Electronics for Imaging slides after forensic firm alleges 'accounting gimmicks'
Shares of Electronics for Imaging (EFII) are trading lower after GlassHouse, a short-leaning research firm made up of former forensic accountants and analysts, issued a report on "accounting irregularities" at the digital printing company. SHORT-SELLER WARNS OF FUZZY ACCOUNTING: In a short report published Thursday, GlassHouse Research criticized the "terminally ill" Electronics for Imaging, which it says "uses every accounting gimmick in the book to mask true economic earnings." The company has continuously used acquisitions to hide a lack of organic growth in the underlying business while undercounting its product warranty reserves, GlassHouse argues, adding that it has uncovered evidence of significant stuffing of inventory channels to maintain the appearance of healthy sales. Notably, Electronics for Imaging's non-GAAP twelve month income is now 290% above GAAP numbers, a chasm produced by what GlassHouse calls "persistent material exclusions" of expenses. The short-seller set a $13.50 target on shares of EFI. PRICE ACTION: Electronics for Imaging shares are down 6% to $43.74 in afternoon trading. Reference Link