's disclosure controls were not effective in prior periods’

[Related: EFI textile printer receives accolades]

EFI says it expects that the total aggregate revenue for the periods under review will not be materially different from the aggregate revenue that was previously reported for those periods, taking into account any revenue from the prior periods that may be moved into the current or upcoming periods.

Morgan Stanley downgraded the company from Equalweight to Underweight. Analyst Katy Huberty cited months of uncertainty with an accounting investigation. Investment banking firm Stifel Nicolaus analyst Aaron Rakers suspended his rating on EFI given the ‘uncertainty of the duration, scope and timing.’

Marketwatch says this puts the company on track for a four-year low.

The audit committee of EFI board of directors is conducting an independent review related to the issue retaining independent professionals to assist in the review.

EFI may be unable to file its form 10-Q for the second quarter of 2017.  EFI says it will release another press release for the date for its announcement of the second quarter results .

At the moment its stock is worth $28.53 on the Nasdaq.

EFI is one of the primary players in the graphic arts market, almost all digital printers from the Japanese manufacturers use EFI rips, it is a leading player in wide format, ceramic printing, fabric printing, is pioneering a move into digital packaging, dominates the MIS market, and has workflow and web-to-print software. It was founded by legendary Israeli innovator Efi Arazi, who was also the founder of Scitex, well known in the 1980s for its page make-up systems.

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