EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

08.30.08

Novell and Fraud (Updated)

Posted in Fraud, GNU/Linux, Microsoft, Novell at 7:45 am by Dr. Roy Schestowitz

…and Paying People to Shut Up About It

Debit/Visa card

Games around credit are painfully familiar to many. As background, consider Novell’s serious financial issues, which may have led the company to selling its soul to Microsoft within months. In a previous post from yesterday, Novell's latest problems were highlighted. The losses continue to widen as the cash cows run thin.

Novell’s history when it comes to fraud is well documented. Consider this old report for example.

After more than seven years in the courts, Novell will spend $13.9 million to make a securities fraud class-action lawsuit go away.

Attention is needed here. Novell’s cronies were not cleared of charges; instead, they bailed out. This does not make the behaviour acceptable. According to yesterday’s article from the Register, “th[e latest] was turned into a loss of $15m for the period because of a debt write-off.”

Did anyone spot that? Yes, debt.

Novell has previously admitted — albeit in private — that it is 'cooking the books'. This indicates that not much has changed since that class-action lawsuit over fraud.

Such things might not be rare, but it does not make them justified, either. Here are a couple of examples.

Former Apple CFO, Fred Anderson, made accusations against Steve Jobs. According to Associated Press, Gene Munster of Piper Jaffray said “It gives the appearance that, ‘I had a partner in crime and it was Steve Jobs.’” Here is an article from The Register.

Apple’s Board of Directors is backing CEO Steve Jobs after former CFO Fred Anderson accused Jobs approving the company’s stock option backdating. Anderson settled civil charges against him Tuesday without admitting any guilt, but agreeing to pay back approximately $3.5m to make up for personal gains in the scandal.

Eventually, they managed to sneak away from justice, assuming these allegations were true in the first place, which is likely. Welcome the juridical system of the 21st — a system where you can commit a crime and get away with, provided you are wealthy enough and can buy people’s silence.

After presiding over a 50 percent rise in Apple’s stock over the past year, CEO Steve Jobs can afford to shrug off shareholder questions about stock option backdating and environmental policies.

Microsoft too has paid for skeptics to take their claims of fraud elsewhere. This includes a Microsoft executive that accused Microsoft of fraud. Microsoft paid money for these claims of fraud to just go away.

What about regulation? The SEC proved its impotence when it let SCO off the hook just a while before they declared their surprise bankruptcy.

Tomorrow’s IRC logs will contain a lot more information about it. This requires tidying up. Meanwhile, watch this new comment from Linux Today:

Generous Gates has yet to give away money to match the huge amounts that the Foundation saved in taxes (ie, the bill you and I pick up).

This is only the tip of the ice-berg of Generous Gates’ generosity.

http://boycottnovell.com/2008/08/13/smithers-on-massive-msft-losses

PS. Generous Gates is converting his paper money inflated wealth into safer currencies courtesy of means such as Ma’s and Pa’s savings (including their pension funds). Secrecy and tricks (such as using a nonprofit Foundation) ensure Ma and Pa buy MSFT real high, kind of like those Enron folks that bought real high, too.

PS2. Gates private investments are benefiting mightily from the Foundations’ donations. Of course, the more billionaires that participate, the more difficult it is to trace down the back-scratching.

The Gates Foundation is a sensitive subject that was covered before, e.g. here. There’s not much goodwill out there, except for in the minds of those that live in a fantasy world. The same goes for other companies and individuals, but one has to be intimately familiar and backed by verifiable proof to make the proper allegations.

Here is an old article that is also relevant. [Update: this article seems to have been pulled over a year ago, but the Internet Archive has a copy]

Microsoft’s past stock options practice poses questions

[...]

Microsoft in 1999 announced that it would end a policy of awarding options at monthly lows and said it would take a $217 million charge, though many details of that discontinued practice haven’t been widely known, The Wall Street Journal said Friday.

Those details raise questions about how Microsoft began the practice, what prompted the company to end it and whether the way the options were dated–at 30-day lows the month after they were granted–influenced other companies, it said.

If S.u.S.E. was acquired by a corrupt company, which seem true based on the citation at the top, then it can hopefully isolate and dissociate itself from Novell some time in the future. OpenSUSE could do this.

