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The Net Takeaway: SPSSE: SPSS and Nasdaq


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SPSSE: SPSS and Nasdaq · 04/25/2004 07:26 PM, Analysis

Ok, it would be remiss of me not to comment just a moment on the SPSS potential delisting issue currently facing us (and them).

Why do we care? Well, a liquid equity market is an important part of a company’s ability to get financing for big projects. If the stock is delisted from a major exchange, it becomes a “pink sheet” which is harder to trade. This makes it harder for SPSS to get credit or otherwise expand without extra “penalties” such as early payback requirements, higher interest rates, etc. (They did have $37 million in cash last year, so they aren’t desperate, but still…)

Ok, so what’s going on? Well, a million years ago (in Internet years), SPSS decided to join the Internet boom. In October of 2001, SPSS made a deal to become the “survey engine” for AOL (more here). This seemed great at the time: this was a great win for the SPSS MR Division, proving them to be both a scalable solution and with access to a large panel of respondents.

Jump forward to today. AOL has had its ups and downs, and like everything else during the boom, prices were way inflated. So, SPSS decided to review how it had accounted for the deal over the last few years, and reworked the deal with AOL. This stimulated their first request: they asked for a 15-day extension on their 10k (a required filing with the SEC for all public companies).

However, the review turned up a new issue, an accounting error whereby SPSS overstated revenues by $3-6 million (note that on the annual basis, this represents no more than 2.8% of their annual revenues). Because of this error, lots more had to be checked… and so they missed the filing deadline. Unlike most of our deadlines, this one really is sort of important.

Because that missed deadline is grounds for removal from the exchange, SPSS now trades as SPSSE. Obviously, they are appealing the issue, and if all works out, this will just be another chapter in the long history of SPSS.

But I worry:

But mostly, I just think this points out how difficult today’s financial world is. Its tough to run a large company (SPSS has a $270 million market cap, and reported $210 million in revenue last year), and every little mistake nowadays impacts, well, everything.

I wish SPSS lots of luck, and I am sure everything will work out. But let’s all keep a close eye on this, ok?

Disclosure: I own no SPSS stock, but I do own mutual funds, and they may have some shares, I don’t really know. I don’t work for the company, and I didn’t ask anyone there about this stuff. I pulled it all from Google News and links in a Google search. I am not a lawyer (IANAL) nor a stock analyst, so take all of the above to your personal broker before buying or selling anything you own based on my potentially incorrect interpretation of the circumstances.

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