Motley Fool
0
All posts from Motley Fool
Motley Fool in Motley Fool,

Ouch! Why Electronics for Imaging, Inc. Stock Plummeted on Friday

What happened

Shares of Electronics for Imaging (NASDAQ: EFII) plummeted as much as 43.8% on Friday after the computer printing technology company admitted to likely accounting woes. The stock is down 43.3% at the time of this writing.

So what

In a statement on Thursday after market close, EFI announced the postponement of its second-quarter financial call, in which it anticipated discussing the quarter's preliminary results. It said it is postponing the call "in order to enable the Company to complete an assessment of the timing of recognition of revenue."

Image source: Getty Images.

EFI said it is also in the process of completing an assessment of its "current and historical disclosure controls and internal control over financial reporting." The most likely main reason the stock is selling off on Friday is that the company said it expects this assessment will reveal a "material weakness" in its internal control over the financial reporting being reviewed. In addition, EFI said it expects that its disclosure controls "were not effective in prior periods."

Now what

These accounting woes pose a number of risks for investors. Not only could a review of the company's reporting methods reveal additional problems, but these assessments could also result in costly litigation, which could negatively impact EFI's bottom line.

EFI said it will announce its new date and time for its second-quarter conference call in a subsequent press release.

10 stocks we like better than Electronics For Imaging
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Electronics For Imaging wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 1, 2017

Daniel Sparks has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.