Slashdot Mirror
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."
disappointment. After they're gone, I'm sure it'll only be another twenty years before I stop seeing customers' boxen with Macafee's anti-virus expired demo notification popping up every time I touch it. Maybe they should have given away more nagware, that might have helped.
This is reminiscent of Enron's mark to market accounting, wherein you basically determine the real market asset value, then you just make up a bunch of shit.
The theory of relativity doesn't work right in Arkansas.
Fines are not enough and hurt shareholders more than those who are responsible: the executives. The true punishment should be fines and jail time for the COO, CFO, CEO and all the other Cx0's. What does fining a company do except bleed the shareholders?
No wonder corporate fraud is so popular. Even if you get caught, the cost is less than the benefit.
This will continue until a lot of these people end up in prison for a few decades.
I hear this was caused by an Excel Marco virus, only McAfee was to embarrased to admit it.
It appears that they may have actually been implementing more than one bad accounting practice.
Why limit yourself to just one.
Who is general failure, and why is he reading my hard drive?
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.