Corporate fraud didn't start with Enron, Tyco, and WorldCom and it didn't end with them, either. Fraud is rampant in the technology industry. What most employees, investors, and consumers don't realize is how much it costs them.
Excuse me for stating the obvious, but you'd be surprised how many people think there's some magic pile of dough somewhere that pays for companies to comply with investigations, contest charges, and remedy issues. In fact, the costs are born primarily by the corporation. That means it comes right out of shareholders' and employees' pockets. Consumers also pay, albeit indirectly.
And yes, we're talking about costs that materially impact earnings, balance sheets, and cash flow. We're talking about internal and outside lawyers, accountants, consultants, crisis PR, D&O (directors and officers) insurance, Sarbanes-Oxley compliance, exit packages, and even recruiting costs to replace executives.
Of course, the biggest cost is in terms of loss of market capitalization. ... Read more
In case you've been in a sensory deprivation tank for the past few days and missed the news, Henry T. Nicholas III, founder and former chief executive officer of chipmaker Broadcom, was indicted on securities fraud, conspiracy, and federal narcotics charges on Thursday.
Henry T. Nicholas III
One of the indictments was related to options backdating, the cause of a $2.2 billion charge Broadcom took last year. But it was the sex and drug-related indictment that captured the media's attention.
If you read the indictment (PDF), you'll understand why one report said, "You can't make this kind of stuff up," .
Rarely does a billionaire and technology industry legend self-destruct in such dramatic and flamboyant style. But there's more to this human tragedy than meets the eye, and it almost surely extends beyond Nicholas. ... Read more
Fear is a human emotion. It's part of our survival mechanism--the adrenaline fight or flight response. In ancient times when a caveman felt fear, he ran and hid or readied himself for battle. Those who paid attention to their fear survived; those who didn't, well, let's just say their descendants probably aren't around to read this.
Having courage does not mean ignoring fear. It means facing fear head-on and doing the right thing anyway. At least that's my definition. If you fail to face fear and act appropriately you're not necessarily a coward, but you're not the best you can be either.
The most successful people on the planet are the ones who face the cold, hard truth of reality and act accordingly. They don't surround themselves with "yes men" and they don't view the world through rose-colored glasses. ... Read more
Technology companies run into trouble from time to time. Today it's Yahoo, Dell , and Motorola. Tomorrow it could be Google, Cisco Systems, or Apple.
Lest we forget, it wasn't that long ago that Apple flat-lined for an entire decade before ousting Gil Amelio in favor of ex-chief Steve Jobs. Jobs restructured the company by first cutting Newton and other unprofitable products, then introducing exciting new core products like iMac, and finally branching out into consumer devices like iPod and iPhone.
But that's nothing new. It happens to most companies, sooner or later. ... Read more
There are lots of things I don't understand. They make me crazy. But don't worry, it isn't contagious.
What I don't understand
How was Lou Gerstner able to reposition a zillion-year-old company like IBM from big iron to services, while Jerry Yang doesn't even know where to begin reinventing Yahoo!?
Why does my wife clean the house before the cleaning people come?
When you tell telemarketers you're not interested, why do they keep talking until you hang up on them?
Why do criminals go to all the trouble of robbing a bank or smuggling drugs and then get caught with the goods doing something stupid like speeding?
Last week my dog pissed on the couch; the same day the cat threw up in my slippers. Why do bad things happen in groups? Is there some unknown force of attraction between disastrous events? Where are the physicists on this? ... Read more
Note: I wrote this on Thursday before Microsoft's latest bid for Yahoo; it's a follow-up to a post I wrote six months ago. I have two comments on Microsoft's offer: 1) It's aggressive and it's a sweetheart deal for Yahoo's shareholders; I think Yahoo's board will accept it; and 2) nevertheless, the issues I present are the same; it just becomes Microsoft's problem.
It's been seven months or so since Yahoo chief and co-founder Jerry Yang replaced Terry Semel at the helm of the ailing internet giant. At the time, I pondered the obvious question: Can Yang fix Yahoo?
For the record, I thought the board acted rashly in appointing Yang--a relatively inexperienced executive--to perform what would clearly be a challenging turnaround. I didn't think he had the experience to pull it off.
At the time, I thought that Yang--a visionary--wasn't what Yahoo needed. I thought Yahoo's problem was largely failed execution and missed opportunities in search advertising that allowed Google to leapfrog its more mature rival.
At this point, I'm even more convinced that Yang was the wrong choice. But I think the problem is bigger than missed opportunity and failed execution. The company does indeed need a new vision. And it needs a CEO who's capable of articulating and selling that vision down through the ranks and ensuring everybody's goals are aligned.
That's a tall order, but it can be done. Lou Gerstner did it at IBM, and that was no walk in the park. But Jerry Yang is no Lou Gerstner. ... Read more
I became a consultant in 2003, but not without some trepidation about leaving the safety net of the corporate world. It was hard to break away. I had worked in the tech industry for 23 years and, despite my reputation, a surprising number of apparently misguided companies wanted to hire me.
Still, my mind was made up. As one executive recruiter put it, you could put a fork in me; I was done.
So I told John Bourgoin, CEO of MIPS Technologies, that I would love to consult for him, but wasn't interested in joining the company.
John said he wouldn't hire me as a consultant. ... Read more
I don't know how many times I've read a post or an article by some small-minded, self-important journalist advising a public company's board of directors on how to "fix" the company. The most common advice is "sell the company," "fire the CEO," or better still, "fire all the executives."
Even if a company is screwing up, how is a journalist--whose entire management experience consists of looking at his watch to be sure he files a story by 3 p.m.--qualified to dole out management advice? Is mastery of a keyboard sufficient experience to know how to run a company?
... Read moreOn March 21, 1983, AMD went public. Adjusted for splits, the stock closed at $9.00 that day. Today, shares of AMD closed at $7.95. That means if you invested $10,000.00 in AMD's IPO, today you'd have $8,833.33. Adjusted for 25 years of inflation, that would be about a buck and a half.
Just to calibrate that, the same investment in Intel would have gotten you about a half a million dollars, Texas Instruments about $150,000, both the NASDAQ and S&P 500 about $100,000; even National Semiconductor and LSI beat AMD, although not by much.
Of course, some investors have figured out that you can make a fortune playing the AMD roller coaster. Except for the tech bubble and a brief spike two years ago, the stock has traded in a relatively narrow range. Seems like a nerve-wracking way to invest, but I know people who swear by it. ... Read more
How many of us have driven home in anger, after a frustrating day at work, and declared to our spouse or the nearest person who will listen, "I can do that incompetent jerk's job way better"? The incompetent jerk is, of course, the boss.
At that point you have three options:
Option 1: Realize that you're full of hot air and do nothing.
Option 2: Quit and go to work for somebody else.
Option 3: Try to get your boss' job.
This post will give you three tips for accomplishing Option 3. Just to be clear, I don't mean getting your boss fired and you getting promoted in his or her place; I mean getting a promotion to that job level, either at your company or elsewhere.
I've done it lots of times. Sometimes it works out; sometimes it doesn't. Six years ago, I was so frustrated with my CEO that I responded to a call from an executive recruiter. Before long, I was CEO of an optical networking company. This was the opportunity I was looking for, a chance to see if I really was better at my boss' job than he was.
Seven months later, my company went bankrupt, a victim of the dot-com bust. True story. ... Read more
