WHERE JANUARY IS THE CRUELEST MONTH
Kurzweil Applied Intelligence knows how to push the limits of voice-recognition technology--and accounting rules. On May 23, the high-tech pioneer announced that four top executives were leaving because of accounting irregularities. But that's not the first questionable incident.
In early 1993, the Waltham (Mass.) outfit faced a big snag in its plan to go public: lousy 1992 earnings. Kurzweil simply moved its fiscal yearend forward by a month, shifting January, 1992--and $1 million in red ink--from '92 to '91. Result: It eked out a $154,000 profit on revenues of $13.9 million for fiscal year '92, ended Jan. 31, 1993. In August, 1993, investors paid $10 per share; the stock is now trading at around 5. The company and its accountants won't comment.
Another curious twist: Kurzweil claimed in its stock prospectus that a patent fight with rival Dragon Systems was unlikely to result in any material cost. Yet just a month after the stock sale, Kurzweil settled, paying Dragon $5.2 million over six years--clearly a painful amount for tiny Kurzweil.
In the May 23 announcement, the company said it had discovered transactions "that do not appear to have been bona fide." It won't elaborate, but one insider says the board believes the four departed execs, including co-CEO Bernard Bradstreet, agreed to post revenues for contracts that hadn't yet been finalized. After a three-week internal investigation, this insider says, one of those involved broke down and came clean. None of the four could be reached for comment.EDITED BY LARRY LIGHT AND JULIE TILSNER Mark Maremont