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Red Hat Vs. The Lawyers
ajs writes "On July 13, Red Hat announced that they would be re-stating their revenues for the last 3 years. This sent a shock-wave through their stock price, but early analysis seems to indicate that it's not that big a deal (the end-result is the same for a given contract, but it will be counted toward a different month). But then the really bad news hit. [Opportunistic lawyers] are taking this opportunity to punish Red Hat for reporting the change and the resulting drop in price. Red Hat is doing well, but can they weather major class action law suits without harming the business? How have other technology companies dealt with this sort of suit?"
Isn't it just grand how thousands of very intelligent geeks spent countless hours creating and improving Linux and Red Hat, and now a bunch of doughy, pasty-faced vultures at "Goodkind Labaton Rudoff & Sucharow LLP" will rake in an assload of cash from this?
God, I really hate the American legal system.
Well even if the SEC weren't involved, Redhat had a rough 2004 by pulling the plug of the redhat distro in favor of the corporate version and fedora. I know so many diehard fans going the way of debian and suse. Losing fan base will kill your company faster than the SEC.
RedHat was following the rules (particularly the ones about switching auditors), and their new auditors convinced them to use a slightly different accounting method for their subscription accounting. It looks as if their previous accounting method was not neccesarily incorrect, flawed, or false - just different.
How is it that someone can bring a class action lawsuit against a company for changing their accounting practices from one one allowed method to another allowed method?
"Great men are not always wise: neither do the aged understand judgement." Job 32:9
For many tech companies, fan base = customer base. Or at the very least, the fan base strongly influences the purchases made from the customer base.
Lose the fan base, there's a very good chance you'll lose your customer base. Customers are fans, too.
Insanity is a gradual process; don't rush it.
I patently reject your characterization of me as an "ambulance chaser." I am one of the many investors who lost significant amounts of money in redhat stock,
.com bubble bursting, not a trivial restatement of earnings. The only thing you can claim to have lost as a result of this is today's change in price.
Waah. I bought in on the day it opened at about 50, got out of half of it at 300 (pre-split), and kept the rest. The paper losses are a result of the
But, by all means, please do sell while it's undervalued, I'll be buying up your shares. Any lawsuit here is strictly driven by greed, either yours for not knowing when to get out (welcome to the stock market, it's gambling, deal with it), or (ahem) somene else's greed in trying to hurt the competition.
Class-action suits against a company for mickey-mouse bullshit is repulsive. If the company was actually doing something sleezily financially bad (eg enron) or dumping arsenic in the public water supply, then these class-action suits are deserved. But suits merely because of stock-price slippage are pathetic. I bet you wouldn't give 2 shits if the same tactics you decry redhat of have earned you money. But since you lost, you can't blame yourself, you're too smart to have made a bad decision. Yeah, blame redhat.
It's asshats like yourself that have destroyed the society and culture that used to exist in the West. Now companies first priorities are their investors, not their customers nor their product. It's pathetic, and that's exactly the reason why all prime-time TV is the same and sucks, why restaurant chains and consumer food companies use shoddy unhealthy (but cheap) ingredients (eg high-fructose corn syrup and MSG), etc. Because the companies have to look after your ass because you invest in them.
I think if you invest in a company, you should that company and have to bide by it's decisions. If those decisions make the stock go down (as long as it's ethical) than tough shit. Now the lawyer in you is probably defining 'ethical' to mean whatever takes care of investors the most. If you are thinking that, then you REALLY are a lifeless asshat that is destroying our society.
Customers are often far more pragmatic then fans. When Red Hat ditched Red Hat Linux in favor of RHEL, the fans whined and went to Debian, whereas customers thought for a moment and realize RHEL had better support and were therefor happier.
"I use a Mac because I'm just better than you are."
Uh, the article _I_ read said it was still vastly overpriced - it's just that this downturn was not really based on any fundamentals. Red Hat is still making money selling support, and financial rewrites don't change that.
Ask anybody in my LUG - I'm the biggest Red Hat supporter in the world. But that _does not_ mean their stock is worth buying.
-Erwos
Plausible conjecture should not be misrepresented as proof positive.
If you were stupid enough to sell for less than what you purchased the stock for, that's your own problem.
This is insightful? Give me a friggin break moderators. Have you ever invested in the stock market before? If you buy the stock and the price starts to go down, you have a choice -- if you think it's going to go down more, you can limit your losses and sell. If you think it's going to go back up, you ride out the bad times. Sometimes you make the right choice. Sometimes you make the wrong choice. Calling someone stupid for selling a stock for less than what they bought it for is ridiculous. What's stupid is holding onto that stock, when all indications are that it will never rise again, just because you don't want to sell at a loss. And from looking at RedHat's stock profile since its IPO, it looks a bit unlikely that RedHat will ever again achieve the highs it once hit.
My advice: grow up.
