Speaking at an investor event, BearingPoint CEO Harry You said: While the board has not approved any specific proposal, it did indicate [that it was interested in] devolving a substantial ownership in our EMEA operations to our employees…with the objective that the business be deconsolidated from BearingPoint. He said clients there wanted to work with an employee owned firm, and that a transaction could be completed by the end of the calendar year.
EMEA contributed revenue of $662m in 2005, just under 20% of the company’s overall sales, but the region contributed only 13% of gross profit due in part to severance costs in Germany, France and Spain.
BearingPoint also announced its preliminary results for the full year 2006, but the company is not yet up to date in its accounts and will miss its deadline for filing its 2006 financial statements with the Securities and Exchange Commission. It now expects to complete the report in June.
BearingPoint’s accounting nightmare dates back to 2004, but You said it will finally get back on track with its filings in the third quarter of 2007 after the design and implementation of a new accounting system is completed.
I would say very humbly and candidly, that getting current has been a much more complex job than any of us first imagined, said You. Catching up is challenging, but we’re pretty darn close.
While the company said that it expects gross revenue for 2006 to be higher than analysts expected at between $3.45bn to $3.55bn, the costs of auditing and rebuilding its systems, and the settlement of some problem contracts means that it will report a pretax loss of $144m to $214m. BearingPoint only managed to file its report for the year 2005 in November which revealed a loss of $721.6m.
You also revealed that it had brought in Ernst & Young to audit its 2007 accounts, while PWC would simultaneously work on completing 2006.
Despite the seriousness of BearingPoint’s position, You was in relaxed mood, and even regaled participants with the details of his performance on the golf course at the weekend, describing one shot as a miraculous recovery. His company’s share price is still stuck in a bunker though, and he said he was aware that it had underperformed the market since he began his tenure in March 2005.
