Go to Jeff Salisbury LWGate Home Page.From: "Tom Worley" <stkguru@netside.net>
Subject: Re: [CANSLIM] Another Andersen client
Date: Tue, 29 Jan 2002 10:33:36 -0500
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Hi Mike,
As I mentioned last night, I consider Management (and thereby the Board =
as well) to be solely responsible when a company fails. Market =
conditions are just their excuse for poor planning and awareness of =
activity in their industry. The auditors don't cause bankruptcy, but =
they can intervene to prevent one (but I agree, they are reluctant to =
oppose management). Most importantly, tho, they must produce an accurate =
and comprehensive report of the company's finances.=20
It is hard for me to believe that Andersen could not see what Enron was =
doing, and realize the eventual outcome. Likewise, it is hard for me to =
believe that Andersen could audit Global Crossing in early 2001, and not =
foresee coming bankruptcy if they did not reduce their burn rate. Even =
then the economy was slowing, and capacity was far ahead of developing =
demand.
I do expect Andersen to survive, but will either merge or no longer be a =
"top 5" accounting firm. I expect they will try to isolate the blame on =
"rogues" in the Houston office. Texas is already looking at unlicensing =
Andersen for doing business in the entire state, and that would hurt =
them. Other states may consider the same action. And clients doing both =
audit and consulting business may get nervous, and drop one or the =
other.=20
Going forward, I would expect Andersen, at least for the next few years, =
to stop doing both, and focus on only one at a time with a particular =
corporation. They are going to have to rebuild their reputation. The =
ultimate outcome may be to cause all accounting firms to conduct =
themselves in a more conservative and ethical fashion, being more =
aggressive with their opinions when they have doubts about a company =
(ok, so I am still an optimist).
Tom Worley
stkguru@netside.net
AIM: TexWorley
----- Original Message -----=20
From: Mike Gibbons=20
To: canslim@lists.xmission.com=20
Sent: Monday, January 28, 2002 9:31 PM
Subject: RE: [CANSLIM] Another Andersen client
Tom,
Andersen's chairman could hardly say anything else, or all their =
existing clients would head for the door, just as some of them have =
reportedly done already. I think their future is in doubt and they =
certainly risk losing key partners and staff because the malodour of =
working for Andersen's is not one they will all want to bear. Their =
future is probably to become a second or third tier firm, or be merged =
into what will become the big 4.
The implication of your post is that bankruptcies are somehow linked =
to the auditor but I find that a bit of a stretch, despite the =
circumstantial evidence you cite. Management and the Board, together =
with market conditions, must surely bear the responsibility for a =
company going belly-up. The Auditors role is not to tell management =
where their policies may lead the company to failure, in fact =
questioning management is something they are loath to do. Andersens =
would appear to have failed in their fiduciary responsibility to =
shareholders in the Enron case (although I think we should consider them =
innocent until proven guilty), but I have seen no evidence that in doing =
so they contributed to Enron's collapse.
Last Friday, All Things Considered (NPR) had a story about how some =
analysts had been shorting Enron stock, or refused to recommend it, =
because their numbers were non-sensical. You can hear it here =
http://www.npr.org/ramfiles/atc/20020125.atc.10.ram
As for answering your question about data sources, I have no idea. =
Because the Accounting firms are partnerships, they have no =
responsibility to publish such information and clearly have an interest =
in holding it closely, so I doubt it is available.
Aloha,
Mike Gibbons
Proactive Technologies, LLC
http://www.proactech.com
-----Original Message-----
From: owner-canslim@lists.xmission.com =
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Tom Worley
Sent: Monday, January 28, 2002 3:34 PM
To: canslim@lists.xmission.com
Subject: [CANSLIM] Another Andersen client
Global Crossing Ltd (GX) just filed for bankruptcy as a preplanned =
reorganization in which two of its Asian partners will buy the assets =
for $750 million. Closed today at 28 cents, down 23 cents for the day on =
NYSE (gotta be embarrassing to NYSE, ENE was the record bankruptcy, GX =
is #4, and that's just this month). I am sure it's a coincidence, but =
for year 2000 Andersen billed them $2.3 million for audit services, and =
nearly $12 million for consulting and other non-audit services. I am =
sure that couldn't have biased Andersen in any way, of course.
Common and preferred shareholders lose everything, including =
Management reported still owning 14%. Then again, there was some insider =
selling last May when the stock was still in the mid-teens, as well as =
some buying in October when it traded $1-3.
Anybody know a place on the net where I can find a list of =
Andersen's clients, showing billing by Audit and non-Audit services? I =
would like to do some shorting. There seems to be a pattern emerging =
here. The Chairman of Andersen says the firm will survive, but I am not =
sure that is good news for investors.
