The Learning Company Stock Dives Nearly 20%

Shares of the Learning Company Inc. fell almost 20% on Wednesday amid fear that accounting practices at the educational software developer may scuttle its agreement to purchase Broderbund Software Inc. for $420 million.

The stock exchange halted trading in Learning Company stock late Wednesday pending news, and the Cambridge, Mass.-based company issued a statement to clear up questions about its accounting practices. The statement also said the Learning Company remained committed to the purchase of Broderbund.

Many analysts also said worries about the Learning Company’s accounting practices were unfounded. Bob Peterson, an analyst at Piper Jaffray, called the fears “much ado about nothing.”

Shares of the Learning Company dropped $5.13 to $20.63 before trading on the NYSE was halted. Market sources said Pacific Crest Securities analyst Jeff Goverman questioned the way the software developer was handling collections of accounts receivable. Goverman did not return calls seeking comment.

Shares of Broderbund were also down, falling $4 per share to $16.38 on the NASDAQ. Traders feared any accounting problems at the Learning Company could muck up its proposed merger with the San Rafael, Calif.-based game and educational software company.

Peterson said he expected the Learning Company and Broderbund stock to rebound Thursday, and added that he plans to reiterate a strong buy rating on the Learning Company.

In its statement, the Learning Company gave a detailed explanation of various facilities in which it sold accounts receivable to third parties. It said the facilities would not affect its financial results and did not increase or decrease accounts receivables. It added that they had been disclosed in recent filings with the U.S. Securities and Exchange Commission.