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Security Vendor McAfee to Pay $50 Million Fine
goombah99 writes "RedHerring.com reports that Security Vendor McAfee has agreed to pay a fine of fifty million dollars stemming from false SEC filing. McAfee cooked its books, overstating its revenues one year by 131%, or half a billion dollars. The method employed was 'channel stuffing' in which compliant re-sellers are effectively paid to buy and hold inventory they may never sell. The shipped goods are booked as revenue and the payments disguised in the books. When it caught up with them, McAfee's stock price crashed, wiping out a billion dollars of shareholder capitalization. The story quotes an analyst saying this maybe the swan song for the once dominant vendor."
Apparently, I missed the analyst gloom/doom forecast. I did see this:
Analysts said the settlement would close a chapter in McAfee's history and let the company focus on its market, which is expected to heat up this year with the entry of Microsoft.
Here's their finance info on Yahoo. They seem to have a $4.73B market cap and are currently dead center of their year stock price range.
Doesn't seem that damaging to them, actually - though they are in for a tough scrap when MSFT gets in the act.
The little guy just ain't getting it, is he?
Me, cynically...
One shall speak only if what one has to say is more beautiful than silence
Off-Balance Sheet Entities:e tfinancing/
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http://executivecaliber.ws/sys-tmpl/offbalanceshe
http://www.investopedia.com/articles/analyst/0220
http://www.investopedia.com/articles/stocks/04/10
"Extremism in the pursuit of liberty is no vice. Moderation in the pursuit of justice is no virtue." --Barry Goldwater
This story is being spun into sensationalistic crap. The story is, the fine is being levied by the SEC for, and I qtfa, "securities fraud ... during the period between 1998 and 2000." I used to work for McAfee, and I want to educate the community.
All of what you know as McAfee used to be called Network Associates up until about 2004. It was formed in 1998 by a massive buy-up of various software firms, including Network General and McAfee Associates - hence the name, "Network Associates." During this reign, the CEO committed the fraudulent acts, including the channel stuffing as indicated, and was eventually fired in 2000 or 2001 for fraud. The new CEO, George Samenuk, took over and has since been credited with turning the company around, reestablishing the McAfee brand identity, focussing on the core products, cutting loose various deadwood (including, unfortunately, the research group that I worked for), and returning the company to legitimate profitability. At an all-hands (the one time Samenuk braved a visit to us research dweebs), he explained that the old regime consisted of "crooks," and that he vowed to be forthright with the SEC and do his personal best to fly straight. To my knowledge, he has done a good job of that ever since.
This fine being reported today is a result of the SEC, acting in good government swiftness, merely enforcing a punishment for deeds done in the past, under different leadership. Take this news as no indication of the current state of the company or its leadership, but view it merely as a capstone to an unfortunate period in McAfee's history.
http://www.billparish.com/msftfraudfacts.html
Financial Pyramid Building Techniques Being Used by Microsoft:
"Stock option programs are an excellent benefit and many companies use them responsibly. At Microsoft, however, stock option accounting is only one of its many pyramid building techniques, what could be called a cash generating component. Additional pyramid building techniques include the following. It is important to note that the genius of the pyramid scheme is to leverage share growth from investors using a passive investment approach based upon indexing to the S&P 500. Most smaller and mid size technology firms are not in the S&P 500 and therefore are locked out of this key aspect of the pyramid from the beginning.
and there's more. This accountant outlines 12 things Microsoft did and then describes the effects on our economy of those 12 things.
Running with Linux for over 20 years!
After reading up on the whole thing, McAfee did the funky accounting in the period from 1998 to 2000, and had $50m laying around, "reserved" for when they'd need it to pay the fine. I don't think that McAfee is really going anywhere any time soon.
You need to restart your computer. Hold down the Power button for several seconds or press the Restart button.