Whenever there's a story / discussion involving India, comments on Slashdot are almost always overwhelmingly negative with "ad-hominem" attacks all around. For example, this discussion thread does not have a single comment discussing the technical aspects of the launch - a launch of 100+ satellites is bound to have some interesting technical challenges which can be discussed. Instead comments are lame jokes about H1Bs and comments on how India shouldn't spend money on space missions. Slashdot was supposed to be a "news for nerds" site, where the nerds can actually discuss technology. It's sad to see what it has degenerated into.
With the Moto acquisition, Google should set the bar by putting out segment defining handsets. There hasn't been too much of innovation outside of Google in the android space. Time for Google to show what's possible with Android + Moto's phone making experience.
Nokia maps are by far the best in the mobile space. It is one of Nokia's biggest selling points.
Now that they are making their maps available to everyone, what "killer exclusive feature" do people have to move to Nokia/WP8?
Are they resigned to becoming an app developer, a sideshow, for the biggies?
The summary is completely misleading. The proposed amendment specifically provides an exemption for VC funded companies. From the proposed Finance Bill -
"(viib) where a company, not being a company in which the public are substantially interested,
receives, in any previous year, from any person being a resident, any consideration for issue of
shares that exceeds the face value of such shares, the aggregate consideration received for
such shares as exceeds the fair market value of the shares: Provided that this clause shall not apply where the consideration for issue of shares is received
by a venture capital undertaking from a venture capital company or a venture capital fund"
Now, there may be situations where a start-up is unable to use this exemption [say, where the investor is not registered as a VC fund in India]. There are trivial work-arounds for such cases, which any decent tax advisor can come up with. [Eg: Issue shares at face value, but with lower voting / dividend rights etc].
Long story short, I don't expect things to change in any meaningful manner on the ground.
PS: Last year, the tax department identified several cases where kickbacks from govt projects were disguised as share investments at very high premiums. The tax department seems to have brought in a (half-baked) proposal to stem such money laundering.
Honestly if we don't stop the up and coming countries from repeating our mistakes then what do we gain? A big fat nothing. A so hate this excuse of its not fair to them, well tough shit. We know better now and they can't claim to not know better either. If we get them off on the right foot it is going to be a lot easier for all of us. If we excuse them then we just push the problem off to the next generation. Of course that seems to be the aim of almost all politicians these days, push off to another generation what we are not willing to do today.
I have a more apt analogy than your pizza one.... just because Jack murders a dozen people doesn't excuse John from killing one.
Well, the developed world needs to *help* the China/India not repeat their mistakes - just crying "Stop!" isn't going to help one bit.
Look at it this way - the west needs to pay for what it has done to the environment. Why not do it through funds / technology transfer to developing countries to help them develop clean industries?
User satisfaction. This would probably involve periodic surveys or something. This would cover almost everything.
Of course, you do have a problem when the users are 'dissatisfied' - you dont know what the problem is!
India still has laws prohibiting photography in "sensitive" areas including airports, major dams, power stations, waterworks(!) etc! Blurring on google maps falls into the same category - It makes the average joe feel more secure and makes him feel that the govt is actually doing something about security.
I'm sure that the security apparatus in India is fully aware that blurring "sensitive" sites will have no impact on terrorists and such-like. It does give the politicians brownie points for being proactive!
The rationale is very similar to that behind the banning of fluids on many flights.
Also, since google has blurred its maps on the US' request, not doing so for India would definitely rankle many people in India. Google chose the safe way out and did what India wanted. I dont think doing so will affect thier business in any way, but not doing so would have run them afoul of the Indian govt.
I certainly agree with your point that if the "kickbacks" were classed as revenue, it would amount to incorrect accounting.This is a very basic and common inventory valuation issue. If inventory was actually valued gross of rebates, the entire accounting team along with the auditors ought to be fired.
