The most spectacular corporate imposion in decades.
November 28, 2001 10:28 AM Subscribe
The most spectacular corporate imposion in decades. Without 9/11, the biggest news story in the past few weeks would have been the cataclysmic end of one of the 90's hottest companies, headed by one of the President's closest supporters, because of fraudulent accounting practices.
How does this affect the Astros? And was it a factor in pitching around Bonds?
posted by Kafkaesque at 11:16 AM on November 28, 2001
posted by Kafkaesque at 11:16 AM on November 28, 2001
i've heard a lot about enron in the past year or so, though i still don't know much about the company or its troubles. all i do know is that the ballpark for the houston astros is named for the company -- which i suppose may soon change. interesting how things have gone down.
posted by moz at 11:16 AM on November 28, 2001
posted by moz at 11:16 AM on November 28, 2001
Every time I hear about the latest death throe I laugh like hyena. Shame about all the good people that will be put out of work though.
posted by euphorb at 11:19 AM on November 28, 2001
posted by euphorb at 11:19 AM on November 28, 2001
interesting how things have gone down
Most notably, a ton of 401(K) accounts
posted by stefanie at 11:24 AM on November 28, 2001
Most notably, a ton of 401(K) accounts
posted by stefanie at 11:24 AM on November 28, 2001
Every time I hear about the latest death throe
This is actually a legitimately big story. Enron wasn't some flashy new up-and-comer, it was a company widely viewed as a powerhouse, with solid management, substantial revenue streams and strong connections. And they aren't just cutting back, they're shutting down. Disasters on this scale practically never happen these days, and certainly not in large, publicly traded companies, which are the focus of so much media coverage and stock-holder interest.
A lot of people, not just at Enron, are pretty shocked right now that this could happen.
posted by mattpfeff at 11:25 AM on November 28, 2001
This is actually a legitimately big story. Enron wasn't some flashy new up-and-comer, it was a company widely viewed as a powerhouse, with solid management, substantial revenue streams and strong connections. And they aren't just cutting back, they're shutting down. Disasters on this scale practically never happen these days, and certainly not in large, publicly traded companies, which are the focus of so much media coverage and stock-holder interest.
A lot of people, not just at Enron, are pretty shocked right now that this could happen.
posted by mattpfeff at 11:25 AM on November 28, 2001
In addition, I'll note that such pillars of the business community as Chiquita, GAP and Providian have all suffered, um, "setbacks" today.
But, of course, it's the shop-floor workers who'll suffer -- there's an Enron power plant a few miles away from me -- rather than the execs, who'll just roll on to their next corporate gig, taking a severance package and a signing-on bonus for their pains.
posted by holgate at 11:27 AM on November 28, 2001
But, of course, it's the shop-floor workers who'll suffer -- there's an Enron power plant a few miles away from me -- rather than the execs, who'll just roll on to their next corporate gig, taking a severance package and a signing-on bonus for their pains.
posted by holgate at 11:27 AM on November 28, 2001
What's fascinating about Enron's (apparent) death is the swiftness with which some questionable accounting practices poisoned what everyone thought was a solid business.
What will be even more interesting is to see how the federal government handles the mess. Enron is very close to Bush -- will there be criminal prosecutions? A bailout? Stay tuned.
posted by Mid at 11:32 AM on November 28, 2001
What will be even more interesting is to see how the federal government handles the mess. Enron is very close to Bush -- will there be criminal prosecutions? A bailout? Stay tuned.
posted by Mid at 11:32 AM on November 28, 2001
What's fascinating about Enron's (apparent) death is the swiftness with which some questionable accounting practices poisoned what everyone thought was a solid business.
The bending of accounting practices during the stock market boom is an open secret: "pro forma earnings" is now synonymous with "taking as many one-time charges as we like to get a penny more than expectations". Many "generally accepted accounting practices" have been finessed to the point of being the acceptable face of fraud. Of course, nobody cared while the graphs pointed upwards. As a fund manager said to me, "The SEC just stopped caring for five years." Throw in the conflicts of interest that come from the same firms providing accountancy services, IPO management, auditing and stock analysis, and you get a pretty diseased corporate body.
posted by holgate at 11:44 AM on November 28, 2001
The bending of accounting practices during the stock market boom is an open secret: "pro forma earnings" is now synonymous with "taking as many one-time charges as we like to get a penny more than expectations". Many "generally accepted accounting practices" have been finessed to the point of being the acceptable face of fraud. Of course, nobody cared while the graphs pointed upwards. As a fund manager said to me, "The SEC just stopped caring for five years." Throw in the conflicts of interest that come from the same firms providing accountancy services, IPO management, auditing and stock analysis, and you get a pretty diseased corporate body.
posted by holgate at 11:44 AM on November 28, 2001
Raging Bull has an article on holgate's point....
