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McKesson cuts results again
May 25, 1999: 12:58 p.m. ET

Improperly recorded sales at software unit prompt second downward revision
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NEW YORK (CNNfn) - Shares of McKesson HBOC plunged as much as 11 percent Tuesday after the company warned it will revise its fiscal 1999 earnings downward for the second time in a month.
     McKesson shares plunged 3-3/16 to 35 and traded as low as 33-3/16 after the heath firm said revenue at its recently acquired software unit, HBO & Co., shouldn't have been posted on the books. It didn't provide any per-share figures on how much in additional downward revisions would be made.
     The announcement follows a similar warning last month, when McKesson said software sales were improperly recorded by the unit it acquired for $13.9 billion in January. That prompted San Francisco-based McKesson (MCK) at that time to revise its earnings for fiscal 1999, ended March 31, downward by 5 cents per share, or about 4.4 percent. It also issued a warning that another downward revision could be on the way.
     The second warning became reality Tuesday. In a brief statement, the company said it found "additional instances of improper revenue recognition," and that items relating to its health-care information technology business were under review. It didn't give a dollar or per-share figure for the additional revision. The company's auditors and legal team are still reviewing HBO & Co.'s records.

On April 28, shares tumbled to 32 from a previous-day close of 65-1/2, shaving off about $9.5 billion of its market value. That massive drop sparked dozens of class action lawsuits against the company alleging securities fraud in the way the sales were recorded. The claims alleged that HBOC's true performance was hidden behind false filings.
     McKesson's shares slid even further Tuesday. Since touching a 52-week high of 96-1/4 on Sept. 28, McKesson shares have shed more than 60 percent of their value.
     In addition to again restating fiscal 1999 results, the company said it's possible that prior years' results of HBO & Co. may need to be restated.Back to top
     -- from staff and wire reports


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