John McLaughlin: "Ten more major corporate ethic scandals will surface over the next six months."

TMG ^ | 22 June 2002 | John McLaughlin

[buaya]

Over the weekend (21-22 June), I caught the last segment ("predictions") of The McLaughlin Group TV program.

Host John McLaughlin's prediction:

"Ten more major corporate ethic scandals will surface over the next six months."

Since then, we've had the Worldcomm, and today, the Xerox revelations.

Anyone want to start placing bets on Numbers 2-10???

[Denver Ditdat]

Microsoft.

[freeperfromnj]

Citibank and Disney

[Dukie]

Any suggestions for the list ?

AOL has previously taken a $50 billion writeoff.

[Trust but Verify]

I work for SBC. If they're 'cooking the books' to look more attractive, it ain't working. The stock price is in the toilet and the earnings haven't been spectacular, either. Also, we received a letter from the CEO telling us we have very sound accounting practices. We do not use AA, we have Ernst Young.

Yes, he could be lying, but SBC doesn't seem to to fit the profile.

GE is another matter. That would be catastrophic.

[balrog666]

Microsoft.

BWAHAHAHAHA. Oh yes, all that cash they're holding is really just Federal Reserve Notes!

[avg_freeper]

This was an article in the NYPOST : (bold mine)

So which five significant companies overstate profits the most, according to S&P's calculations?

The research firms says Raytheon may be reporting profits that are nearly 9,000 percent better than its "core" real numbers. And Perkin-Elmer is 7,274 percent overstated; The Gap, 1,047 percent; Apple Computer, 1,003 percent; and Yahoo! 956 percent.

(excerpt)

[unequallawsuntoasavagerace]

Truly amazing how George Bush was able to have such a pervasive negative influence on corporate culture in less than two years.

[bvw]

"I think any company with a CEO book is probably fair game."

LOL! Sounds like a great hedge fund theme!

What d'yall think of Citi, Merril ...?

[walden]

I can buy your list-- especially Oracle. How did you arrive at it? Former Anderson clients?

I can tell you from having been both an auditor and a corporate accountant-- the integrity of the management of the company is the critical factor. The auditors aren't going to invent the methods of cooking the books, although they may buy off on it. It's company management that drives the accounting policies & procedures.

[walden]

NOT Microsoft. They've been slammed time & again (think they even paid some fines) for being too CONSERVATIVE in booking revenue & income. Overstating results is not their style, and as an investor who uses published financials, I like the fact that they're conservative, even more than the rules require or permit.

[hopespringseternal]

Wasn't Jack Welch the one banging the Harvard Wetloaf skank?

[alloysteel]

Only ten? Perhaps somebody should do a check on which stocks Terry McAuliffe has gotten out of recently, or is busy divesting himself.

[sibb1213]

I hope you are wrong too since my husband and I are both retired from GE and have huge holdings of GE stock. I get a real sick feeling in the pit of my stomach wondering if Jack and his men were crooks. Ruthless, yes, absolutely! But crooks? He made millionaires out of many of his employees and we have him to thank for that. Our stock has suffered because of Enronitis and the recent Worldcom scandal but thank God we don't use A. Anderson for our accounting!! Only time and more digging will tell. (Personally I hope it is Ted Turner and also Disney!!)

[Tauzero]

"I like the fact that they're conservative, even more than the rules require or permit."

Not in the way they account for employee stock options.
But they're hardly alone in that.

[sibb1213]

Yes, but that doesn't make him a crook, just a scum bag!

[Tauzero]

"Our stock has suffered because of Enronitis"

Not it has not. It peaked in Sept. 2000. GE stock lost the mandate of heaven long before Enron.

Not really my business, but I advise you to diversify.

[aristeides]

I know Archer Daniels Midland has been buying support for its ethanol subsidy with the way it advertises for the talking heads shows on TV. But I wonder why GE has felt the need to buy so many ads on the same shows.

[walden]

To your knowledge, is Microsoft accounting for employee stock options in violation of the accounting rules on the subject?

I would agree that the rules should be changed-- but Microsoft's methods have been pretty thoroughly scrutinized, so I very much doubt that they're technically doing anything wrong. Of course, even by following accepted accounting rules, you can have big, unexpected hits to bottom line in the future.

Are they violating the rules?

[DoctorMichael]

.........going into a very defensive posture as we speak..........

I imagine many CEOs, CFOs and boardmembers of a lot of corporations are running either secret internal audits to make sure they are clean or are scurrying around covering their tracks if they aren't (clean).

[rohry]

"Not really my business, but I advise you to diversify."

Good job. I was just trying to figure out a nice way to tell her the same thing. Retired people should not be in the stock market in any significant way right now.

GE is especially bad. They have huge derivative positions, large amount of (potentially expensive) debt and has high exposure to dicey loans through their GE Capital division.