Losers in a real casino don't get a jury trial, Marty.
But losers on Wall Street who can point to acts of deceit do--and to a defendant, I can assure you a jury trial looks very much like a second casino all by itself. That casino costs a minimum of $500,000 in defense fees (often much more) to play all the way through to completion. It is also a huge inconvenience for the company in time spent producing documents, attending depositions, meeting with attorneys, etc.
I am personally critical of this state of affairs, which is of course entirely irrelevant. The important thing is that it is the reality in which publicly-traded companies must conduct themselves. Silicon Valley companies such as National Semiconductor (Peter Sprague's "training ground") know this fact of life better than anyone else, I would imagine. There is an ongoing battle in California between San Diego attorney Bill Lerach (from the top securities class action law firm in the country, Milberg, Weiss), on the one hand, and the CEOs of many Silicon Valley powerhouses--Intel and Seagate to mention a few--on the other hand. The Spragues are not oblivious to all this, and this allows us to better "read into" just what it is that is being said by Mr. Collins and Mr. Sprague in their posts today.
That fact that they are saying anything (other than flat denial of rumors) is extremely encouraging because they likely do not have a legal duty to comment at all. WHAT they are saying is even more encouraging, because they are tending to validate the Reseller News article and WAVX's role in the "coalition" or "consortium."
The company presently operates under two somewhat conflicting bodies of rules--securities regulations and contractual confidentiality agreements or understandings. The securities regulations require first and foremost that WAVX (including Collins as authorized agent) not make misleading statements of fact. If WAVX is NOT currently in discussions along the lines outlined in the Reseller News article of last Friday, then they run an enormous risk that Sprague's and Collins's comments today could get them into a fair amount of legal trouble someday. The comments, by innuendo, tend to mislead by creating the impression they are involved. These guys know this, and they're not stupid. So they are basically saying they are very much involved in this security standard "coalition." (We'll come back to "coalition" in a moment.)
In addition to avoiding making misleading statements, the securities laws also sometimes create affirmative duties of disclosure if and when certain material things happen. Collins is saying in no uncertain terms that the company follows of policy of disclosing significant definitive agreements, at least with OEMs, when they occur. (I'm not convinced this duty necessarily exists, but nor am I in a position to say, or have enough specialized regulatory knowledge to know.) That doesn't matter. What matters is that Collins is saying that's how WAVX intends to approach the matter. Given this statement, it would be misleading on Collins's part if definitive agreements had already been signed, or if they were signed tomorrow, but we did not hear about them fairly soon after.
The little catch to all this is that parties may find all sorts of ways to postpone making the agreement definitive, even while everyone involved in the transaction pretty much knows it's a done deal. Perhaps--pure speculation--that WAVX, IBM and/or HWP and/or NSM have agreed on terms, but with the interest of others such as Compaq now in the equation, they have discussed entering into a multi-party agreement which all parties intend to sign at once. If Compaq folds, WAVX can still be fairly certain the original parties will go back and do a two- or three- or four-party deal. Right now, though, nothing is "final."
These "almost but not quite there" scenarios afford Collins and Sprague the comfort level to say what they are saying to us. I personally think that if there were a fair amount of "iffiness" to WAVX's chances of nailing down a deal, then the Sprague and Collins posts either would never have occurred, or would have been more deliberately precise in outlining the risk of there never being a deal at all.
The other set of legal restraints are contractual. These parties with whom they are negotiating have likely included customary confidentiality provisions in the agreements that set the stage and rules of their discussions. These parties are free to waive these provisions, to relax them, or to insist upon them. Frankly, the remedy for breaching this confidentiality is often nil, and the confidentiality obligation may not even be formalized. (It could put a damper on the discussions though if the other party has reason to be particularly upset.) Collins and Sprague are required to talk in guarded language and in limited forums (viz. not issue Business Wire news releases, but nevertheless post here and on Raging Bull) because that's what their potential partners have said or implied is okay with them.
In the absence of discussions with OEMs, there is no sound business or legal reason for WAVX to be less than 100% to the point on these issues. Every other course of action presents legal risks. Again, the fact of guarded comment equals confidentiality agreements equals potential partner(s). This by itself is a form of confirmation.
The Reseller News article was well-written by a journalist in a specialized field. He used many precise quotes. He named his sources. He identified some of the biggest companies in the computer industry. The number of important bridges he would have burned by going far afield is staggering. If Mr. Bliss has any interest in continuing in this line of journalism, I have to believe he kept his observations and conclusions within what was fairly supportable based on his interviews.
Coalition and consortium are interesting words. I happen to think they are dangerous words for the technology industry to use unless there are indeed 1) collective discussions actually taking place; and 2) they involve discussions on a safe (from an antitrust standpoint) topic such as internet security standards. This is not only a safe discussion, it is a dialogue the government has invited the industry to engage in. That is, they are not getting together to discuss how to price the next generation of PCs--a no-no topic under the antitrust laws.
[I suppose it's possible the industry prompted the article to keep the government from imposing standards and to make it look like they are really doing something with the issue of internet security, but more likely the issue has become so important from a business standpoint that they are in fact having collective discussions--which could well result in the WaveMeter ending up in every PC out there.]
I'm going to be back on the vacation trail again for several days, so I allowed myself the luxury of a long-winded post tonight. Sorry if I put some of you asleep.
In closing, Marty, I too find your humor and insights refreshing. I will mention, though, that I sometimes struggle through your sarcasm, satire, and hyperbole. At least for me, your real message can get lost. We have a lot of new names on this board, and you come across as particularly informed about the company, generally intelligent, and quite articulate, so you are probably being taken seriously and/or literally by many people. And I'd bet other people are sometimes trying to figure out what all the TOYA'ing is all about.
Pure Folder |