Sometimes you lose money on a stock. Sometimes you make money on a stock. That's true for everyone.
But everyone doesn't go crying to a lawyer every time they have a problem. Only a certain kind of person does that -- not the good kind.
I suggest if you really want your money back, you should just go rob a liquor store. As you point the gun at him, you could explain to the clerk that you're doing it because you're a victim of a small disagreement in corporate accounting methods.
Or you could earn it, like -- well, like a grown-up.
Perhaps, but that's nothing compared to what you lose if you suport things you know to be wrong just because you hope to thereby get money.
-- MarkusQ
Have you considered that the lawyers in question stand to make between 35 and 50% off the top of the settlement? So many companies settle out of court these days, trying to avoid bad press, that it's worthwhile for these bastards to file every single lawsuit they can. A few will pay off huge, many will pay off some, and they'll take their fee right off the plunderings, er, judgement...
At the bottom of the endless pile of paper work which characterizes all regulation lies a gun.
Alan Greenspan
This kind of biased editorializing that has been pointed in the past but why not point it out again: I don't remember the anti-MS California class action attorneys being labeled "ambulance chasers." What bothers me more though is just any old lawyer being called an ambulance chaser. Sharks, maybe. Ambulance-chasers, no. It reminds me of when people call liberals "terrorists" because they are anti-war. I don't care if you think they are bad because they are anti-war, but don't use some irrelevant word. Same thing goes here. Ambulance chasers are laywers that solicit clients soon after personal injury. Anyway, it doesn't look like the class has been certified. It could be this case goes nowhere and it doesn't even cost RH that much (relatively). (Don't mod me troll because I mentioned lawyers, liberals, and M$ in the same post :P)
Actually, no, I wouldn't be "hooting and hollering." I like to see Microsoft get its ass kicked, sure. Who doesn't? But I like to see Microsoft get its ass kicked about the things for which it *deserves* it. Such as, in no particular order:
- Security - or the lack thereof - in IE, Outlook, Exchange, and Outlook Express.
- Clippy and his dolphin kin in Japan.
- Fundamental design choices that make decent security apparently effectively impossible in Windows
- Integrating the browser into the OS (partly covered by those design choices)
- Monopolistic and anti-competitive behavior. If I were an independent developer selling a Windows app, or a small company doing the same, I'd be really scared, especially if MS made a buyout offer and I didn't want to sell. Time and again, their next move has been to do everything possible to destroy potential competitors through underhanded means. Even when I was a Microsoft supporter and though Bill Gates was a genius (up to 1997, when I tried Linux for the first time), I found a lot of MS' business practices to be pretty distasteful.
- Having to reboot if I change the netmask. This would be more understandable if I also had to reboot if I changed the IP address, but I don't. Just if I change the netmask.
- The way every version of Windows tries to be more helpful and thereby becomes more of a hindrance. The one Windows box I still run uses Windows 2000 and I have no intention at all of "upgrading" to XP.
- Failing to innovate IE to the point where it is now the least capable major browser in the market.
- Spreading FUD and lies rather than even thinking about competing on merit.
- Being unable to compete on merit.
- Losing tons of server market share, and even a little desktop market share, to Linux b/c it can't compete on merit.
*However* - I do NOT want to see even Microsoft being ripped off by a bunch of ambulance chasers filing a bogus class action lawsuit because they restated how their earnings are calculated - and that, if you RTFA, is all Red Hat has done: restate how their earnings are calculated. Their earnings have not changed.
I want to see Microsoft beaten, crushed, and generally humiliated in the marketplace, sure. But I want to see it happen fair and square, not through the kind of tactics MS itself routinely uses on others.
And yes, as a matter of fact, I do believe MS is behind this suit somewhere, just as they were behind the SCO suit, and it will come out eventually.
From what I read, they switched the accounting of their subscriptions to a finer granularity. In the end, the result should be mostly the same, but they have to announce the change in accounting practices. Now they're going over their books with they new model, recalculating their revenues, and get slapped with a lawsuit.
Both accounting practices are legal, so where is the messing? I think that lawsuit is bogus and just a means to drain resources from Red Hat...
Regards, Ulli
Simple things should be simple, complex things should be possible.
First, my opinion is that Red Hat is coming back from this hardship nicely. They are doing an excellent job of determining where their holes in product lines are and filling them.
I was one of the very vocal opponents of Red Hat dropping their standard distro in favor of Fedora, but I have largely changed my mind.
Of course they decided to restructure their product line. Revenue from the retail products didn't make a dent in their operating costs, whereas enterprise sales have quadrupled in 4 years.
But still, keep in mind that RedHat isn't really a software company just yet. With 90% of their >$1B capital invested in (and 3/4ths of their $14M profit coming from) bonds and other securities, they are still more of an underperforming mutual fund than a successful company.
But it definitely seems likely that a couple of years from now their profit from RHEL is going to overtake the investment revenue.
-a