CNET to Restate Financial Results

July 10, 2006 ( - CNET Networks Inc. said it expects to restate financial results to correct accounting errors the company made in recording stock-based compensation.

The Wall Street Journal reports the San Francisco media company said it believes the charges are material, and it expects to restate results for 2003, 2004 and 2005. The company does not expect the restatement to impact its previously reported revenue or cash positions.

CNET said it will record non-cash charges for stock-based compensation expense in certain periods starting from the year ended December 31, 1998, and continuing during the vesting periods for the options, decreasing net income or increasing net losses, according to the news report.

Based on findings from a review of its stock-option practices by a special committee of independent directors, the company may also restate its financial statements for earlier years and its operating results for the first quarter of 2006.

CNET announced in May that it had received notice from the Securities and Exchange Commission (SEC) that the commission was beginning an informal inquiry into the company’s stock option grant practices (See CNET Latest to Face SEC Stock Option Inquiry ).

Separately, the Wall Street Journal reports that Take-Two Interactive Software Inc. announced the SEC is investigating its stock option grants dating back to January 1997. The company said it is also conducting its own investigation.