“In August 2015, IBM learned that the SEC is conducting an investigation relating to revenue recognition with respect to the accounting treatment of certain transactions in the U.S., U.K., and Ireland”, the filing said, without providing any details.
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“In August 2015, IBM learned that the SEC is conducting an investigation relating to revenue recognition with respect to the accounting treatment of certain transactions in the USA, UK, and Ireland”, said IBM in its latest quarterly financial filing.
An IBM spokesperson said the company is cooperating with the agency.
IBM saw shares fall overnight as news emerged that the Securities and Exchanges Commission (SEC) is investigating how it filed revenues for deals in the USA, the United Kingdom and Ireland. “The investigation could be into warranty reserves, they could have recognized an item at the wrong time”, Mr Nelson said. A May 2014 change in the accounting standard for revenue recognition has increased scrutiny by regulators.
Separately, IBM also authorized a $4 billion share buyback on Tuesday, in addition to $2.4 billion remaining from a previous share repurchase program announced in October a year ago.
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CEO Virginia Rometty is attempting to shift the company’s focus to newer areas such as cloud computing, data analytics and cyber-security.IBM posted a bigger-than-expected drop in third-quarter revenue and cut its full-year profit forecast last week as a stronger US dollar accentuated weakness in demand from China and emerging markets.
