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Computer Networking Company Faces Delisting

The threat of delisting from Nasdaq might short-circuit some companies, but it’s largely business as usual at Ixia. Since the May 6 disclosure of a warning letter from Nasdaq about the delisting, shares in the Calabasas computer network company have fluctuated only slightly, starting at $12.26 and closing May 14 at $11.99, a decline of about 2 percent. Ixia faces removal from the stock exchange over delays in filing a third quarter 2013 report and annual 2013 report. Since receiving the letter, the company has requested a hearing before a special Nasdaq panel to present an updated plan to regain compliance. The request will delay the delisting until at least May 24. Matthew Robison, an analyst with the San Francisco office of Wunderlich Securities of Memphis, Tenn., said investors pay attention to the issues with the Nasdaq, but it won’t affect whether they buy or sell shares because even if the company is kicked off the exchange, it will continue to trade. “The reason the share price is stable is because the accounting issues don’t have any relationship to cash flow and right now the cash flow has a good yield,” Robison said. While Ixia did not file a formal quarterly report, it did file in October a Form 8-K with the U.S. Securities & Exchange Commission disclosing information on its third quarter. The company had net income of $6 million (8 cents a share) compared with $10.9 million (14 cents) in the same period a year earlier. Revenue increased 4.3 percent to $115 million. The company’s Nasdaq troubles began last fall when then-Chief Executive Vic Alston resigned after 18 months on the job when it was discovered he had falsified his resume. Errol Ginsberg, the company’s founder and former chief executive, was named acting chief executive to replace Alston. Alston’s resignation prompted a review by the board of director’s audit committee, which found accounting errors in previous financial reports and decided the company would need to restate its financials for two quarters in 2013. Nasdaq approved a compliance plan in January but then Ixia missed a March deadline to restate the quarterly reports. This is not the first time that Ixia has been in trouble with Nasdaq over earnings reports. In early 2007, the company was threatened with delisting and remained on the exchange after providing a Nasdaq Listing Qualifications Panel with results of an investigation by the audit committee about internal accounting controls. The company restated results from one quarter in 2006 and amended its 2005 annual report and two 2005 quarterly statements. Ixia did not provide an executive for comment but issued a prepared statement on its issues. “The company continues to work diligently and to devote substantial resources to complete the reports and the previously announced restatement of the financial statements,” the company said in a prepared statement.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.
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