Opinion on  China Expert Technology Inc. (CXTI)
China Expert Technology (CXTI.OB) conference call should calm investors

China Expert Technology : CXTI.OB Chairman and Acting CFO Huang (Michael) Tao gave a conference call this morning (replay information here ) that should help calm investor fears over the departure of former CFO Simon Fu. The money quote: “there will be no discrepancies in financial statements.”

Other highlights made in the call:

1. Tao said that the company should have worked out an arrangement for a successor before Fu left. It sounds like the company underestimated the effect the news would have on investors, and I expect a smoother communication of future corporate events.
2. The relocation to Shenzen from Hong Kong will be important to the company because: (a) it will move the company closer to its governmental customers; and (b) should reduce costs over time as labor expenses, especially of highly-skilled professionals, are substantially less in Shenzen than Hong Kong. It sounds like Fu’s departure may have been related to the relocation but I didn’t catch a few sentences in that part of the call.
3. CXTI is interviewing three qualified candidates. Tao will meet with each next week and wants to hire a new CFO as soon as possible. The company wants a candidate that has a strong GAAP background and is bilingual.
4. While the preliminary results for Q2 announced last week have not been vetted by the company’s auditors (BDO), Tao did not back away from any of the numbers. He said that CXTI should be able to issue final Q2 results on time and anticipated a conference call on those numbers no later than August 15.

Overall, I was very impressed by the call and think it will help stabilize CXTI shares.

DISCLOSURE: Long CXTI.OB.