SEC investigation into IBM revives accounting woes

Accounting woes came back to haunt Wall Street last night when IBM said it had been notified of a formal investigation by the securities and exchange commission.

In a statement issued after the close of the market, the computer-maker said the inquiry was focusing on the way the company booked revenues in 2000 and 2001. Shares in the company slipped more than 3.5% in after-hours trading.

IBM said the investigation relates to "certain types of customer transactions". The company believes the inquiry originated from a separate inquiry into a customer of IBM's retail stores solutions unit, which sells computing equipment and software for checkout counters, kiosks and other "points of sale". It would not identify the customer.

The retail stores unit is part of IBM's personal systems division and the company does not break out its revenues.

IBM said last night that it had been "specifically advised" that the inquiry is a fact finding investigation and that it hasn't reached any conclusions related to the matter.

The company added that it is cooperating fully with the SEC and is "committed to maintaining the highest standards" of accounting.

Shares in IBM were halted by the New York Stock Exchange in the afternoon, pending the announcement. In the regular session, they fell 62 cents to $87.42, only marginally beneath the 12-month high of $90.32.