Slashdot Mirror
IBM Says SEC Probing Its Accounting
chriscooper1470 writes "International Business Machines Corp. on Monday said that the U.S. Securities and Exchange Commission had begun a formal investigation of how the world's largest computer company accounted for some revenue in 2000 and 2001."
Depends on how you define "big". IBM may make more money on corperate stuff. Dell makes most in home sales.
-
ping -f 255.255.255.255 # if only
In other words, IBM is known to play by the rules and treat investors fairly. If they were ever guilty of anything, it would be that about 6 years ago they didn't disclose as much information as they should have to investors. That's much different now.
Even if they are a little "aggressive" with their accounting I highly doubt they'll be in the type of trouble Enron is in. I don't think IBM is going away anytime soon, and they (the SEC) are just investigating the accounting for 1 division relating to 1 customer. I don't think there's much to worry about (famous last words?)
There are only 10 kinds of people in this world... those who understand binary and those who don't
I highly doubt this is anything like Enron/Worldcom/Adelphia. Companies, especially tech oriented companies got scrutinized pretty well after those big guns fell. I'm hedging my bet on there were some small discrepencies, but nothing larger than 100 million. Sure, that's a lot of money, but not as much as the Billion our buddies at SCO want.
On a personal note, i haven't heard of rampant, silly hiring by IBM. I was told by a Worldcom employee in the summer of '01 that they'd hire any EE they could get their hands on. Wow, i though, they must be booming to be hiring like that. Obviously not, but i haven't heard of any strange business happenings from IBM.
Too bad my co-op here hasn't used those accounting methods... they're kinda hurting right now. And a couple years of faked prosperity would be a good learning experience :P
My favorite way to illustrate how earnings are managed is to bring up a story from when I worked at big blue, 1990-ish.
I asked a work friend, a tech, to a new year's eve party I was having. He told me he couldn't come because he had to spend the night getting mainframes on trucks. Seems everyone in the facility (except us engineers--too soft, I guess--and management I assume) got drafted into getting more big iron shipped. You see, if it's on the truck prior to midnight, it's revenue in that year.
Of course, if it's revenue in that year then it's not revenue in the next year, so one year later they have to work twice as hard loading trucks. Then one year you run out of either trucks or iron and you miss your numbers. That's called paying the piper.
Milo
Actually, since Amdahl/Fujitsu and Hitachi have mostly gotten out of the business, IBM *IS* the mainframe market.
And don't spew any of that crap about the E10K or SuperDome being a mainframe. They're not. Despite what the shiny brochure says, they're not.
You think emacs is evil?! You've never used VM's XEDIT have you?!! That's evil, baby!
Armonk, New York-based IBM said in a statement that it "believes the investigation arose from a separate SEC investigation of a customer of IBM's Retail Store Solutions unit," which sells electronic cash registers and other point-of-sale products.
Here is a possiblity that folks are overlooking: I used to work for an IBM competitor in the point-of-sale industry. That company was a big player in one little niche, and we competed vigorously with IBM. We would sometimes mysteriously loose large customer accounts (think big like McDonalds or Burger King sized deals) to IBM for 'mysterious' reasons.
Imagine for example, if big blue bundled various computer and IT infrastructure around a deal and gave away the POS equipment.
Not saying that they ever did, but if they pulled some crap like it would be very questionable business conduct. If the deal then went south with that customer....
My first real programming job, one of my first assignments was figuring out how come the quarterly sales figures didn't jibe with the monthlies and the yearlies didn't jibe with the quarterlies (sum of monthly numbers > quarter, sum of quarters > year).
Finally realized (looking at the audit tables generated by a sql trigger) that the VICE PRESIDENT OF SALES was entering a bunch of sales at the end of the month, "booking" them for the monthly report run, the "unbooking" them after the run, and eventually cancelling them. The cancels were eventually picked up on the next month's report, but the system didn't back-adjust and rerun the old month report.
This made the VP look great, although he had to get nervous because every month he had to book enough fake orders to cancel last months back charge, plus the amount he wanted to pad this month (for some asinine reason, the cancels didn't carry forward from month to month, only the previous month). BUT, the quarterly reran ALL the numbers again (it didn't just total the months), so the numbers didn't fit. Anyway, he got nice monthly bonuses.
Anyway, I had to go to my boss and show him the stuff. I was real nervous, I'd been in this position about two months and was presenting evidence of the VP engaging in fraud. The funny part? Nothing happened to him. Nothing at all (although we fixed the system). My boss said he was told it couldn't be "proven" to be him and he claimed he didn't do it. He said 'several people have my login" (smart, real smart!). Anyway, the rich get richer. I always' wondered if his bonuses got docked?
DO NOT DISTURB THE SE
We used to buy computers from Datapoint in the late 70s and early 80s. Funny thing was, they'd send us extra equipment once in a while, when we'd ask, they'd say, oh, shipping error, send it back.
They also had a track record of zillions of quarters in a row of ever increasing revenue.
One day, some rookie accountant wondered why so mnay Holiday Inn rooms were being booked and no one was staying in them, investigated, and found they were ful of extra equipment, being shipped at end of quarter to show increased revenue. Huge scandal when that hit the news, stock dropped by a factor of ten overnight.
At least that's my memory of such long ago events, and I'm not even going to stick to it if someone has a better memory.
Infuriate left and right