As for "acceptable" accounting practices, these include practices like Amazon.com and Drugstore.com (an affiliate, but a separate company) trading advertising deals with each other, and each reporting the value of the deal as "revenue". It'd be comical, if it didn't actually work....
posted by mattpfeff at 12:08 PM on November 28, 2001
As for "acceptable" accounting practices, these include practices like Amazon.com and Drugstore.com (an affiliate, but a separate company) trading advertising deals with each other, and each reporting the value of the deal as "revenue". It'd be comical, if it didn't actually work....
posted by mattpfeff at 12:08 PM on November 28, 2001
As it turns out, another Houston company, Dynegy was ready to buy it. Now it looks like the deal fell through. Watching the stock and funds that hold the stock decline is simply amazing. It will be interesting to see how much the ex-CEO and CFO are going to be prosecuted for the loss in value. Should the auditors be held responsible too? What big energy company is next I wonder? Maybe a telcom?
posted by brent at 12:11 PM on November 28, 2001
posted by brent at 12:11 PM on November 28, 2001
Disasters on this scale practically never happen these days
Remember Long Term Capital Management? It seems secrecy kills. Maybe Enron shouldn't have done so much business off of the balance sheet with subsidiaries like JEDI Capital, Obi-1 Holdings, and Kenobe Inc.
posted by euphorb at 2:38 PM on November 28, 2001
Remember Long Term Capital Management? It seems secrecy kills. Maybe Enron shouldn't have done so much business off of the balance sheet with subsidiaries like JEDI Capital, Obi-1 Holdings, and Kenobe Inc.
posted by euphorb at 2:38 PM on November 28, 2001
That's amazing: it's like a programmer naming his businesses "fred inc." "barney inc." and "wilma inc." Great link, euphorb.
posted by holgate at 3:51 PM on November 28, 2001
posted by holgate at 3:51 PM on November 28, 2001
did somebody already ask what an imposion was?
posted by worldsystema at 5:06 PM on November 28, 2001
posted by worldsystema at 5:06 PM on November 28, 2001
Actually without 9/11 the biggest event in the past few weeks would have been the crash of flight 587 into a quiet Queens neighborhood.
It's surprising how quickly and quietly that story just ran its course, especially considering that it was after all a fairly large aircraft with over 250 people on board crashing in a urban area...
posted by clevershark at 9:37 PM on November 28, 2001
It's surprising how quickly and quietly that story just ran its course, especially considering that it was after all a fairly large aircraft with over 250 people on board crashing in a urban area...
posted by clevershark at 9:37 PM on November 28, 2001
Actually, the only reason a plane crash would have been a bigger story before would have been the following: 1) Plane crashes are sensational, and scary in a primal way, due to the presumed control factor, even if more people die in car wrecks every year, but they've all since been dwarfed or made to seem as trivial (as far as the big picture goes) as they are by 9/11; and 2) Stories like Enron can be dizzyingly complex, or seem so on the surface, which is why the S&L story and its bailout - clocking in, conservatively, at $500 billion - were gigantic in impact but underplayed on the news. The S&L story might be talked about more now if there hadn't been an economic boom in the '90s, though.
posted by raysmj at 7:53 AM on November 29, 2001
posted by raysmj at 7:53 AM on November 29, 2001
As a followup: looks like bankruptcy for some parts of Enron already. The rest is likely to follow. Amazing, considering that it was #7 on the Fortune 500 last year. There is some concern that its collapse will take down banks or other lenders.
Apologies for the type-o in the link. Nothing like a good spelling snark to further a discussion.
posted by Mid at 9:05 AM on November 29, 2001
Apologies for the type-o in the link. Nothing like a good spelling snark to further a discussion.
posted by Mid at 9:05 AM on November 29, 2001
Company run by idiots goes under. Shocked I am!
Most Powerful Nation on Earth (TM) run by moron goes under.
Pray it ain't so.
posted by zeb vance at 5:55 PM on November 29, 2001
Most Powerful Nation on Earth (TM) run by moron goes under.
Pray it ain't so.
posted by zeb vance at 5:55 PM on November 29, 2001
« Older | Dead Men Walking Newer »
This thread has been archived and is closed to new comments
posted by Mid at 10:31 AM on November 28, 2001