However, there are certainly some practical problems. Problems arise when the rebate is based on full-year purchases and during the early quarters there is no way to know with any certainty whether the rebates will actually be realised. Accountants would then have to use judgement and the "principle of prudence" when accounting for the rebate. In effect, this would lead to rebates being spread unevenly across quarters depending upon the likelihood of receipt of the same.
I do have one query though. How did you determine that the "kickbacks" were classed as revenue and not as a deduction from COGS? Is there a separate line-item in the financials under the head revenue?
Just to clarify, I used to words "revenue receipt" to distinguish it from a non-income statement "capital receipt". I did not actually mean that it must be classified as revenue.
Your entire logic is correct if the deal was actually illegal. But with the limited info TFA had, it appears to be highly unlikely that the deal was actually illegal.
The crux of the matter is determining if the deal was illegal and even if it was, determining if Dell was guilty of wrong doing.
When big players negotiate big contracts, they often put in protections to not be worse off than the competition. I would expect the deal to be illegal because by not disclosing it, they MAY be in material breach to other companies. Further, Intel has signed consent decrees with the Feds over alleged anti-trust violations, and non-disclosed payments to keep competition out may violate those agreements.
In my experience as an accountant, I have seen several such contracts too.
1) Even if Intel had entered into such contracts,Intel would only be guilty of breach of contract and would be liable for damages. It would still not be an illegal act
2) Even if Intel has violated anti-trust laws, Intel would be liable and not Dell.
3) Rebates are sometimes given in the form of cash instead of lowering prices because they are dependant upon reaching target volumes which can be determined only at the period end.
4) GAAP does not require rebates to be separately disclosed. It is perfectly correct accounting to account for such rebates as a reduction from purchase cost. In fact, if they didnt do so, they would be overvaluing their inventory, thus inflating profits!
From the limited information available from the Reuters article, I fail to see the justification for the class action lawsuit.
From TFA "The lawsuit accuses Dell of artificially inflating profits "by secretly receiving approximately $250 million a quarter..."
1) Well, if the USD250 mn received was accounted for (thus "inflating profits") how can it be secret? If the rebate was illegally pocketed by execs, that would be "under the table".
2) Last time I checked, it was not "illegal" to offer quantity discounts/rebates to large customers. Hell, according to the law firm's logic, buying at CostCo is illegal because they offer quantity based rebates!
3) All criterea for revenue recognition were fulfilled - the amount was a revenue receipt and was actually received. How can then it amount to "artificial inflation of profits"?
The law firm is just out to get some free publicity and slashdot's editors are too willing to help.
The problem in India is not that colleges don't impart trade skills. The problem is that many of them fail to impart ANY skills at all. Considering that I just finished the college routine in India, here are some of the reasons IMO:
1) Low investment in education:
India's investment in higher education has been abysmally low for years. As a result, many colleges have shockingly poor infrastructure. Students work on poorly maintained, ancient equipment if at all.
2) Low quality of teachers:
This is a very important factor for poor education in India. Teachers and professors even at the graduate level are paid a pittance. Many teachers are taken on as temps to get around prescribed pay-scales and reservations. Coupled with the fact that there is very little research undertaken at most of India's colleges, there is simply no incentive for quality people to enter the teaching profession.
In the I-T industry, for example, even a fresh engineer can expect salaries of atleast INR20,000 pm. A teacher would need decades of experience to reach that salary level. There is simply no comparison between Industry and the 'Academia' in payscales.
India implemented a semi automated electronic voting system during the last country wide general elections. There has been surprisingly little debate on the security of this system. The design is closed source even though it was developed by a govt owned unit. There has been no independant audit of the system's security, even though the systems are used in virtually every election nowadays.
All this in a country where booth capturing and rigging are commonplace. The scope for electoral fraud is immense! It's probably only a matter of time before someone begins to exploit flaws in the system...
