real-time news and commentary for investors
Wednesday, Oct 2
Netsol tumbles on SA short piece
- Shares of Netsol tumble (NTWK -8.3%) after SA contributor Bill Hamill makes the short case on the auto leasing software company.
- Hamill calls the firm's accounting "hyper aggressive," observing that net income has been materially inflated by the company's practice of capitalizing R&D rather than the more conservative industry practice of expensing it. He also notes that Netsol's Days Sales Outstanding, at 216, is an outlier when compared to the metric of other public software companies and is higher than even Autonomy's DSO in FY2010.
- A number of other red flags: Netsol has used paid equity research firms in the past, employs a questionable auditor, has had internal control lapses, and recently hired a part-time CFO to iron those lapses out.