Microsoft may now be injecting money into Novell in order to keep its strategy against GNU/Linux, ODF and Free software going. Suffice to say, Novell is provably a friend of Microsoft more than it is a friend of Free software. Novell is not SUSE. It’s broader than SUSE.

Novell and Vista

Update #2: Another comment on the article above (from the Internet Archive):

Lessons of Enron

I’m not going to jump on the microsucks band wagon. I would point out that if the enron scandal held any lessons for us, it should be that questionable business practices should be dealt with harshly. I wonder how many other companies are well on their way down the enron road? What will it do to the economy when the s*** finally hits the fan?

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

6 Comments

  1. Alec Baldwin said,

    August 30, 2008 at 12:59 pm

    Gravatar

    Utter nonsense. Roy Cluelessowitz – Balders is back.

    You demonstrate about as much understanding of business as the average door-stop.

    Novell has in excess of $1bn in cash. Novell is “cooking the books, and admitted it?” Do you have any idea what the SEC Filing process was all about? And what the end result was?

    Why, if all you say is true, is the share-price rising, is revenue growing, is margin from operations increasing, are investors (who would presumably have more of a clue than you) investing? All these experienced business people, must be real dumb… maybe they should listen to you, after all you sound like you have years and years of experience in business….

    You’re a 9-yr old.

    LOL

  2. Roy Schestowitz said,

    August 30, 2008 at 1:17 pm

    Gravatar

    A lot of businesses which claims to have money in the bank may have just borrowed it, but that’s not the point.

    Start here.

  3. Alec Baldwin said,

    August 31, 2008 at 3:01 pm

    Gravatar

    This is hysterical. Are you now suggesting that the annual accounts filed by Novell and legally verified, are inventions? Are you suggesting that Novell has “borrowed” 1 BILLION Dollars?

    I am crying with laughter. It’s the ultimate in FUD. It’s like saying, “I have nothing to say, so why don’t I just cast doubt on the facts with an attention-seeking tabloid-esque headline…”

    Your cluelessness is apparently plumbing new depths.

    Keep going Roy the Boy – you are making a fool of yourself, and becoming more of a joke as each new post arrives…

  4. Roy Schestowitz said,

    August 31, 2008 at 3:27 pm

    Gravatar

    The more I explore, the uglier it seems and I shall post a followup to this post, which will contain the latest findings.

    “Alec Baldwin”, you only ever show up in this Web site when Novell is shown to be in trouble. How come?

  5. Jose_X said,

    August 31, 2008 at 10:33 pm

    Gravatar

    From what little I know, I don’t know if Novell has done anything illegal. The impression I have gotten over the years is that there are some very questionable laws in the books. Just recently the SEC(?) announced that a new method of accounting will be phased in for public companies to match international rules. It makes sense from a competitive point of view, internationally, but this would be making laws that have problems even more lax (supposedly the new methods are more lax).

    >> Why, if all you say is true, is the share-price rising, is revenue growing, is margin from operations increasing, are investors (who would presumably have more of a clue than you) investing? All these experienced business people, must be real dumb… maybe they should listen to you, after all you sound like you have years and years of experience in business….

    If a company was cooking the books, anything could be showing up on their reports, and share price is determined in part by this (which under the assumption would be lies).

    Further share price can rise if the market generally wants that, and this can be for many reasons. For example, experience investors might feel that Novell would “get away” with whatever it was doing (at least for a while) without a problem and hence be willing to buy. Enron and Bear Sterns were very high right up to the end. Perhaps questionable practices might work during certain conditions but become too risky during others. Possible examples of varying conditions might be Microsoft maintaining their monopoly levers vs. losing them; Microsoft and Novell being called out by antitrust authorities soon vs. never; and the economy being strong or not.

    Do note that NOVL dipped to it’s lowest value in years just months ago. It’s current pop still leaves it very low. Microsoft’s help might allow NOVL to rise a good amount over the next few years. Perhaps more likely however is that this help has kept it from tanking (as I think has been suggested on this site). Look at SCOX’s lawsuit. The stock had a large bounce that lasted for a couple years I think, at which point (much as NOVL looks today) it went below the price at the time of the announcement and has kept sinking to this day.

