The accountants at IBM had a busy week, restating earnings from 2004 and proposing changes to future results to take advantage of US tax laws relating to income earned overseas.
IBM recently figured out that employees in Japan had incorrectly recorded the sales of third-party hardware. The company refused to provide exact details on this situation but did say that the snafu would force it to lower 2004 revenue by $260m. The mistakes occurred in IBM's massive services unit, which brought in close to $50bn last year.
"[I]t was determined that certain IBM Japan employees acted improperly and inconsistently with IBM’s policies and practices," IBM said in a filing with the US Securities and Exchange Commission. IBM declined to elaborate on what happened to the IBM Japan employees as a result of their actions, although it said some disciplinary measures had been doled out.
In the same SEC filing, IBM revealed that it's looking to repatriate up to $8bn in earnings pulled in by overseas operations. A US tax law has provided companies with one year to bring home profits generated abroad at a lower tax rate.
IBM expects to take a charge of $550m from this move and is waiting on board approval before it says what quarter the charge will affect. ®