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Is EMC The Next ENRON? (Data Storage Giant Over-Stating Income)
Ron May News Report Email List ^
| 2/4/2002
| USConservative
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?
__________________________________
TOPICS: Business/Economy; News/Current Events
KEYWORDS:
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To: max61
Funny you should mention how arrogant their salespeople are, that was the first impression my son got. Many of them had made soooo much $$$ they thought they were invincible. My son was hired as a sales rep and immediatly knew that he didn't belong in that environment. He's on his way back to medical equipment sales.
21
posted on
02/04/2002 4:46:23 PM PST
by
surrey
To: usconservative
Umm, take your newsletter scheme to profit from inciting fear somewhere else.
Democrats and hedge funds are contributing to the misery and unhappiness of the average 401K invested worker. The stock bears are on the prowl, correctly sensing the Dems want this economy to tank a little harder. This year is not going to be a good one. Bear raids for political and economic advantage are despicable, but predictable in an election year.
22
posted on
02/04/2002 5:18:31 PM PST
by
kingh99
To: usconservative
Any bets? Sure. I'll buy 100 shares from you at the end of March at $2.50 a share. Agreed?
To: kingh99
Try reading the May Report sometime. This isn't a scheme, dumbass. Nice try.
To: FlameThrower
Any bets? Sure. I'll buy 100 shares from you at the end of March at $2.50 a share. Agreed? I don't own any EMC. Never have, never will. Kinda deflates the poster above yours argument eh?
It won't be worth $250 btw. It'll be down to junkbond status.
One of EMC's biggest resellers just got looped into the scandal. Seems they reported selling 20 SYMM's to a company - THAT NEVER AGREED TO PURCHASE THEM.
Can an SEC investigation be far behind? methinks not!
To: kingh99
Scheme huh?
EMC fires two managers after internal investigation function vlaunch(vidurl) { pop = window.open(vidurl,'vviewer','width=535,height=425,scrollbars=no,resize=no,location=no,status=no'); pop.focus(); } .nt1 {color: #ffffff; font-family: Arial, Helvetica, sans-serIf; font-size: 13px; font-weight: normal;} .nt2 {color: #ffdb7b; font-family: Arial, Helvetica, sans-serIf; font-size: 13px; font-weight: bold;}
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| EMC |
14.88 |
+0.05 |
+0.34% |
Vol:14,309,300 |
4:01pm 02/05/02 |
|
 EMC fires two managers after internal investigation
2/5/2002 10:02:00 AM
BOSTON, Feb 5 (Reuters) - EMC Corp., the world's largest maker of data-storage systems, on Tuesday confirmed it fired two managers after investigating the business practices at its professional services branch in Chicago. Hopkinton, Massachusetts-based EMC (EMC) on Friday terminated Manish Shah, a regional director of professional services, and Robert Waltz, a business analyst who worked for Shah, said EMC spokesman Mark Fredrickson. Citing company policy, Fredrickson declined to give a reason for the terminations, but said the matter was small, isolated and involved less than $1 million. He said the case would not have a material effect on EMC, whose 2001 revenue totaled about $7 billion. The Wall Street Journal reported on Tuesday that EMC's internal investigation found irregularities in the booking of customer orders. The Journal said EMC discovered that certain employees were meeting their sales quotas by falsifying customer signatures on service orders performed by an EMC subcontractor. Fredrickson declined to comment on the Journal story. The terminations come after EMC endured a rocky ride in 2001 as stiffer competition and a downturn in spending on data-storage hardware and software triggered a price war in the industry. EMC's sales and stock price tumbled as the company moved to slash spending and reduce its work force. Fredrickson downplayed the investigation in Chicago, saying there won't be any overarching implications on EMC. "It was an extremely small matter. The case is closed as far as we are concerned," Fredrickson told Reuters. He said EMC's investigation took place over the past few months. Shah joined EMC in January 2001. Waltz started work at EMC in October 1999, Fredrickson said. REUTERS Rtr 10:02 02-05-02 Selector Code: reuco
Copyright 2002, Reuters News Service
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To: usconservative
I remember a conference call in Jan 2001 and the EMC Chairman said that even if we have a recession they would still make a huge profit. I remember most of the big firms had them at a strong buy with a target of $120 for the stock. I got out when it was at $90 just before the fall. Then 6 months later when their stock went down 60% the same Chairman said on another conference call that the downturn would cause them to lose billions. He then used 9-11 as an excuse a few months ago ?
