Go to Jeff Salisbury LWGate Home Page.From: "Tom Worley" <stkguru@netside.net>
Subject: Re: [CANSLIM] Another Andersen client
Date: Tue, 29 Jan 2002 11:26:01 -0500
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Hi Mike,
I would certainly agree, external and unforeseeable events (at least at =
the corp level) like the 9/11 attacks are not management's fault. But a =
company the size of GX doesn't fail in 4 months because of this.
I am sure that the split off of Andersen Consulting affected the =
remaining partner's income. Same happens when a big law firm has several =
major producers go independent. But that doesn't justify prostituting =
themselves for the almighty buck if they have any ethics, much less =
business sense.
Tom Worley
stkguru@netside.net
AIM: TexWorley
----- Original Message -----=20
From: Mike Gibbons=20
To: canslim@lists.xmission.com=20
Sent: Tuesday, January 29, 2002 11:08 AM
Subject: RE: [CANSLIM] Another Andersen client
HI Tom,
Thanks for the lengthy response. We seem to be broadly in agreement =
except on management's responsibility for market conditions. There are =
some external shocks that management could never forsee or plan for, the =
most recent obvious one being 9/11 which has caused many failures. I'd =
give management a break on those kinds of things (unless of course they =
hadn't implemented a disaster recovery plan).
I also think Andersen maybe a special case within the accounting =
industry to some degeree. I've been out of a big 6 firm for a few years =
now, so I've lost touch, but the defection of Andesen's consulting =
partners to form Andersen Consulting about 10 years ago left the =
remaining Audit and Tax partners with a big cut in their income. Maybe =
this caused them to be more maleable and less prudent in their audit =
work. Pure speculation on my part.
Aloha,
Mike Gibbons
-----Original Message-----
From: owner-canslim@lists.xmission.com =
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Tom Worley
Sent: Tuesday, January 29, 2002 5:34 AM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Another Andersen client
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>I would certainly agree, external and =
unforeseeable events=20
(at least at the corp level) like the 9/11 attacks are not management's =
fault.=20
But a company the size of GX doesn't fail in 4 months because of=20
this.</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>I am sure that the split off of Andersen =
Consulting=20
affected the remaining partner's income. Same happens when a big law =
firm has=20
several major producers go independent. But that doesn't justify =
prostituting=20
themselves for the almighty buck if they have any ethics, much less =
business=20
sense.</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> Tuesday, January 29, 2002 =
11:08=20
AM</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 =
class=3D590164715-29012002>HI=20
Tom,</SPAN></FONT></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D590164715-29012002></SPAN></FONT> </DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D590164715-29012002>Thanks for the lengthy response. We seem to =
be=20
broadly in agreement except on management's responsibility for market=20
conditions. There are some external shocks that management could never =
forsee=20
or plan for, the most recent obvious one being 9/11 which has caused =
many=20
failures. I'd give management a break on those kinds of things (unless =
of=20
course they hadn't implemented a disaster recovery =
plan).</SPAN></FONT></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D590164715-29012002></SPAN></FONT><FONT face=3DArial =
color=3D#0000ff=20
size=3D2><SPAN class=3D590164715-29012002></SPAN></FONT> </DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN =
class=3D590164715-29012002>I=20
also think Andersen maybe a special case within the accounting =
industry to=20
some degeree. I've been out of a big 6 firm for a few years now, so =
I've lost=20
touch, but the defection of Andesen's consulting partners to form =
Andersen=20
Consulting about 10 years ago left the remaining Audit and Tax =
partners with a=20
big cut in their income. Maybe this caused them to be more maleable =
and less=20
prudent in their audit work. Pure speculation on my =
part.</SPAN></FONT></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D590164715-29012002></SPAN></FONT><FONT face=3DArial =
color=3D#0000ff=20
size=3D2><SPAN class=3D590164715-29012002></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></FONT></DIV>
<BLOCKQUOTE dir=3Dltr 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> Tuesday, January 29, 2002 5:34 =
AM<BR><B>To:</B>=20
canslim@lists.xmission.com<BR><B>Subject:</B> Re: [CANSLIM] Another =
Andersen=20
client<BR><BR></DIV></FONT>
<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.=20
Market conditions are just their excuse for poor planning and =
awareness of=20
