WatchGuard Postpones Earnings

A series of financial errors have forced security vendor WatchGuard Technologies Inc. (Nasdaq: WGRD) to postpone its fourth-quarter and fiscal year 2004 earnings call today.

Analysts are expecting quarterly revenues of $20.76 million and annual revenues of $86.42 million for the firewall and VPN appliance vendor.

The Seattle-based firm says that it will now file a Form 12b-25 (notification of late filing) with the Securities and Exchange Commission (SEC) with regard to its annual 10-K report for the year ended December 31, 2004.

So, what caused all this brouhaha? In a statement released this morning, WatchGuard said that the late filing is the result of delays in completing its financial statements and audit for 2004.

Errors were apparently discovered in WatchGuards previously issued financial statements. These include inaccurate income classification of early-pay incentive discounts taken by customers, under-accrual of customer rebate obligations, and timing of revenue recognition associated with specific products and services. The end result was an overstatement of product revenue and an understatement of deferred revenue, the company said.