Trouble at Osicom
Last Tuesday evening, Osicom Technologies disclosed that February orders hadn’t materialized on a contract the Santa Monica, California, computer-networking firm had valued at $90 million in a July 1998 press release. The next morning, Osicom shares plummeted. Nasdaq halted trading after they’d fallen by $8, to $10.43. Trading resumed late Thursday, and the shares closed at 6 7/8 Friday, far below their 52-week high of 28 3/4.
The trigger for Osicom’s disclosure apparently had been inquiries about the contract from the Bloomberg Financial Markets wire service. Bloomberg reported that Osicom’s $90 million deal for a portable wireless device to be sold to a Japanese company had actually guaranteed Osicom only $175,000. In a stream of press releases, Osicom indicated that the situation was actually worse; it expects to receive no payments beyond $68,000 it already has gotten from its client. Other products, including a fiber-optic device called the GigaMux, were doing fine, Osicom insisted. The company also denied any impropriety in failing to disclose the situation earlier.