    One thing Roy would like (from what I gathered from IRC conversation) is to have the rules changed to be sensible (whatever “sensible” might be). A lot of people would like that wrt public accounting rules/practices. *Some* of the “outing” on this site is to focus on the ethical issues and on the future prospects (perhaps using Novell and Microsoft as the model in cases where others do the same thing), independent of the legal situation. Companies doing business with Microsoft should know that Microsoft is most definitely not among the more ethical corps.

    Buffett had this to say wrt stock options not being expensed [ http://money.cnn.com/2004/05/03/pf/buffett_qanda/index.htm in 2004 ]:
    >> Already up on the soapbox, Buffett and Munger went straight into a denunciation of everyone who opposes treating stock options as an expense. To Berkshire’s bosses, it is not just a technical accounting question, but a matter of fundamental morality.
    >> “Write your congresspeople giving them your views on whether options should be expensed,” said Buffett. “It was a disgrace 10 years ago when Congress bludgeoned the SEC and the [Financial] Accounting Standards Board to override FASB’s decision to expense options. It accelerated the anything-goes mentality of the 1990s.”
    >>…After the audience stopped laughing, Buffett came to his point about options, “The U.S. Senate concluded that the world was flat, because their their contributors paid them enough to say the world was flat.”
    >> Then Munger weighed in: “It’s worse than that. Those people who wanted to round pi to 3.2 were stupid. These people [the opponents of expensing options] are worse than stupid. They know it’s wrong and want to do it anyway.”

    Problem though. I think stock options are expensed today; however, Bill Parish and others don’t like the model being used (Black Sholes). For companies like Microsoft over the past two decades, this formula would underestimate significantly the options impact on share holder wealth in the future as the options vested. See, http://boycottnovell.com/2008/08/13/smithers-on-massive-msft-losses

    Microsoft also took huge advantages of something else, the so-called “Stock Options Income Tax Benefit”. While Microsoft was paying their bills without incurring expenses on their financial reports (eg, see Buffett comment above), for tax purposes, the IRS was treating it as if they were spending that money. Hence Microsoft has stellar financial reporting AND was not paying income taxes due because of huge tax breaks (eg, of some $4 to $5 billion in 1999 IIRC). If you look at their reports (eg, 1999), you see a very large tax bill, but then also this Options Benefit which in various years neutralized the taxes with left over credits for use in future years. The law allowing this is horrible and doesn’t even reward the intended recipients (young innovative high growth companies) in light of the behemoth monopolists (MS, Cisco, etc) that were stealing their thunder using extraordinary large options grants and market controls.

    So we come to this: if laws were passed that allowed a few companies to (eg) print their own money, it would be legal for the time being and investors would scoop it up. Eventually the chickens might come home to roost if the laws or circumstances change.

    Also, just because the laws existed doesn’t make it healthy for the nation.

    Another tidbit: Microsoft plays around with risky derivatives. They have a lot of inside information on the economy because of their particular position. This allows them to play with derivatives fire and get away with it, but they will make mistakes as you can read about in this same link Roy S posted above: http://www.billparish.com/msftfraudfacts.html

    [Note, the link from the Linux Today posting has an extraneous space within it so appers to be a dead link.. use this: http://boycottnovell.com/2008/08/13/smithers-on-massive-msft-losses ]

    BTW, Microsoft’s minting of stock options until the last few years means there is probably a solid ceiling/resistance and/or plain old downward pressure on MSFT as these options vest/mature, at least for the duration of those options (the following article states 10 years beyond when they are vested which I think in some cases is like 7 years from when they were given out).

    From http://knowledge.wharton.upenn.edu/article.cfm?articleid=825
    >> ..Options are more profitable in a rapidly rising market. On the other hand, if the price fell to $50, options giving the right to buy at $75 would be worthless — “underwater” or “out of the money.” The 50 shares of stock, however, would be worth $2,500. Stock is better in a falling market.

    Smart investors and market makers like to keep prices high until the very end. Most of these anticipate major news events, if not the actual dates, at least that the events and stock movements up/down are coming.

