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IBM United States Government The Courts News

SEC Formally Investigates IBM 61

Posted by Zonk from the trouble-for-big-blue dept.
glhturbo writes "IBM announced Thursday that it had received notice of a formal, nonpublic investigation by the Securities and Exchange Commission (SEC) concerning the company's disclosures relating to Q1 2005 earnings and expensing of equity compensation. According to the article, there has been a non-formal investigation going on since June 2005. Both articles indicate that it doesn't mean IBM has broken any laws, so we'll see what comes of it."
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SEC Formally Investigates IBM More

SEC Formally Investigates IBM

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  • IBM is dirtier than they appear (Score:2, Interesting)

    by Anonymous Coward
    I've unfortunately had personal experience working with IBM. I don't know why they do it, but they are the greediest company I've ever seen in action up close and personal. I've personally seen their project managers fake work, make work when there was none, and drag a project out for years. Maybe you all think that's business as usual, but I thought it was pretty bad.
    • I have bystander knowledge of IBM only. All I can say this guys have too much experience.

      They quite good at separating "good product" from "cash cow" lines. What you describe is sort'a pet projects for investors. Normally this is products which look great on paper - but in reality make no sense. Investors of course care more about what's on paper. We as customers care more about product.

      As an example, take one of my projects. (*Not* for IBM.) The project consisted of two parts: big ugly brick under table an
      • Interesting story that sounds familiar. What you're missing, however, is that to all the upper management folks, marketing etc. it's the guy who built the joystick part that actually built the product. You might have done most of the work, but he got most of the visibility.

    • Welcome to the world of business (Score:5, Insightful)

      by SmallFurryCreature ( 593017 ) on Saturday January 14, 2006 @07:03AM (#14470533) Journal
      ALL succesfull IT companies do this. Companies that don't do this do not succeed.

      Some tricks.

      • Agree on a project on a per hour basis: Cool because now the hired company has absolutly no motivation to finish quickly.
      • Agree on a fixed price for a project: Cool because as soon as the project goes out of control you take all the good people of it and replace them with the cheapest staff you got preferably people who need the work experience.
      • Make a detailed requirement list: Cool because the smallest change now becomes a new item to be negiotated.
      • Draw up a broad general requirement: Cool because now you can't actually demand X is implemented since you never had it on paper.
      • Demand all project work is done internally to assure you have control and supervision: Cool, any problems or delays caused by your staff will be used to explain ALL the problems and delays.
      • Outsource the entire project and only accept the finished product: Cool, you will have absolutly no idea what the fuck is going on and the only thing you will ever see is faked demos until finally you get a few pieces that are A the product B the installation documentation C the techinal docs. None of wich are related and your own people ain't got a clue how to deal with it.
      • Outsource production, do internal quality control and hire a 3rd party for extra work like porting: Even cooler, nobody will accept responsibility for anything and all will demand increased budgets to make up for the others failing.
      • Buy an off the shelve solution: Cool, it won't ever work as you expected and the costs of workarounds will be 10x higer then if you had it custom build.
      • Have it developed completly internally by people loyal to your own company: Cool, you now have programmers running loose in the building. Rentokill charges extra for that.
      • Don't do IT. Do it the way you have done if for decades and make a fat profit: Cool, shareholders will dump your stock since companies that make a profit without buzzwords are just not the way you do business.

      IT is the weirdest industry around.

      • I liken it more to the plumbing or building trades. You call a builder, they come around, whistle through their teeth, say "You want WHAT??!", say "It'll cost you...", and even when you think you've found someone good and reliable there's still the chance you'll wind up paying through the nose for half a job.

        The only real difference is your IT contractor is more likely to wear a tie and have a shave.

    • We talking the same big blue?

      I did some subcontract work for them in Poughkeepsie and Austin, and found them to be very professional. The usual inter-office/dept/division politics of large organizations, typical annual budget shuffles, and the usual paperwork hassles getting hardware or software.

      Their devtechs were the usual mix of average-good with the occasional star, but their systechs were top-notch across the board.

      Projects certainly didn't "drag out". Sometimes releases had to be delayed to c

  • Now I get.... (Score:1, Redundant)

    by d474 ( 695126 )
    ...so that's why Apple is switching over to Intel chips.