Here's some info on the EVM:
http://www.eci.gov.in/EVM/index.htm [Election Commission of India]
http://en.wikipedia.org/wiki/Indian_voting_machine s [Wikipedia]
Umm..I guess you have no idea how good a call center wage in India is. Freshers are paid around INR 8000 - INR 12000 a month. That puts them in them firmly in the middle class. Hell,most government jobs start at something like INR 3000 a month or so. Call center guys certainly have more than enough to eat. There are even "complaints" that call centers are putting too much money into the hands of youngsters and "fuelling consumerism".
Well, you'd think that INR 12000 must be a lot of money..... It's only USD 260 a month!!!! Your minimum wage has to reaaally scrape the bottom for outsourcing to disappear.
The most likely reason for the call center cancelling its contract is probably because there were much more profitable contracts around.
You see, the outsourcing business has grown very fast in India and companies are finding it difficult to scale up so soon. That could partly explain things like this.
Although voice based services are the most visible, a lot of "back office" processes are being moved to India. Ernst & Young has a large tax return preparation program in India. I-Bs like Goldman Sachs have moved much of thier fund accounting to India. These jobs might be seen as "inferior" in US, but here, they pay the best salaries, thus attracting top talent. Outsourcing is here to stay. Prove me wrong.
Umm..dont nuclear weapons level the field somewhat? While China may have only enough nukes to destroy all major US cities, the US may have enough firepower to destroy ALL chinese cities. In the event of war, they are both royally screwed anyhow. (of course I'm assuming that the ABM shields are still mere toys).
The amount of incremental damage you can cause to the enemy with an additional WMD falls very quickly. 10,000 nukes dont make you much stronger than 1000.
Most "significant" nations have nukes. The US would never ever try to wage direct war against them for "crossing us".
So, why do you need such large military spends?
Havent any of you taken basic economics classes? 1 USD can buy a heck lot more in China than in the US. A wage of USD 2/3 might be ridiculous in the US, but quite sufficient in low wage countries like China and India. I'm from India, so I'll take India as an example. Last time I checked, the minimum wage in India was INR 48-52/day(USD 1). An income of INR 3000-4000(USD 65 - 86) is sufficient to maintain a family of 4. Costs of living are very low, especially in smaller towns. Points of reference? Doctors fresh from med school get around USD 65 per month in govt run hospitals. Expenses? Well, INR 1000 p.m. gets me decent 1 room accomodation in my somewhat small city. Schooling? Well, around INR 4000 per annum gets you a decent private school. Of course, govt run schools are free with free meals for the kids to boot. End point - Labour intensive manufacturing is sometimes inherently cheaper in developing countries.
But automated manufacturing costs more or less the same whether in US or in say India. Power costs in India are significantly higher, capital outlay reqd for the machinery is more or less the same..
Why would someone throw away their competitive advantage? Automation is not necessarily "the way it should be".
Wage issues aside, I agree that working conditions in China are truly appaling and dehumanising. Atleast in India, most factory workers are unionised and are protected by a plethora of laws.
Most unions in India are unfortunately highly politicised.(Most unions are affiliated to the INTUC or the CITU, which are in turn very close to powerful Left parties) Union leadership is thus seen as a stepping stone into politics. Unsurprisingly, labour unrest is frequently stirred by union leaders trying to throw their weight around.
Umm..so basically what you're saying is that non-Americans are less trust-worthy?
When was the last time "natural loyalty to the country" have a bearing on identity theft?
Now, your second point,that these people are "low paid". Well, even USD 11,000 is a big salary in India. A person earning even that much is considered very well off. So, there is no way "low pay" is going to demotivate them.
TFA says that BofA actually has a *subsidiary* in India where they employ 2000 people. So, they are not "outsourcing" all of it. They have just moved thier operations. So, the work is still being done by BofA, but in a different country. So, the people working on this data are going to be BofA employees just like the Americans.
Now, a portion of it has been outsourced to local Indian companies.Most outsourcing contracts have stiff conditions for data security and privacy, including right-to-audit clauses. Big Indian companies take great pains to ensure data security because even one "incident" can totally f*** up their client base. They are, in effect, expected to exceed American standards because the outsourcer is taking a risk by not doing it inhouse.