    Many MSFT employees at some point are likely to be terribly disappointed. The smart ones likely jumped ship.

    The business world loves to bypass government regulations. They are always pushing the limits of new financial instruments and practices to make a buck. There is just too much money to be made before the economy and gov catch up. But the hang-over usually does come in one way or other, much like the hot potato eventually burns whoever is holding it at the wrong moment. People thinking MS will be strong in 20 and 30 years (or maybe even 5) might be way off, but we’ll see.

    Just like Gates did a 180 on his position on patents based on convenience, I would not be surprised if he eventually favors laws that benefit the small companies over the large.. this would be once the MS titanic was sunk and just as his B&M Foundation aided small private companies are poised to rise. [Just a guess.]

  6. Roy Schestowitz said,

    September 1, 2008 at 4:05 am

    Gravatar

    Many MSFT employees at some point are likely to be terribly disappointed. The smart ones likely jumped ship.

    That too has happened.

What Else is New


  1. The Federal Circuit Continues Squashing Software Patents

    Under the leadership of Sharon Prost the Court of Appeals for the Federal Circuit (CAFC) continues its war on software patents, making it very hard to remember the last time it tolerated any



  2. SUEPO Representatives Like Elizabeth Hardon Vindicated as Battistelli's Detrimental Effect on Patent Quality is Widely Confirmed

    Feedback regarding the awful refusal to acknowledge patent quality crisis at the EPO as well as the appointment of a President so close to Battistelli (who most likely assures continuation of his policies)



  3. Links 17/10/2017: KDE Frameworks 5.39.0, Safe Browsing in Epiphany

    Links for the day



  4. Judge Bryson Rules Against Allergan After It Used Native American Tribes to Dodge Scrutiny of Patents (IPRs); Senator Hatch Does Not Understand IPRs

    Having attempted to dodge inter partes reviews (IPRs) by latching onto sovereign immunity, Allergan loses a key case and Senator Hatch is meanwhile attempting to water down IPRs albeit at the same time bemoaning patent trolls (which IPRs help neutralise)



  5. Rumours That António Campinos Initially Had No Competition at All (for Battistelli's Succession) Are Confirmed

    Succession at the EPO (mostly French) shows that there's little room for optimism and Battistelli's people are too deeply entrenched in the upper echelons of the EPO



  6. EPO Stakeholders Complain That the New Chairman Does Not Grasp the Issues at the EPO (or Denies These)

    Some information from inside the EPO’s Administrative Council, whose Chairman is denying (at least to himself) some of the core issues that render the EPO less competitive in the international market



  7. Another Misleading Article Regarding Patents From Rana Foroohar at the Financial Times

    In an effort to promote the agenda of patent maximalists, many of whom are connected to the Financial Times, another deceiving report comes out



  8. Monika Ermert's Reports About the Crisis at the EPO and IP Kat's Uncharacteristically Shallow Coverage

    News from inside the Council shows conflict regarding the quality of European Patents (granted by the EPO under pressure from top-level management)



  9. Patent Troll VirnetX a Reminder to Apple That Software Patents Are a Threat to Apple Too

    VirnetX, a notorious patent troll, is poised to receive a huge sum of money from Apple and Qualcomm is trying to ban Apple products, serving to remind Apple of the detrimental impact of patents on Apple itself



  10. Links 16/10/2017: Linux 4.14 RC5, Debian 9.2.1, End of LibreOffice Conference 2017

    Links for the day



  11. The Systematic Erosion of Workers' Rights and Holidays at the EPO Goes Years Back

    The legitimacy of the staff's concerns at the EPO, having seen basic labour safeguards being shredded to pieces by Battistelli for a number of years (predating even the escalation of the conflict)



  12. Articles in English and German Speak About the Decline in Quality of European Patents (Granted by the EPO)

    Heise and The Register, two sites that have closely watched EPO affairs for a number of years, speak about the real problem which is declining patent quality (or rushed examination) -- a recipe for frivolous litigation in Europe



  13. Software Patents and Patent Trolls Not a Solved Issue, But the US is Getting There

    A media survey regarding software patents, which are being rejected in the US in spite of all the spin from law firms and bullies such as IBM



