The shock and awe portion of the release were the 9 accounting sins committed by the company. I will not list them here, read the release.
The conference call in July provided a preview that prepared investors for this fact. Of greater concern to me was the lack of an explanation of what the future plans were for Vitesse.
In particular, the lack of audited results from FY04/FY05 now and forever leaves a big void with respect to the future intent of the company. Investors need to know what the companies objective is with respect to relisting on the Nasdaq. When can this be anticipated, or as one astute reader points out, are we looking at a future similar to Riverstone Networks? (Lightreading link)
I provided a more extensive and private opinion directly to the company, but this summarizes what I feel needs to be done:
1. Make a clear and concise statement on what the plan is as a result of not having 2004/5 financials. What operating model will the company seek?
2. Provide a release timeline for FY06 results based on what is known today. Previously, the company expected to release these by end of year. Now, it is indeterminate.
3. Provide timeline for the independent operation of the company. When are the consultants (and expense) gone and when do the new auditors come on-line.
It may be that my expectations for an immediate plan following the release of the report are unrealistic. If so, a date should be provided to investors when a go forward plan addressing the above issues will be available.
Such a plan will allow investors to benchmark the ability of management to manage the crisis to a conclusion.
I have other, stronger opinions about the board, but the reality is that management has little control over the makeup of board. It is up to the investment community to catalyze change there.
Full Disclosure: I am long Vitesse