One more thing...would you still stick to your views if the work had been outsourced to an American company?
Many Financial Institutions and banks get their IT solutions and management outsourced to local companies. Are you against that too?
Slashdot Mirror
Whenever there's a story / discussion involving India, comments on Slashdot are almost always overwhelmingly negative with "ad-hominem" attacks all around. For example, this discussion thread does not have a single comment discussing the technical aspects of the launch - a launch of 100+ satellites is bound to have some interesting technical challenges which can be discussed. Instead comments are lame jokes about H1Bs and comments on how India shouldn't spend money on space missions. Slashdot was supposed to be a "news for nerds" site, where the nerds can actually discuss technology. It's sad to see what it has degenerated into.
With the Moto acquisition, Google should set the bar by putting out segment defining handsets. There hasn't been too much of innovation outside of Google in the android space. Time for Google to show what's possible with Android + Moto's phone making experience.
Nokia maps are by far the best in the mobile space. It is one of Nokia's biggest selling points. Now that they are making their maps available to everyone, what "killer exclusive feature" do people have to move to Nokia/WP8? Are they resigned to becoming an app developer, a sideshow, for the biggies?
The summary is completely misleading. The proposed amendment specifically provides an exemption for VC funded companies. From the proposed Finance Bill -
"(viib) where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares:
Provided that this clause shall not apply where the consideration for issue of shares is received by a venture capital undertaking from a venture capital company or a venture capital fund"
Now, there may be situations where a start-up is unable to use this exemption [say, where the investor is not registered as a VC fund in India]. There are trivial work-arounds for such cases, which any decent tax advisor can come up with. [Eg: Issue shares at face value, but with lower voting / dividend rights etc].
Long story short, I don't expect things to change in any meaningful manner on the ground.
PS: Last year, the tax department identified several cases where kickbacks from govt projects were disguised as share investments at very high premiums. The tax department seems to have brought in a (half-baked) proposal to stem such money laundering.
PPS: IAACA, sadly
Honestly if we don't stop the up and coming countries from repeating our mistakes then what do we gain? A big fat nothing. A so hate this excuse of its not fair to them, well tough shit. We know better now and they can't claim to not know better either. If we get them off on the right foot it is going to be a lot easier for all of us. If we excuse them then we just push the problem off to the next generation. Of course that seems to be the aim of almost all politicians these days, push off to another generation what we are not willing to do today.
I have a more apt analogy than your pizza one.... just because Jack murders a dozen people doesn't excuse John from killing one.
Well, the developed world needs to *help* the China/India not repeat their mistakes - just crying "Stop!" isn't going to help one bit.
Look at it this way - the west needs to pay for what it has done to the environment. Why not do it through funds / technology transfer to developing countries to help them develop clean industries?
Where's Jack's punishment?
User satisfaction. This would probably involve periodic surveys or something. This would cover almost everything. Of course, you do have a problem when the users are 'dissatisfied' - you dont know what the problem is!
India still has laws prohibiting photography in "sensitive" areas including airports, major dams, power stations, waterworks(!) etc! Blurring on google maps falls into the same category - It makes the average joe feel more secure and makes him feel that the govt is actually doing something about security.
I'm sure that the security apparatus in India is fully aware that blurring "sensitive" sites will have no impact on terrorists and such-like. It does give the politicians brownie points for being proactive!
The rationale is very similar to that behind the banning of fluids on many flights.
Also, since google has blurred its maps on the US' request, not doing so for India would definitely rankle many people in India. Google chose the safe way out and did what India wanted. I dont think doing so will affect thier business in any way, but not doing so would have run them afoul of the Indian govt.
I certainly agree with your point that if the "kickbacks" were classed as revenue, it would amount to incorrect accounting.This is a very basic and common inventory valuation issue. If inventory was actually valued gross of rebates, the entire accounting team along with the auditors ought to be fired.
