EUniverse Finance Chief Quits As Accounting Errors Detailed
WALL STREET WEST
EUniverse Inc., the formerly high-flying Internet company, replaced its chief financial officer three days before filing its long-delayed annual report.
Joseph Varraveto resigned as chief financial officer on Aug. 19 after a two-and-a-half-year stint that included nine months of results that ultimately had to be restated.
The accounting problems had already led to the removal of eUniverse’s auditor, major changes to its accounting oversight and procedures, and a nearly four-month halt in its stock trading.
Taking Varraveto’s place is Thomas Flahie, a former Arthur Andersen partner who served as chief financial officer of nutritional snack maker Balance Bar before Kraft Foods Inc. gobbled it up in 2000.
His most recent stint was as chief financial officer of Camarillo-based software company eLabor, which was sold to payroll processing giant Automatic Data Processing Inc.
“[Flahie’s] in-depth knowledge in all areas of finance and risk management will provide a strategic direction for the company,” said eUniverse Chief Executive Brad Greenspan in a press release.
EUniverse spokeswoman Laurie Eisner had no comment on Varraveto’s departure.
Meantime, eUniverse filed its belated 10K with the Securities and Exchange Commission, which included the reversal of $6 million in revenues for the three quarters ended Dec. 31, 2002. Reported profits of $7.8 million, or 25 cents a diluted share, were shaved to $1.6 million, or 4 cents.
The company said its accounting “relied on inaccurate and incomplete source data,” and it also found problems with calculating allowances for sales charge-backs and product returns. The problems were more pronounced in the December quarter, when the company made an acquisition of an e-commerce company, the company said.
It said it plans to file its 10Q for the first quarter ended June 30 in September.
Nasdaq has moved to delist eUniverse, but the company has appealed as it sought to get its filings in order. Nasdaq has not indicated whether it will lift the trading halt.
The company also said it continues to cooperate with an SEC inquiry into the restatements, and cannot predict its outcome.
The company has also closed down four underperforming business lines and laid off about 20 percent of its staff. With a headcount of 241 as of Aug. 8, the company said it would save about $6 million a year from the restructuring.
RiShawn Biddle
Semis Roll On
Several local semiconductor stocks were taking part in a nationwide run-up in chip shares last week, driven by the expectation that an improving worldwide economy will spur profit gains later in the year.
On Aug. 27, El Segundo-based International Rectifier Corp. gained $1.80 to close at $40.10 after its stock was upgraded from neutral to outperform by investment firm Harris Nesbitt Gerard. Camarillo-based semiconductor manufacturer Semtech Corp. jumped $3.21 to close at $21.65 on Aug. 27 after it beat earnings estimates by one penny per share. The day before, Westlake Village-based Diodes Inc. got a boost when Deloitte & Touche had named it one of the Los Angeles area’s 50 fastest growing technology companies. Diodes shares have more than doubled this year, to $20.80 as of Aug. 27.
The local action mirrored recent gains in some of the largest chip-sector stocks. Intel Corp. shares have gained more than 80 percent year to date to close at $28.02 on Aug. 27. Santa Clara-based National Semiconductor Corp. gained $1.57 to close at $28.74 on Aug. 27 after investment bank Lehman Brothers upgraded its stock from underweight to equal-weight.
Michael Thuresson
Turnaround Pro Arrives
Alix Partners, the Southfield, Mich., consulting firm that has carved out a niche as a turnaround specialist, has opened a Los Angeles office in Century City.
J. Duross O’Bryan, former Western region head of PricewaterhouseCoopers’ dispute analysis and investigations group, and Christine Spadafor Clay, a former partner at Boston Consulting Group, will head the office.
The firm, is owned by Jay Alix, a former accountant who invests in troubled companies through a leveraged buyout fund, Questor Partners, which he co-founded in 1995.
Alix Partners’ clients have included Enron Corp., Kmart Corp., WorldCom Inc. and General Motors Corp.
Kate Berry
