CEO Conway Offers His Latest "Shiny Object" -- In Response To Vastly-Increased 2011 GAAP Losses Per Share

This attempt would be disconcerting, if it weren't so transparently silly -- and thus ineffectual. After trading flat essentially all day, on below-average volume, MATR took a powder at the close -- losing almost 2 percent in the last half hour -- immediately after the below press release, from Mattersight's Chicago Loop offices hit the wires:

. . .Mattersight Corporation (NASDAQ: MATR) today announced the launch of the newest version of its transformational Performance Management application for its Behavioral Analytics service. . . .

Mattersight's Performance Management solution leverages its strong competencies and expertise managing big data. Every day, Mattersight captures over 70 trillion data attributes, applies over 2 million algorithms, executes over 250 billion computations, and processes over 350 TB of data in order to provide its customers with new and contextually accurate information to understand their customers and improve their operations. . . .

None of this will change the reversal of the trend toward smaller losses per share from continuing operations -- on a GAAP basis, from 2009 through 2012, inclusive. And CEO Conway well-knows it.

In fact -- it turns out that "improving loss per share trend" was a simple illusion. The losses only shrink if no one has to pay for the Series B dividends and redemptions. But GAAP requires that someone -- i.e., the company -- pay for those obligations, and include the same in losses per share. That is truly rudimentary financial accounting -- and shocking that through at least seven layers of review, no one noticed it.

The SEC filing averrs that Mattersight had learned of the error in the second quarter of 2012 (see Note 22, on page 34). That means that for some period of time after March 31, 2012, management knew its stock was trading on materially inaccurate information -- and it wasn't some discretionary disclosure item, like preliminary merger negotiations. No, for perhaps as long as 45 days (from April 1 to May 15, 2012) -- Mattersight sat mum about a material mistatement that they themselves had made to the world.

How does that happen, without drawing at least an informal SEC inquiry? I don't know -- but we shall see.

Will Mattersight open down, again, tomorrow? Stay tuned.