Software Companies Blaming Sarbanes-Oxley for Lagging Earnings

Some software companies are missing second quarter earnings estimates and are blaming the time, energy and money companies are spending on Sarbanes-Oxley Act requirements for slowing software purchase decisions, Reuters reported.

The Sarbanes-Oxley reform legislation was enacted in 2002 after Enron imploded taking its auditing firm Arthur Andersen down with it.

Veritas Software Corp. and Siebel Systems warned about quarterly results in recent weeks because of a number of deals that failed to close in the key final weeks of the quarter, Reuters reported.

Piper Jaffray software infrastructure analyst David Rudow told Reuters that chief financial officers and chief executives were spending time and money on auditing in order to be in compliance with regulations under Sarbanes-Oxley.

"We believe the CFO's workload to complete this work is overwhelming and they may not have the time or budget to sign large software contracts at the last minute of the quarter," Rudow said.

"We feel this, along with the fairly tight spending environment, are contributing factors to the June quarter misses," Rudow said.

Others were less ready to blame SOX for the delays in software purchases.

"Customers and CFOs we've spoken to have not indicated Sarbanes-Oxley played a role their technology buying," Brad Reback, an analyst at CIBC, told Reuters.

In fact, SAP, the world’s largest maker of business software, predicted increased revenue for the second quarter. Reback said SAP had been successful in selling pieces of its software systems, rather than pushing the entire systems the way competitors have done.

You may like these other stories...

As complex as federal tax can get, at least you're only dealing with one agency: the IRS. But when you get into state and local sales tax, you're coordinating hundreds of jurisdictions that are constantly changing....
All that was needed on Tuesday was a voice vote for the House of Representatives to pass a bill that would prevent state and local governments from taxing access to the Internet.Now the ball is in the Senate’s court....
Many bootstrapped startups do not have the budgets to bring on dedicated IT experts who can build out infrastructure and provide immediate solutions to end users. Small businesses must simplify both hardware and software...

Upcoming CPE Webinars

Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.
Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.