However, there are certainly some practical problems. Problems arise when the rebate is based on full-year purchases and during the early quarters there is no way to know with any certainty whether the rebates will actually be realised. Accountants would then have to use judgement and the "principle of prudence" when accounting for the rebate. In effect, this would lead to rebates being spread unevenly across quarters depending upon the likelihood of receipt of the same.
I do have one query though. How did you determine that the "kickbacks" were classed as revenue and not as a deduction from COGS? Is there a separate line-item in the financials under the head revenue?
Just to clarify, I used to words "revenue receipt" to distinguish it from a non-income statement "capital receipt". I did not actually mean that it must be classified as revenue.
Your entire logic is correct if the deal was actually illegal. But with the limited info TFA had, it appears to be highly unlikely that the deal was actually illegal.
The crux of the matter is determining if the deal was illegal and even if it was, determining if Dell was guilty of wrong doing.
1) Even if Intel had entered into such contracts,Intel would only be guilty of breach of contract and would be liable for damages. It would still not be an illegal act
2) Even if Intel has violated anti-trust laws, Intel would be liable and not Dell.
3) Rebates are sometimes given in the form of cash instead of lowering prices because they are dependant upon reaching target volumes which can be determined only at the period end.
4) GAAP does not require rebates to be separately disclosed. It is perfectly correct accounting to account for such rebates as a reduction from purchase cost. In fact, if they didnt do so, they would be overvaluing their inventory, thus inflating profits!
From the limited information available from the Reuters article, I fail to see the justification for the class action lawsuit.
From TFA "The lawsuit accuses Dell of artificially inflating profits "by secretly receiving approximately $250 million a quarter..."
1) Well, if the USD250 mn received was accounted for (thus "inflating profits") how can it be secret? If the rebate was illegally pocketed by execs, that would be "under the table".
2) Last time I checked, it was not "illegal" to offer quantity discounts/rebates to large customers. Hell, according to the law firm's logic, buying at CostCo is illegal because they offer quantity based rebates!
3) All criterea for revenue recognition were fulfilled - the amount was a revenue receipt and was actually received. How can then it amount to "artificial inflation of profits"?
The law firm is just out to get some free publicity and slashdot's editors are too willing to help.
The problem in India is not that colleges don't impart trade skills. The problem is that many of them fail to impart ANY skills at all. Considering that I just finished the college routine in India, here are some of the reasons IMO:
1) Low investment in education:
India's investment in higher education has been abysmally low for years. As a result, many colleges have shockingly poor infrastructure. Students work on poorly maintained, ancient equipment if at all.
2) Low quality of teachers:
This is a very important factor for poor education in India. Teachers and professors even at the graduate level are paid a pittance. Many teachers are taken on as temps to get around prescribed pay-scales and reservations. Coupled with the fact that there is very little research undertaken at most of India's colleges, there is simply no incentive for quality people to enter the teaching profession.
In the I-T industry, for example, even a fresh engineer can expect salaries of atleast INR20,000 pm. A teacher would need decades of experience to reach that salary level. There is simply no comparison between Industry and the 'Academia' in payscales.
India implemented a semi automated electronic voting system during the last country wide general elections. There has been surprisingly little debate on the security of this system. The design is closed source even though it was developed by a govt owned unit. There has been no independant audit of the system's security, even though the systems are used in virtually every election nowadays. All this in a country where booth capturing and rigging are commonplace. The scope for electoral fraud is immense! It's probably only a matter of time before someone begins to exploit flaws in the system... Here's some info on the EVM: http://www.eci.gov.in/EVM/index.htm [Election Commission of India] http://en.wikipedia.org/wiki/Indian_voting_machine s [Wikipedia]
Umm..I guess you have no idea how good a call center wage in India is. Freshers are paid around INR 8000 - INR 12000 a month. That puts them in them firmly in the middle class. Hell,most government jobs start at something like INR 3000 a month or so. Call center guys certainly have more than enough to eat. There are even "complaints" that call centers are putting too much money into the hands of youngsters and "fuelling consumerism".
