Who's Afraid of a Big, Bad Profit Restatement? Investors, Analysts Stick by a Trio of Stocks
By some measures, the maker of the popular video game "State of Emergency" has one of its own.</br></br>Take-Two Interactive Software last month restated earnings downward for seven consecutive fiscal quarters, disclosed that the Securities and Exchange Commission is investigating its accounting practices and announced its chief financial officer's resignation after two months on the job for "personal reasons." A little later, the New York company, which makes video games, said there was an error in a portion of its restated earnings.</br></br>The reaction from Wall Street? Numerous analysts praised the company, and investors have bid up its stock 8% since Take-Two made its announcement.</br></br>An anomaly in a market that supposedly is more attentive to accounting issues in the wake of the alleged accounting irregularities at collapsed Enron? Not really.</br></br>Take Hanover Compressor, a company with similar problems. It said last month that it, too, would restate lower seven quarters of earnings, that the SEC is reviewing its accounting for a partnership, and that it also had appointed a new chief financial officer. But the company's stock has soared 27% since breaking the news. Moreover, although the company recently lowered 2002 financial targets, analysts have become even more bullish about the stock.