activity in their industry. The auditors don't cause bankruptcy, but =
they=20
can intervene to prevent one (but I agree, they are reluctant to =
oppose=20
management). Most importantly, tho, they must produce an accurate =
and=20
comprehensive report of the 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=20
see what Enron was doing, and realize the eventual outcome. =
Likewise, it is=20
hard for me to believe that Andersen could audit Global Crossing in =
early=20
2001, and not foresee coming bankruptcy if they did not reduce their =
burn=20
rate. Even then the economy was slowing, and capacity was far ahead =
of=20
developing demand.</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>I do expect Andersen to survive, but will =
either merge=20
or no longer be a "top 5" accounting firm. I expect they will try to =
isolate=20
the blame on "rogues" in the Houston office. Texas is already =
looking at=20
unlicensing Andersen for doing business in the entire state, and =
that would=20
hurt them. Other states may consider the same action. And clients =
doing both=20
audit and consulting business may get nervous, and drop one or the =
other.=20
</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>Going forward, I would expect Andersen, at =
least for=20
the next few years, to stop doing both, and focus on only one at a =
time with=20
a particular corporation. They are going to have to rebuild their=20
reputation. The ultimate outcome may be to cause all accounting =
firms to=20
conduct themselves in a more conservative and ethical fashion, being =
more=20
aggressive with their opinions when they have doubts about a company =
(ok, so=20
I am still an 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=20
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
=20
</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=20
Andersen 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=20
else, or all their existing clients would head for the door, just =
as some=20
of them have reportedly done already. I think their future is in =
doubt and=20
they certainly risk losing key partners and staff because the =
malodour of=20
working for Andersen's is not one they will all want to bear. =
Their future=20
is probably to become a second or third tier firm, or be =
merged into=20
what will become the big 4.</SPAN></FONT></DIV>
<DIV> </DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D720195601-29012002>The implication of your post is that =
bankruptcies=20
are somehow linked to the auditor but I find that a bit of a =
stretch,=20
despite the circumstantial evidence you cite. Management and the =
Board,=20
together with market conditions, must surely bear the =
responsibility for a=20
company going belly-up. The Auditors role is not to tell =
management where=20
their policies may lead the company to failure, in fact =
questioning=20
management is something they are loath to do. Andersens would =
appear to=20
have failed in their fiduciary responsibility to shareholders in =
the Enron=20
case (although I think we should consider them innocent until =
proven=20
guilty), but I have seen no evidence that in doing so they =
contributed to=20
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=20
class=3D720195601-29012002>Last Friday, All Things Considered =
(NPR) had a=20
story about how some analysts had been shorting Enron stock, or =
refused to=20
recommend it, because their numbers were non-sensical. You can =
hear it=20
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=20
class=3D720195601-29012002>As for answering your question about =
data=20
sources, I have no idea. Because the Accounting firms are =
partnerships,=20
they have no responsibility to publish such information and =
clearly have=20
an interest in holding it closely, so I doubt it is=20
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 =
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=20
bankruptcy as a preplanned reorganization in which two of its =
Asian=20
partners will buy the assets for $750 million. Closed today at =
28 cents,=20
down 23 cents for the day on NYSE (gotta be embarrassing to =
NYSE, ENE=20
was the record bankruptcy, GX is #4, and that's just this =
month). I am=20
sure it's a coincidence, but for year 2000 Andersen billed them =
$2.3=20
million for audit services, and nearly $12 million for =
consulting and=20
other non-audit services. I am sure that couldn't have biased =
Andersen=20
in any way, of 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=20
some insider selling last May when the stock was still in the =
mid-teens,=20
as well 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=20
services? I would like to do some shorting. There seems to be a =
pattern=20
emerging here. The Chairman of Andersen says the firm will =
survive, but=20
I am not sure that 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></BLOCKQUOTE></BLOCKQUOTE=
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