Well, you'd think that INR 12000 must be a lot of money..... It's only USD 260 a month!!!! Your minimum wage has to reaaally scrape the bottom for outsourcing to disappear.
The most likely reason for the call center cancelling its contract is probably because there were much more profitable contracts around.
You see, the outsourcing business has grown very fast in India and companies are finding it difficult to scale up so soon. That could partly explain things like this.
Although voice based services are the most visible, a lot of "back office" processes are being moved to India. Ernst & Young has a large tax return preparation program in India. I-Bs like Goldman Sachs have moved much of thier fund accounting to India. These jobs might be seen as "inferior" in US, but here, they pay the best salaries, thus attracting top talent.
Outsourcing is here to stay. Prove me wrong.
God! You're an english MA and still write stuff like "not a single job offer in *site*"?!!! Atrocious!
Umm..dont nuclear weapons level the field somewhat? While China may have only enough nukes to destroy all major US cities, the US may have enough firepower to destroy ALL chinese cities. In the event of war, they are both royally screwed anyhow. (of course I'm assuming that the ABM shields are still mere toys). The amount of incremental damage you can cause to the enemy with an additional WMD falls very quickly. 10,000 nukes dont make you much stronger than 1000. Most "significant" nations have nukes. The US would never ever try to wage direct war against them for "crossing us". So, why do you need such large military spends?
Havent any of you taken basic economics classes? 1 USD can buy a heck lot more in China than in the US. A wage of USD 2/3 might be ridiculous in the US, but quite sufficient in low wage countries like China and India. I'm from India, so I'll take India as an example. Last time I checked, the minimum wage in India was INR 48-52/day(USD 1). An income of INR 3000-4000(USD 65 - 86) is sufficient to maintain a family of 4. Costs of living are very low, especially in smaller towns. Points of reference? Doctors fresh from med school get around USD 65 per month in govt run hospitals. Expenses? Well, INR 1000 p.m. gets me decent 1 room accomodation in my somewhat small city. Schooling? Well, around INR 4000 per annum gets you a decent private school. Of course, govt run schools are free with free meals for the kids to boot.
End point - Labour intensive manufacturing is sometimes inherently cheaper in developing countries.
But automated manufacturing costs more or less the same whether in US or in say India. Power costs in India are significantly higher, capital outlay reqd for the machinery is more or less the same..
Why would someone throw away their competitive advantage? Automation is not necessarily "the way it should be".
Wage issues aside, I agree that working conditions in China are truly appaling and dehumanising. Atleast in India, most factory workers are unionised and are protected by a plethora of laws.
Most unions in India are unfortunately highly politicised.(Most unions are affiliated to the INTUC or the CITU, which are in turn very close to powerful Left parties) Union leadership is thus seen as a stepping stone into politics. Unsurprisingly, labour unrest is frequently stirred by union leaders trying to throw their weight around.
Or...it could be that American salaries are now 20% of what they were five years ago! That dot-com bust must've really hurt!
Umm..so basically what you're saying is that non-Americans are less trust-worthy? When was the last time "natural loyalty to the country" have a bearing on identity theft? Now, your second point,that these people are "low paid". Well, even USD 11,000 is a big salary in India. A person earning even that much is considered very well off. So, there is no way "low pay" is going to demotivate them. TFA says that BofA actually has a *subsidiary* in India where they employ 2000 people. So, they are not "outsourcing" all of it. They have just moved thier operations. So, the work is still being done by BofA, but in a different country. So, the people working on this data are going to be BofA employees just like the Americans. Now, a portion of it has been outsourced to local Indian companies.Most outsourcing contracts have stiff conditions for data security and privacy, including right-to-audit clauses. Big Indian companies take great pains to ensure data security because even one "incident" can totally f*** up their client base. They are, in effect, expected to exceed American standards because the outsourcer is taking a risk by not doing it inhouse. One more thing...would you still stick to your views if the work had been outsourced to an American company? Many Financial Institutions and banks get their IT solutions and management outsourced to local companies. Are you against that too?