'No Fraud' At 21Vianet, According To Analysts; Shares Sink 19%

21Vianet Group Inc VNET extended its losses a further 19 percent, a day after a short seller accused the company of fraud.

But at least two analysts defended the company after it held a conference call for investors Thursday that offered a rebuttal to the allegations.

Shares of the China-based Internet infrastructure are down nearly 40 percent in the past several days.

"We don't see any evidence of fraud," Credit Suisse's Collum McCallum said.

McCallum said the company uses standard accounting practices for revenue recognition, and while accounts receivables have been growing, they've been matched by fast growth in accounts payable.

Morgan Stanley 's Gary Yu said elements of allegations by the short seller were "due to counting errors" and lower use rates cited were due to "differences in definition" as Vianet uses daily weighted averages.

Yu added, however, that there's "room for improvement in cash management" regarding receivables and a number of recent acquisitions.

The company's recent $250 million acquisition of Aipu "does appear to be on the high side" while several related-party transactions concerning a $16 million deal to buy iJoy "could raise investor concerns," Yu said.

Yet a third analyst is uncommitted.

Management on Thursday's conference call "didn't sound well prepared" Rosenblatt's Jun Zhang told Bloomberg. “They didn't provide sufficient clarifications to a few questions raised by investors such as increasing accounts receivable, and sometimes gave contradictory explanations over the call on the same issue.”

A group calling itself Trinity Research, which declines to identify its principals, posted a report Thursday accusing 21Vianet of falsifying financials, operating an illegal bandwidth reselling network and acquiring shell companies to mask insolvency.

For its part 21Vianet said the allegations, "contain numerous errors, unsupported speculation and malicious interpretations of events."

21Vianet traded recently at $16.50 a share, down 17.9 percent.