Posted on 02/04/2002 3:16:12 PM PST by usconservative
Received this a few minutes ago in an email list that I participate in. If you're an EMC customer, pay close attention.
Ron May runs a newsletter about Chicago business. He breaks news frequently will before other sources. Look at this! ---------------------------------------------------------------------------- - Email number one from 2/1/02 from Ron May: Here is the scandal. Now, I must tell you that it comes form one anonymous caller who sounded quite credible, but it could all be bunk, or part of it could be, so you were warned. Here is what I heard from the caller whom I did speak with. 1. Monish Shah, the VP of Professional Services at the Chicago office of EMC (on Bryn Mawr) and Bob Waltz who reported to him have been fired this morning. 2. They are also looking into the conduct of Allen Cullen who is the VP of Sales in the same office. He too may be dismissed. 3. For about a month now, they have been investigating the situation. 4. There is a revenue discrepancy of between $6MM and $8MM for the 4th quarter of 2001. 5. This is where it gets a bit fuzzy. Monish had his own side business in which he was using consultants. He was somehow billing their work through EMC and was paying his own company, even though no work was being done. There are forged documents, I was told, having to do with customers signing off on POs, etc. That is all phony, I am told. The exact mechanics of how this scheme worked are a bit unclear. 6. Given the Enron scandal, this is a big thing if it turns out to be true. The caller told me that HR, Legal and Finance are all in the office going over documents today. I was also told that about 200 people work out of this office. 7. So here is how it might have worked. Monish faked that work was being done for clients. His side business firm got paid, but the customers did not pay EMC. EMC is out the money. The caller told me that he is not intimately involved and may not even be an EMC employee. He was not certain about the titles of the people, but he did know their names with a greater degree of certainty. Again, none of this has been confirmed. I have had one anonymous call that sounded pretty realistic. But it may turn out to be pure baloney. ____________________ Email number two from 2/1/02 from Ron May Briefly noted, by Ron May * If I had a million dollars to bet right now on whether this is a bona fide scandal, I would make the bet in a New York second. My gut tells me that this is big, just based on the level of people in the firm that are involved. 1. The story is true about EMC. They summoned Manish Shah yesterday to Wisconsin to make sure no one saw them. So far, the only two people who have been firedd are Manish and Bob Waltz. The amount of money that the revenue figures are off by: between $5MM and $10MM, and that is what they know so far. 2. EMC's stock could be at $1.00 in a month. Maybe that is a bit overly dramatic, but it could be that big. Can you spell L-E-G-A-T-O? That company went from $80 to $8 in less time than it will take for me to write this letter because of phony RR (revenue recognition). That was three years ago. 3. One of my internal sources tells me that he found out about the troubles back in July of 2001. That is when there were some problems, and they were not just billing problems. Apparently they involve a two word phrase that I don't use any more in this report. You know, s. h. Since the anonymous call this morning, I have tapped into my sources inside the firm and I do know these guys. They have never steered me wrong in the past. There is a mysterious reference to a group of six guys, and it is now about fifteen guys who are involved in the internal investigation which is not over yet. My sources are telling me that this is BIG: SEC big, Connie Chung big. 4. The correct terminology is that they are called Statements of Work (SOWs). They were falsifying SOWs to make it look like they made quota. That put money into Manish's pocket by way of his bonus which was tied to that. He cut and pasted signatures. In other words, they were forged. Or he had his cronies at a place like Mascon or Motorola sign for him. Three firms I have heard that were involved in the falsification of work are: Motorola, Mascon, and UAL. The falsification has been going on for at least the last two quarters. 5. There is a great deal of internal concern including letters from the Chairman. An e-mail was sent out today denying the essence of what I reported this morning, but acknowledging that Manish is no longer with the firm. Why? What's the big deal if only $10MM was involved? Well, to start with, it's illegal. And if the SEC gets wind of this, they could go back over five years of revenue numbers with a fine tooth comb. Imagine what the mere hint of that could do to the stock. 6. Bob Waltz reported to Manish and he was also canned. Another person under suspicion is Tim Fiedler, a district sales manager. Other bull that has gone on includes that Manish's brother-in-law was there three months and got stock options when far more senior people did not. That is all I have for the moment. Here is the e-mail that went out internally this afternoon from Allen Cullen, the Divisional VP of Sales. -----Original Message----- From: Cullen, Allen Sent: Friday, February 01, 2002 2:53 PM To: Cullen Division Subject: May Report Good afternoon.......It has been brought to my attention that a report is circulating the internet with comments pertaining to the Chicago Office and more specifically our Professional Services Organization.....Let me take this moment to clarify any confusion with regards to this e-mail / report........Yes , it is true , Manish Shah and Bob Waltz are longer employees at EMC......The remaining content in this report is absolutely false.......There are no issues that exist in the Chicago office........We continue to have one of the most dedicated and focused sales and services organizations in the business.....Our Division continues to deliver the quality and commitment to EMC customers that the technology industry standardizes on.......Let's not get distracted by random publications ......Let's focus our efforts and energies toward the client base and deliver a great Q1 ........Good selling !!!! Allen Cullen Divisional Vice President 800-337-6393 Main: 773-756-3000 Fax: 773-399-9622 cullen_allen@emc.com +++++++++++++++ Allen, Ron May here. I have a question. How do you spell L-I-A-R? __________________________________
As a former EMC customer, I can only say I'm all but too happy to be away from them. Their slimy, sleazy way of doing business was always a huge turn-off. The company I work for switched our data storage from EMC to one of their competitors some time ago, and we're very glad we did.
