When Microsoft bought Fast Search & Transfer ASA and its vaunted enterprise search widgetry last month for $1.23 billion cash to compete against Google it bought itself police investigation.
When Microsoft agreed to buy it in mid-January, the publicly
traded Norwegian company was already in the revenue-recognition soup. It had
been delisted a month before, and was supposed to restate its 2006-2007 results
for a second time.
However, Microsoft’s swooping in to rescue it and its
collapsing license revenues – presumably after doing due diligence – didn’t
make those accounting problems go away.
Kredittilsynet, the Financial Supervisory Authority of
Norway, basically Norway’s version of the SEC, has been on Fast’s tail for a
while and thinks that Fast played, well, fast and loose with the books and that
its revenue-inflating irregularities may border on the criminal.
Økokrim, the Norwegian
National Authority for the Investigation and Prosecution of Economic and
Environmental Crime, the natural prosecution authority of such things, agrees with
Kredittilsynet but it’s too busy
to open a criminal investigation, according to Portfolio.com, which got a
translation of the story Aftenposten, the Norwegian newspaper, tells.
whistled up the
When Microsoft said it was buying Fast – and hinted it might
use its search engine technology to really rip into Google – the Norwegian tax
authorities reportedly wanted to talk to two members of Fast’s board about a
little matter of $50 million in back taxes.
Fast seemed to be flying high until about a year ago when
things suddenly turned sour. Q2 revenues were sheered some 40% sequentially and
there were reports of an investigation by Kredittilsynet.
In Q3 it lost $100 million on revenues of $35.6 million, its
turnover down almost 20% year-over-year. Revenues from enterprise licenses
amounted to only $4 million and it had to write off $26 million in unpaid
deals. It reportedly lost serious market share.
In December Fast said it would restructure and lay off 20% of its people to cut costs when trading in its stock was suspended and it was going to have to restate, and then Microsoft appeared as if by magic on the scene.