Tom Worley
stkguru@netside.net
AIM: TexWorley
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<DIV><FONT face=3DArial>Hi Mike,</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>As I mentioned last night, I consider Management =
(and=20
thereby the Board as well) to be solely responsible when a company =
fails. Market=20
conditions are just their excuse for poor planning and awareness of =
activity in=20
their industry. The auditors don't cause bankruptcy, but they can =
intervene to=20
prevent one (but I agree, they are reluctant to oppose management). Most =
importantly, tho, they must produce an accurate and comprehensive report =
of the=20
company's finances. </FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>It is hard for me to believe that Andersen could =
not see=20
what Enron was doing, and realize the eventual outcome. Likewise, it is =
hard for=20
me to believe that Andersen could audit Global Crossing in early 2001, =
and not=20
foresee coming bankruptcy if they did not reduce their burn rate. Even =
then the=20
economy was slowing, and capacity was far ahead of developing=20
demand.</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>I do expect Andersen to survive, but will either =
merge or=20
no longer be a "top 5" accounting firm. I expect they will try to =
isolate the=20
blame on "rogues" in the Houston office. Texas is already looking at =
unlicensing=20
Andersen for doing business in the entire state, and that would hurt =
them. Other=20
states may consider the same action. And clients doing both audit and =
consulting=20
business may get nervous, and drop one or the other. </FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>Going forward, I would expect Andersen, at least =
for the=20
next few years, to stop doing both, and focus on only one at a time with =
a=20
particular corporation. They are going to have to rebuild their =
reputation. The=20
ultimate outcome may be to cause all accounting firms to conduct =
themselves in a=20
more conservative and ethical fashion, being more aggressive with their =
opinions=20
when they have doubts about a company (ok, so I am still an=20
optimist).</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV>Tom Worley<BR><A=20
href=3D"mailto:stkguru@netside.net">stkguru@netside.net</A><BR>AIM:=20
TexWorley</DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dmikegibbons@proactech.com=20
href=3D"mailto:mikegibbons@proactech.com">Mike Gibbons</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Monday, January 28, 2002 =
9:31=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> RE: [CANSLIM] Another =
Andersen=20
client</DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D720195601-29012002>Tom,</SPAN></FONT></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D720195601-29012002></SPAN></FONT> </DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D720195601-29012002>Andersen's chairman could hardly say =
anything else,=20
or all their existing clients would head for the door, just as some of =
them=20
have reportedly done already. I think their future is in doubt and =
they=20
certainly risk losing key partners and staff because the malodour of =
working=20
for Andersen's is not one they will all want to bear. Their future is =
probably=20
to become a second or third tier firm, or be merged into what =
will become=20
the big 4.</SPAN></FONT></DIV>
<DIV> </DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN =
class=3D720195601-29012002>The=20
implication of your post is that bankruptcies are somehow linked to =
the=20
auditor but I find that a bit of a stretch, despite the circumstantial =
evidence you cite. Management and the Board, together with market =
conditions,=20
must surely bear the responsibility for a company going belly-up. The =
Auditors=20
role is not to tell management where their policies may lead the =
company to=20
failure, in fact questioning management is something they are loath to =
do.=20
Andersens would appear to have failed in their fiduciary =
responsibility to=20
shareholders in the Enron case (although I think we should consider =
them=20
innocent until proven guilty), but I have seen no evidence that in =
doing so=20
they contributed to Enron's collapse.</SPAN></FONT></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D720195601-29012002></SPAN></FONT> </DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN =
class=3D720195601-29012002>Last=20
Friday, All Things Considered (NPR) had a story about how some =
analysts had=20
been shorting Enron stock, or refused to recommend it, because their =
numbers=20
were non-sensical. You can hear it here <A=20
=
href=3D"http://www.npr.org/ramfiles/atc/20020125.atc.10.ram">http://www.n=
pr.org/ramfiles/atc/20020125.atc.10.ram</A></SPAN></FONT></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D720195601-29012002></SPAN></FONT> </DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN =
class=3D720195601-29012002>As=20
for answering your question about data sources, I have no idea. =
Because the=20
Accounting firms are partnerships, they have no responsibility to =
publish such=20
information and clearly have an interest in holding it closely, so I =
doubt it=20
is available.</SPAN></FONT></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D720195601-29012002></SPAN></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Aloha,</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Mike Gibbons<BR>Proactive =
Technologies,=20
LLC</FONT></DIV>
<DIV><FONT face=3DArial size=3D2><A=20
=
href=3D"http://www.proactech.com/">http://www.proactech.com</A></FONT></D=
IV>
<BLOCKQUOTE style=3D"MARGIN-RIGHT: 0px">
<DIV class=3DOutlookMessageHeader dir=3Dltr align=3Dleft><FONT =
face=3DTahoma=20
size=3D2>-----Original Message-----<BR><B>From:</B>=20
owner-canslim@lists.xmission.com=20
[mailto:owner-canslim@lists.xmission.com]<B>On Behalf Of </B>Tom=20
Worley<BR><B>Sent:</B> Monday, January 28, 2002 3:34 =
PM<BR><B>To:</B>=20
canslim@lists.xmission.com<BR><B>Subject:</B> [CANSLIM] Another =
Andersen=20
client<BR><BR></DIV></FONT>
<DIV><FONT face=3DArial>Global Crossing Ltd (GX) just filed for =
bankruptcy as a preplanned reorganization in which two of its Asian =
partners=20
will buy the assets for $750 million. Closed today at 28 cents, down =
23=20
cents for the day on NYSE (gotta be embarrassing to NYSE, ENE was =
the record=20
bankruptcy, GX is #4, and that's just this month). I am sure it's a=20
coincidence, but for year 2000 Andersen billed them $2.3 million for =
audit=20
services, and nearly $12 million for consulting and other non-audit=20
services. I am sure that couldn't have biased Andersen in any way, =
of=20
course.</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>Common and preferred shareholders lose =
everything,=20
including Management reported still owning 14%. Then again, there =
was some=20
insider selling last May when the stock was still in the mid-teens, =
as well=20
as some buying in October when it traded $1-3.</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>Anybody know a place on the net where I can =
find a=20
list of Andersen's clients, showing billing by Audit and non-Audit =
services?=20
I would like to do some shorting. There seems to be a pattern =
emerging here.=20
The Chairman of Andersen says the firm will survive, but I am not =
sure that=20
is good news for investors.</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>Tom Worley<BR><A=20
href=3D"mailto:stkguru@netside.net">stkguru@netside.net</A><BR>AIM:=20
TexWorley</FONT></DIV></BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>
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