Merck & Co dropped Arthur Andersen LLP, its auditor for the past 31 years, becoming the biggest company to abandon the accounting firm that reviewed the records of the failed Enron Corp.
Merck, the second-largest US drugmaker, appointed PricewaterhouseCoopers as its outside auditor for 2002, said Merck spokesman Chris Loder.
Merck's dismissal of Andersen is the latest blow to the reputation of the accounting firm, which faces investigations by Congress, the Securities and Exchange Commission and the Justice Department over its duties as Enron's auditor. Merck paid Andersen, the smallest of the Big Five US accounting firms, US$6.3 million for auditing services in 2000.
"This should be viewed as a very serious matter for Andersen and might lead to many more defections," said Howard Schilit, an accounting watchdog who heads the Center for Financial Research & Analysis Inc. in Rockville, Maryland.
The move to replace auditors, which must be approved by shareholders, was part of Whitehouse Station, New Jersey-based Merck's annual review, Loder said. He declined comment on Andersen's role in the Enron scandal.
Whether Andersen will survive as an independent auditor or will be taken over by another firm is now an open question, he said. Merck's shareholders likely will greet news of the change in auditors with "relief," Schilit said.
"Merck has enough headaches with other things," said L. Roy Papp, managing partner of Phoenix-based L. Roy Papp & Associates.
"They might as well not have another headache with this."
Papp, who manages about US$1 billion in assets and holds 635,000 shares of Merck, noted the drugmaker's profits have fallen as patents on its medicines have expired.
Papp uses Andersen for his company's outside audit work and said he doesn't plan to drop the firm.
More than 20 publicly traded companies have replaced Andersen as their auditor since the beginning of January.
Some shareholders sent letters to Merck, questioning the drugmaker as to whether it would retain Andersen, Loder said. The company also received some letters in support of keeping the auditing firm, he said.
Merck paid Andersen US$4.2 million for its 2000 audit, and an additional US$2.1 million for tax services fees and employee benefit plan audits, according to a proxy filing with the SEC. Merck hasn't yet filed its 2001 proxy statement, which would include fees for the most recent year. Merck has historically filed its proxy at the end of March, SEC filings show.
Roy Vagelos, a former Merck chairman, was named this week to an oversight board formed to order changes at Andersen. Paul Volcker, a former Federal Reserve chairman, heads the panel.
AdvancePCS, an Irving, Texas-based health care company, fired Andersen on Feb. 12 and hired PricewaterhouseCoopers, according to an SEC filing.
Harris & Harris Group Inc, a venture capital firm based in New York, disclosed in a filing today that it would dismiss Andersen as its auditor as soon as its 2001 audit was completed.
Harris & Harris said it would retain PricewaterhouseCoopers as its new auditor, the filing said.
Other companies that have dropped Andersen as their auditor include White Plains, New York-based Paxar Corp, which makes electronic bar code printers and labeling devices. Paxar dismissed Andersen on Feb. 20, as part of a plan by its audit committee to rotate auditors every seven years, according to an SEC filing.
Corinthian Colleges Inc, a private for-profit education company based in Santa Ana, California, dropped Andersen as its auditor on Feb. 18, hiring Ernst & Young LLP, a regulatory filing showed.
Andersen is seeking to settle lawsuits with Enron creditors and shareholders.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”