OSK comments on Mems

I was reading thru the copy of OSK research report on Mems.

Let me share it here for I reckon that there is some serious implications here if some of the comments made were true...

• We understand that there has been speculation since last week indicating that MemsTech’s audited FY07 net profit could be much lower than reported in September 2007 after adopting a new accounting standard. We have contacted the management and we think it is still premature at this juncture to actually conclude anything. First of all, this is not a special investigation on the company’s FY07 financial results. It is a standard procedure that the full-year financial results of PLCs will eventually be audited. According to management, the audited FY07 results will only be released at least two weeks from now. Meanwhile, our concerns that investors may further dump the shares until this uncertainty is alleviated, we have revised our recommendation on MemsTech to a Neutral. Nevertheless, our fair value of RM0.95 is maintained until the audited report is obtained.
  
  What if MemsTech’s FY07 earnings is excessively overstated? Obviously, there willbe a few negative consequences in such an event, which include :-
  
  (i) Reputation of the company would be severely discounted
  (ii) The transfer of listing from MESDAQ to Main Board might be affected
  (iii) 1Q FY08 results could be lower than expected after adopting the new accounting standard (iv) Our earnings estimates for FY08 will also be adjusted lower as our growth assumption for the company’s traditional sensors business which contributed over 90% its FY07 revenue will not be as high anymore.
  
  Risks. Besides the risk mentioned above, we mentioned in our previous reports that silicon microphone is essentially the main investment theme for the stock at the moment and key investment risks associated with are : (i) lower than expected shipment (ii) pricing pressure (iii) quality issue (iv) delay in ramping up capacity
  
  Keeping an eye. We will be monitoring the situation with undivided attention and on a lookout for any future developments.

Well, if you own this stock, I do hope you understand what is happening and what's the implications here.

For the sake of our market, I pray hard that this is not yet another company overstating its earnings!