Tough times for Cerner

Cerner's shares continued to slip as Wall Street interpreted a report published on Tuesday questioning the company's accounting practices. By the end of trading Thursday, Cerner shares were down to $83.95, falling $9.13 in very heavy trading. They are in the same range midday Friday.

How real are the questions surrounding the company? The firms behind the allegations say there are warning flags that aggressive revenue recognition tactics are in use. Questionable (well actually, fraudulent) accounting has been known in health information companies before, notably at HBOC before McKesson bought it. But in the post-Enron and Sarbanes-Oxley environment, it seems unlikely that a company seeing as many successful "wins" as Cerner has in the past year would need to take accounting risks. On the other hand, investors are liable to be very skittish and can use this as an excuse to take profits. Since this is the one of the last pure HIT stock plays, it will be closely watched.

- see this article from the Kansas City Star

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