    And now you know the rest...of the story.
    • Redundant? This is the first post in this thread making this joke. If the modder would be so kind as to linking to anywhere on slashdot this exact joke has been made, I'd be interested to see it.

  • Mmmmm. (Score:3, Interesting)

    by Famanoran ( 568910 ) on Saturday January 14, 2006 @04:29AM (#14470280)
    I work for IBM. I'm not worried. As other posters have stated, this appears to be a non-story. In fact, this is the first I've heard of this.

  • Martha Stewart was never charged with securities fraud or insider trading -- well, actually she was, but the charges were dropped quickly when the investigation didn't turn anything up. What sent Martha to prison for five months followed by five months of home confinement was lying to federal investigators. So I guess the lesson here is that the way to cover your ass is to not attempt to cover your ass; even if they don't find anything they can still get you if you lie to them. Remember that IBM: don't t
    • So I guess the lesson here is that the way to cover your ass is to not attempt to cover your ass; even if they don't find anything they can still get you if you lie to them.

      I think it's that the way to cover your ass is to cover your ass without resorting to illegal means. There no problem with playing defensive, as long as you don't let documents disappear etc.

    • Martha Stewart was never charged with securities fraud or insider trading -- well, actually she was, but the charges were dropped quickly when the investigation didn't turn anything up. What sent Martha to prison for five months followed by five months of home confinement was lying to federal investigators.

      Martha & Scooter Libby, BTW, both made the same mistake: When talking to investigators, they made the MISTAKE of assuming that they had done something illegal, when in fact they had not.

      In Martha

  • I think the SEC is targeting the wrong company in the SCO vs. IBM lawsuit.

  • Even when they do right, it is wrong (Score:3, Interesting)

    by LouisJBouchard ( 316266 ) on Saturday January 14, 2006 @09:22AM (#14470834)
    OK,

    According to the article, it looks like IBM was looking to start to expense stock options prior to the new SEC rules taking effect. If looks like they sprung it on everyone at the last minute which put analysts in an uproar because they had to readjust their numbers at the last minute, then the expenses were not in line with what the analysts predicted (were actually less).

    Simply put, IBM tried to do the right thing for its investors and the public but flubbed it and the government now seems hell bent to punish IBM (They have been looking for something for years regarding investor relations) and will not stop until they get something, even if it is a technicality. This allows them to say that they are going after the big guys while getting the Enron execs off the hook.

    IBM really did nothing wrong. They simply followed public opinion and did what the SEC was going to require them to do anyways. In actuality, the SEC should use this to guide other companies into complying with the new rules since IBM was the first. Instead, they are going to punish IBM.
  • Something bad may have happened at IBM.

    *sigh* Are there any real news out there?

  • Er...My Rights Online? (Score:5, Funny)

    by afabbro ( 33948 ) on Saturday January 14, 2006 @10:31AM (#14471082) Homepage
    How is this "Your Rights Online"?

    I don't feel my rights have been violated by either IBM's way of expensing equity compensation or the SEC's investigation of it.

    No doubt, I'm just numb to creeping fascism. You know, first they came for those expensing equity compensation, but I didn't speak up because I use a different method. Next they came for those using Last-In-First-Out inventory accounting, but I didn't speak up because I use FIFO...

    Zonk, you're gaining ground on Cliff and timothy as the worst Editor yet.

  • SEC smoke (Score:1, Informative)

    by Anonymous Coward
    Many recent SEC investigations have drawn much media attention and then closed with 'no action needed'. Wall Street market manipulation? This may be one of those. If you trust the SEC to do the right thing, read on.

    Could be to distract attention from the biggest problem since the S&L debacle/regulatory failure of the 80's. (Almost destroyed financial system at taxpayer expense.)

    The SEC has been ignoring and covering up 'naked shorting' by hedge funds. The problem is huge and is part of the Refco bl
  • "Meet me back in the boardroom, where someone WILL get fired."
  • that M$ or one of IBM's rival chip companies has something to do with this? M$ could be pissed that IBM is really supporting the open-source movement with Linux and OOo, or maybe Intel is pissed that even with the soon coming of their new line of procs that IBM's Cell and Niagra procs will blow the Yonah out of the water?

    Feel free to think I'm reading between the lines, maybe I am, but if it is actually a situation such as one of the above that I described, feel free to add anything else you can think of

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