29 Jun

Accounting cleansing time: stop chasing the RoadRunner

Road Runner & Wile E. Coyote (by Chuck Jones)

With the news that Xerox will have to restate past earnings (update: triple that number), the official accounting cleansing season has opened. Expect more companies to acknowledge they let run doubtful account receivables beyond reason, from extending too many risky vendor loans to customers, to lengthening payment terms ad infinitum, to recognizing orders that weren’t officially sanctioned by customers yet as booked sales, to booking all of a recurring deal early on.
I hope Worlcom-class fraud isn’t rampant, but aggressive booking practices and revenue recognition patterns are nothing new. When you anticipate revenue that’s not really there yet to please investors, you’re only increasing your burden for times to come.
We should dispel the illusion than public companies have these smooth, predictable, quarter-to-quarter growing revenue streams. Investors should reward companies that acknowledge bumps in their business early on, instead of looking for uniformly rosy pictures. There’s just no business where you can guarantee you’ll always deliver, no matter what.
Sales pipeline forecasting is a rationalized fantasy, and management by decree ("the company picnic will happen on next Friday, so the weather will be fine,") is pushing companies to become more remote from their customers. When the gap between marketplace reality and spreadsheet fiction is too wide, something has got to give in. I have come to accept reality’s great reluctance to cave in to wishful thinking. It’s time investors did as well, and stopped asking companies to tell them bedtime stories. It’s time company leaders started showing courage and acknowledge there’s only so much they can master. There’s always a time when it’ll come to you you’re running in the air, as in those wacky cartoons.
Update: Paul Krugman: Flavors of Fraud.
07/01/02 update: IHT: Tweaked data haunt business.
07/14/02 update: The Economist: American capitalism.
07/29/02 update: Elizabeth Spiers: Quit Yer Whinin’.
03/04/03 update: CFO Magazine: What Goes Around.

27 Jun

Death of Confidence

Joshua Allen:

"[T]here is another correction which is long overdue, and which should be triggered by these scandals. Unfortunately, I am afraid that the necessary correction is being overlooked by the press, since it involves their own ranks. Why is nobody asking the question, "why didn’t the press tell us about all of this fraud five years ago?" The answer is that investigative journalism is a dead art, and all that the press have left are talking heads who talk about whatever their audience is buzzing about. If you ask them why they never reported on this fraud earlier, they’ll say "because nobody told us about it until now". In other words, until everyone knows about it, the reporters aren’t going to know about it."

26 Jun

Pledge of Allegiance Ruled Unconstitutional

Fox News:

"In its 2-1 decision, the 9th U.S. Circuit Court of Appeals overturned a 1954 act of Congress that inserted the phrase "under God" after the phrase "one nation" in the pledge."

If this could hold on a federal level, the US would look a lot more like a civilized (i.e. secular, in my agnostic point of view), place.
Update: Eugene Volokh has a wholla lotta comments.
06/28/02 update: JD Lasica, after an e-mail I sent him, has more. I guess all these religious references in American public life are just unfathomable to us Euros. Update: I told JD that my point of view might be more strictly French than European at large. This Kuro5hin thread has posts from England, Luxembourg, Belgium and Finland. It seems I’m not the only one to see the USA are flirting with theocracy, though separation of church and state isn’t uniformly applied across the continent. I mean, I can’t imagine anyone this side of the pond saying: "we need common-sense judges who understand that our rights were derived from God." This thread, by the way, highlights the supreme degree of dignified stupidity (or is it hypocrisy elevated to art form?) displayed by some Republican politicians.

26 Jun

Google advertises in Line56, sounds very corporate

I just saw a text ad in this article (it might not be here anymore due to rotation):

"Sponsor Spot:
Your customers use Google throughout the buying cycle. Advertise on Google and stay with them all the way. Google does 1/3 of all searches, with more than 10 billion B2B searches a year and keyword-targeted ads that reach an in-market audience. Learn more by clicking here or email b2b@google.com."

The choice of place (Line56) and copy shows they want to reach out enterprise customers. Seems organic growth can only take them so far, and they eventually decided to start advertising as well (did you ever see an ad for Google before?)
Update: Robert tells me Google started advertising its search appliance last month, and he saw ads for Adwords on Clickz about two weeks ago.
07/05/02 update: saw a button ad on BtoBonline today.

26 Jun

Yahoo cuts some broadcast services

CNet:

"Yahoo said Tuesday that it is shutting down several broadcast services, including its financial news program FinanceVision and Yahoo Radio. […] "FinanceVision was advertising-driven, and that model ceased to be enough to support (it)," Sohn said. "The proposition to provide video broadcasting was a very different proposition than hosting Web pages with text." [said Henry Sohn, Yahoo’s vice president and general manager for network services]"

That’s sad to see a clever combination of video and web such as FinanceVision go under. I wonder whether they even considered turning it into a fee-based service.

26 Jun

Business Plan Archive

Business Plan Archive:

"The Internet boom and bust of 1996 to 2002 was the most important business phenomenon of the past several decades. In the wake of this historic period, we have an unprecedented opportunity to learn from our past mistakes and successes. To help us learn from history, we are creating the Business Plan Archive (BPA) to collect business plans and related documents from the dot com era. These plans

25 Jun

Amazon’s Secret Sauce

Kevin Werbach:

"Mature e-tailers like Amazon and eBay are more than just online storefronts — they’re also software platforms. […] Platform vendors thrive by putting themselves at the center of an ecosystem, offering core functions and integration hooks for other products to exploit. In much the same way, the best e-commerce companies are licensing their platforms to other retailers."