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PictureTel Dropped From S&P SmallCap 600 Index

Is PictureTel (http://www.picturetel.com) in trouble?

Earlier this week its stock price tumbled on news that its auditors were unsure about how long PictureTel could stay in business. In a recent 10-K filing, PriceWaterhouseCoopers said that certain factors "raise substantial doubt about its ability to continue as a going concern". The 10-K does mention, however, that company management is "negotiating an expanded credit facilityand may seek additional equity investment" that will take them past the next twelve months and beyond.

On Tuesday, PictureTel was dropped from the S&P SmallCap 600 Index for "lack of representation". Also Stifel, Nicolaus said it was downgrading PictureTel from Accumulate to Hold. In response to all this, its stock price has tumbled. In late afternoon trading Wednesday, the stock was down over 15% from yesterday's close.

All of this comes on the heels of an announcement by PictureTel Tuesday to launch a subsidiary called 1414c to leverage the companies eVideo Server application for videoconferencing and streaming.

PictureTel held a conference call Tuesday to announce the new subsidiary and also talked about their finances. Unfortunately, there was no link to an archived conference call on PictureTel's web site.

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