I know some of the people at UAL (which is referenced in this email) and will be calling them to see if the above is in fact, true. But based on Ron May's uncanny ability to get these things right, especially with his contacts in the IT industry, I'm betting he stumbled onto something BIG.
If you've been riding EMC's stock down from it's highs over the last year to the mere pittance of about $16/share recently, now might be a good time to salvage what you can from your EMC stock.
Couldn't happen to a "nicer" company, IMO.
If it's AA, this is going to be a HUGE nail in their coffin!
You've obviously never dealt with EMC. If I had a $1 for every time they presented a "non-binding" Statement of Work in front of me over the 3 years we had their storage products in house, I'd have a few hundred bucks.
EMC wants a SOW for everything they do. My *guess* is that at the end of the day, it'll be determined that all these "non-binding" SOW's that never materialized into actual revenues for EMC will have been used to prop up their bottom line, and pump up their stock price.
Any bets? (As a *former* Excessive Margin Company customer, I'd bet I'm right!)
EMC tried recruiting me from the company I work for three times over the course of a year. Funny how EMC's so-called "ethics" prohibit them from recruiting from their customers, so they hired a search firm to do it for them, and gave them my name! Unethical bastards, IMO. I hope they go belly-up and soon.
Richard W.
For the record, a SOW or statement of work is a consulting standard method of "scoping" out a job to be performed. This document details assumptions, deliverables, customer and consultant responsibilities, etc. so that all parties involved are playing from the same page. All parties review and "sign-off" on the SOW before work begins. Work ends when all deliverables have been met and agreed to. In fact, I just finished reviewing one for my next engagement.
It would not surprise me if this were true about EMC. The EMC sales force is by far the most arrogant group of sales people I have ever met in 22 years in the IT business. I know of two EMC sales persons whom if I ran into them today I would probably cold-cock on the spot as in both cases, I wasted alot of work and lost money so that these scumbags could meet their quotas. I have witnessed on two occassions EMC sales people being escorted off a customer's premises by local law enforcement authorities.
On the other hand, they do have a decent product, on par with the best in the business but on the pricey side. EMC's are not "low-end" storage.
---max
You and I probably had the same rep! LOL! I gotta ask ... why would you spend your budget to help EMC meet their quota? I never would. I did what was in the company I worked for, best interest period.
As far as EMC's product goes, they're NOT the best in the business anymore. Hitachi (and the HP labeled Hitachi product) is kicking their sorry arse up and down the street. The Hitachi 9900 far outperforms anything EMC has to offer, at 2/3'rds (or cheaper!) the price. We switched about a year and a half ago, and saw our average performance go up 70% - just by changing the disk.
When we tweaked our code to take advantage of features already built into the Hitachi system, we saw some applications perform 700% better and more.
It was truly amazing. I have absolutely NO idea why anyone would continue to pay EMC's extortionist prices for disk, and deal with their arrogant, smug sales force. They remind me of used car dealers. Slimy to the max, and even more untrustworthy than Clinton.
But that's just my opinion.
Believe me, it is not by choice. The firm I work for is both an HP and EMC var (as well as Cisco, IBM, etc. etc.). It has almost come to the point where many of our firm's server/storage consultant's are refusing to do work for EMC which for the most part is a result of EMC ethics (or lack thereof).
As far as EMC's product goes, they're NOT the best in the business anymore. Hitachi (and the HP labeled Hitachi product) is kicking their sorry arse up and down the street.
I am also quite familiar with HP's XP line as well and am currently assisting my present customer with configuration and capacity planning for a XP512 they are considering purchasing. Have worked on the XP48, 256 and 512 models and agree with you on their respective performance. I've not worked on any native Hitachi storage however but since HP basically rebadges Hitachi's unit, I don't think that it would be too differing from HP's.
And you are right EMC's margin is more than most customer's would want to know about. Whenever a customer I am with talks about purchasing a Symm I always tell them to get a quote from EMC, and when the rep calls back tell him that you are waiting for a competetive quote from HP or Hitachi. This typically will result in a follow on quote from EMC for about 15-20% less than the original.
---max
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