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Non-Tech : The ENRON Scandal
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To: Mephisto who wrote (4348)8/10/2002 12:38:25 PM
From: Baldur Fjvlnisson  Read Replies (1) of 5185
 
Hi Mephisto, I think those tech Co's are mighty shaky.

The accounting tricks and gimmicks were seriously
creative a couple years back.

Plese note that the following is just an example.

The world's most admired companies like Lucent, Cisco
and others used every trick in the book to inflate
sales. They even bought their own stuff with their own
money through vendor financing and took huge hits when
the customer folded.

A classic example was Motorola in early 2000. They sold
phones to Turkey in the above manner, proudly trumpeted
that in the news but didn't mention the vendor financing
until weeks later in the SEC filings. They lost 1.7
billion. Nokia was taken for 800 million by the same
Turkish party if I remember correctly.

Yes, they were optimistic back then and the cell phone
industry installed capacity to produce 1500 million
phones/year. Unfortunately we only have two ears so
reality is more like 400 million. But the debt mountains
and overcapacity remain. It's just amazing.

And after all the fraud and blunders; the answer investors get when they complain is nobody held a gun to your head and forced you to buy those stocks, nor did anyone force your fund manager. This after a megachoir of analysts has
tried to whine up this sinkhole economy and market and after
Wall St. recommended Enron right into bankruptcy.

Take care,

BF
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