Stock Watch: MicroStrategy Plunges After Earnings Revision

MicroStrategy, Inc. (Nasdaq: MSTR) lost more than half its value Monday after the Vienna, Virginia-based maker of e-commerce software said it would revise 1998 and 1999 results lower because of accounting changes, and shelved plans for a stock offering. The accounting changes will also result in lower earnings for the current quarter than previously forecast, MicroStrategy said. The stock plunged 140 points to close at 86 3/4.

The changes will reduce reported revenue for 1999 to between $150 million and $155 million from $205.3 million. Results from operations will show a loss of 43 to 51 cents a share, rather than income of 15 cents a share as previously reported. For 1998, revenue will be cut to $95.9 million from $100.9 million, and net income will be revised to 1 to 4 cents a share from 8 cents.

The company said that because of its “evolving” business, it decided to switch accounting methods to spread some sales and contract revenues over the entire contract periods, rather than separating it between software and services. The change should have no “material” effect on cash flow or the amount of revenue expected, said President and Chief Executive Officer Michael Saylor.

“We continue to be well positioned to take advantage of opportunities in the e-business software and personalized wireless content markets,” Saylor said. Revised results are scheduled to be reported by March 30th.

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