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The Mr. Dumas Accounting Award: Universal Travel Group (UTA)
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Universal Travel Group (NYSE: UTA) is seeing some interesting trading today on news that it is delaying its earnings report. The company calls itself “a leading travel services provider in China, offering package tours, air ticketing, and hotel reservation services online and via customer service representatives.” We are awarding the company an award which it will not appreciate: The Mr. Dumas Accounting Award.
The company has postponed its year 2010 earnings conference call previously scheduled for March 30, 2011 at 9:00 a.m. EDT. That was today. It was just back on March 15 that Universal Travel said that it “confirmed that it will host a conference call to discuss the Company’s audited financial results for full year 2010 ended December 31, 2010, along with fourth quarter 2010 financial results on Wednesday, March 30, 2011 at 9 a.m. E.D.T.”
Today’s delay does not even give a date for the call to be rescheduled, something even more frightful. It simply said that the report will be a later day in 2011 to be determined. You may wonder why we are giving it The Mr. Dumas Accounting Award when the company specifically said in its statement that the postponement was not due to any accounting irregularities. The company said this will allow it and its independent auditors “to complete their work on the financial statements and audit.”
In a final effort to appease holders, the company said that “regrets any inconvenience that the postponement may have created.” Inconvenience? Shares are down over 20% at $4.10 in pre-market trading this morning against a 52-week trading range of $3.25 to $10.23.
Where the problem comes into play is that Universal Travel finds itself in a situation where it confirmed the worst fears of investors regarding the accounting practices of Chinese firms. Investors have many high hopes from China, but many are also savvy enough by now to know that more large companies have pulled shenanigans on the books than can easily be counted. Many investors and critics even argue that there are often two or three sets of accounting books at some Chinese ADR companies.
The company can claim that there are no accounting irregularities all day long. We have no knowledge of any irregularities at all, but the pattern is easy to identify and we understand why investors are shooting first and asking questions later. It is March 30, and if a public company (in China or not) can’t produce results that its auditors can agree to, investors are going to be worried. Rightly so!
Universal Travel Group gets the “Mr. Dumas Accounting Award” whether it wants it or not.
JON C. OGG
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