BearingPoint hit over accounting

BearingPoint Inc., a provider of financial software to governments and corporations around the world, continues to have accounting issues of its own.

For the past two years, the McLean technology-consulting firm has struggled to file its financial statements with the Securities and Exchange Commission.

BearingPoint’s compliance problems go back to late 2004, when the company’s new management team, headed by Harry You, decided to get its financial reports in order.

The financial review became more extensive than originally thought, and more than two years later, the firm has not cleared the deck.

In June, BearingPoint fulfilled a self-imposed deadline and submitted its 2006 quarterly and fiscal-year financial reports.

Its net loss for that year narrowed 70 percent to $213 million ($1.01 per share) from $721 million ($3.59) the previous year.

Reporting these numbers is a positive sign that the company is working hard to get on the right track.

But it’s not there yet.

Analysts said they won’t be able to assess BearingPoint’s direction until they see its quarterly reports for 2007.

Last week, a spokesman for the company said the release of BearingPoint’s third-quarter report was “imminent.”

Until then, investors are likely to grow increasingly agitated by the company’s inability to report on time.

“Many investors thought they should have worked though this by now, but it has taken longer than everyone thought,” said Joe Vafi, an analyst at Jefferies & Co., an equity-trading firm in New York.

“This becomes most apparent if you look at the general decline of the stock price,” he said.

Since the beginning of July, shares of BearingPoint have fallen more than 30 percent, their steepest decline in almost two years.

The shares got a slight boost on Friday, rising 25 cents to $5.87. Markets were closed yesterday because of the Labor Day holiday.

Although BearingPoint’s accounting woes may soon be over, it has lost the confidence of its investors, a lot of money and, perhaps the company’s biggest loss, its competitive advantage.

While the firm struggled to fix internal problems, its competitors have been outsourcing business overseas.

Rivals such as Accenture Ltd. have set up operation centers in India, which enables them to provide services to clients at much lower prices.

Analysts said BearingPoint has been slow to join the outsourcing boom because of its internal distractions.

“They have missed the whole mega-wave of moving tech consulting offshore,” said Mr. Vafi. “And the offshore guys are getting very good, very quickly.”

Tien-tsin Huang, an analyst at JP Morgan Chase, agreed.

“BearingPoint has much more work to do to reposition itself in a competitive environment,” he said.