S3 Shares Fall on Earnings Restatement News

Santa Clara-based S3 Inc. shares fell 16% after the maker of multimedia products said it will restate earnings for previous quarters because of errors in recognizing sales to international distributors. Shares fell $1.41 to close at $7.34 in Nasdaq trading. The shares earlier touched a 52-week low of $6.75. The stock was the 11th-most active in Nasdaq trading and the 20th-most active in U.S. composite trading. On Monday, after the close of trading, S3 said it would restate earnings for previous quarters by 14 cents to 29 cents a share, cutting revenue by a total of $40 million to $70 million, because it didn’t properly follow its accounting policy on recognizing revenue on sales to distributors after the product is sold to a customer. The company had better-than-expected second-quarter earnings this year of $2.3 million, or 5 cents a share, on revenue of $108.9 million. “We are currently implementing measures to ensure that this type of error will not recur,” said Chief Executive and President Gary Johnson.