  14. US Patent Trolls Are Leaving and the Eastern District of Texas Sees Patent Cases Falling by More Than Half

    The decline of patent aggression in the US and the patent microcosm's response to Justices, having ruled in TC Heartland, curtailing patent trolls



  15. Qualcomm's Nightmares Are Getting Worse as Antitrust Questions Are Raised and Assessed

    Qualcomm is getting itself deeper in trouble as fines pile up and its multi-billion dollar dispute with Apple isn't getting it anywhere



  16. Forget About Apple; Two of the Leading Phone Makers (Samsung and Huawei) Are Bickering Over Patents

    Massive Android OEMs, Huawei and Samsung, are in a big patent dispute and this time, for a change, China is a legal battleground



  17. Tim Heberden From the Glasshouse Advisory is Throwing Stones in a Glasshouse to Create Patent Litigation

    IAM's latest lobbying, aided by the patent microcosm, for a climate of feuds and disputes (to line the pockets of the litigation 'industry')



  18. Access to Medicine is More Important Than Patents

    Some of the latest news about patents that impede/deny access to crucial medication; strategic litigation from the generics sector, seeking to invalidate patents and then offer low-cost alternatives



  19. Links 14/10/2017: Windows Breaks Dutch Law, Wine 2.19 Released

    Links for the day



  20. The Patent Trial and Appeal Board (PTAB) Supported by Congress, a Federal Judge, Soon to be Supported by the Supreme Court Too?

    The Patent Trial and Appeal Board is still widely defended, except by the patent microcosm which likes (and profits from) patent trolls and litigation Armageddon



  21. Patents Are Turning BlackBerry and Nokia, Which Used Android, Into Anti-Android Fronts That Tax Android OEMs

    The Canadian BlackBerry has sued BLU in the US only to compel it to pay 'protection' money; Nokia's patents are being scattered to trolls, which are doing something similar (without risking litigation themselves)



  22. The Unified Patent Court (UPC) is Rotting Like the European Patent Office

    The Unitary Patent litigation pipe dreams (or prosecution/trolling fast lane), which Battistelli's EPO long relied on, turn out to be the road to nowhere



  23. Lying and Faking Now a Standard Procedure at the European Patent Office

    The European Patent Organisation (EPO) under the leadership (or chairmanship) of Christoph Ernst continues to relay lies from Battistelli's Office, SUEPO rejects these, the Office lies about SMEs, prioritises Microsoft (again), and probably buys fake Twitter "followers"



  24. Links 13/10/2017: X.Org Server 1.19.5, pfSense 2.4, Final Stages of Ubuntu 17.10

    Links for the day



  25. Truly Terrible 'Journalism' About António Campinos Boils Down to Lobbying and Agenda-Pushing

    The expectedly shallow coverage of the appointment (succession) of Battistelli's French pick, which will likely change nothing of significance at the European Patent Office (EPO)



  26. Under Christoph Ernst, the Council is Just a Megaphone of Battistelli's EPO, Including on Patent Quality

    The Administrative Council of the EPO does not appear to be interested in a serious, adult, scientific debate about the quality of European Patents (EPs) and is instead relaying lies from Benoît Battistelli



  27. Links 12/10/2017: Cutelyst 1.9.0, Qt Creator 4.5 Beta

    Links for the day



  28. The Hogwash Begins: Patent Microcosm's Media Pretends Campinos is Anything But Battistelli's French Succession Plan

    A survey of media coverage regarding António Campinos, the French person whom Benoît Battistelli selected as his successor at the EPO



  29. Patent Quality at the EPO (European Patents) is Slipping While Battistelli's Office Boasts “Expansion of Early Certainty” (Even Worse)

    The EPO is staring down the abyss as high-level EPO management, quite frankly as usual, looks for new ways to further exacerbate patent quality (for superficial gains in the number of granted patents) rather than improve it



  30. Former Microsoft Employee Explains Why Microsoft 'Embrace' of GNU/Linux and Free/Libre Open Source Software is Like W3C Entryism

    Microsoft's latest moves are "EEE" that "concern" him, according to this new video


CoPilotCo

RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

CoPilotCo

Recent Posts