Rumors continue to circulate regarding the fate of speech recognition firm Lernout & Hauspie.
Even though it is operating in an exciting, potentially high-growth sector, things aren’t going well for speech recognition firm Lernout & Hauspie. It has gone into bankruptcy protection and its recently appointed CEO John Duerdon has been sacked. Worse, the firm is surrounded by allegations of major fraud.
Last year it transpired that L&H’s Korean operations were not making the cash the accounts claimed. This was due to misleading accounting, which counted products that L&H subsidiaries sold to other L&H subsidiaries as new revenues, amongst other problems. Unsurprisingly, various members of the L&H management are being investigated for fraudulent malpractice and its auditors are also likely to face legal action.
To try and assuage these problems, former Dictaphone CEO Mr John Duerdon was appointed L&H’s CEO in June 2000. This move, while not solving matters, did increase the beleaguered company’s credibility and encouraged investors that it was rigorously trying to find transparent solutions to its problems. This was backed up with the results of an extraordinary audit being made public last year. On January 16, however, the L&H board ousted Mr Duerdon and replaced him with Philippe Bodson – a Belgian businessman apparently unconnected with L&H. Nonetheless, many US investors and creditors are concerned that Mr Duerdon was removed because of the transparency drive and that Mr Bodson may be less cooperative.
L&H claims to be able to return an operating profit and positive cash flow by 2002. But this won’t be easy. Suppliers will be wary about giving L&H credit; customers will worry whether it will continue to be around to look after installs; talented employees will leave and join the competition. And its brand is mud. Indeed, unless Mr Bodson can rapidly succeed in establishing his credentials as an independent and put forward a convincing plan to extricate the company from its current mess, creditors may well be happy to bankrupt the company when their loans become due.