Well which is it?
If these people are allowed to flat out lie to sharholders and the brokers can rate them at strong buys just to _on_load_ their stock someone has to go to jail.
AOL is in the same boat and there were alot of articles at least three years ago saying they were cooking the books !
Look where they are now !
The market is gonna melt down because of these greedy bastards and they will be the ones who should get the blame. The buyers and sellers are in it to make money and if we get greedy then it's our own fault. But, we're going on the fact that we aren't being lied to !
To: usconservative
This isn't a scheme, dumbass. Nice try.Just another Wall Street con game rumor to get people to sell their stock. Guess some short sellers are getting pretty desparate to be even posting their nonsense here on Free Republic. So two guys get fired for booking nonexistant orders. Happens everyday at every company. Sure you don't want to tell us about the EMC secratary canned for stealing paper clips?
Richard W.
28
posted on
02/05/2002 12:33:28 PM PST
by
arete
To: arete
Just another Wall Street con game rumor to get people to sell their stock. Guess some short sellers are getting pretty desparate to be even posting their nonsense here on Free Republic. Wild accusation ain't it? Seeing I don't own their stock, I have absolutely NOTHING to gain from posting this story. Funny how people like you jump to those conclusions though.
As a former EMC customer, it's high time these chickens came home to roost. EMC has been an arrogant, obnoxious company to deal with. They are worse than used car dealers, IMO and I used to work with them so I know that they're one and the same!
Anyone who reads the may report (www.themayreport.com) sees what's going on at EMC. EMC and some of their "vendor partners" have been falsely propping up their profits for years now. One vendor partner submitted a SOW -which EMC forecast for profit- to replace a major Chicago based insurance company's entire disk subsystem farm. That's more than 20 EMC SYMM's at once. HA! And they did the same thing with a major airline based out of Chicago! EMC's local rep submitted a phony SOW for a large, chicago based airline to replace all their older EMC SYMM's within a 6 month time period. Problem is, the signatures of the "major chicago airline" personnel were forged, the SOW was submitted and counted as revenue in profit projections, and that pumped up the stock price.
So here's two cases where I personally know people at both shops, who say they NEVER signed SOW's with EMC to perform all this work YET EMC claims to have the SOW's and used them to project profit, which pumped up their stock price. AND, EMC has been doing this for at least the last 5 years now.
So people like you, and some other doofus on this thread accuse ME of being a short-seller or running a scheme? You bozo's don't have a freaking clue what you're talking about or who you're talking to. I've got absolutely nothing to gain personally from this, period. All I'm doing is pointing out yet another corproate giant doing the same thing ENRON did. There's more of this kinda crap to come too. Don't believe me? Look how shaky the markets are.
The markets already know that there's going to be some serious crack-downs on how profits are reported in the future, and that's going to affect market valuations. We ain't seen the worst of it ... not yet we haven't.
And the next idiot on this thread who accuses me of selling short, or spreading unfounded rumors can first kiss my hairy fat white arse, then go do a search on google for EMC on Reuters or API, or just go to cbs market watch.
it's all there ...
To: arete
So two guys get fired for booking nonexistant orders. Happens everyday at every company. Doesn't happen in the company I work for and we are an EMC VAR (as well as others). Our sales policy holds that if the customer does not issue a Purchase Order, you can't book the sale.
---max
30
posted on
02/05/2002 6:12:24 PM PST
by
max61
To: kingh99
I couldn't agree more. That was an excellent post. Democrats, being led by Daschle, are doing everything they can to keep the economy from recovering. They are terrorists in their own right but most people are to dumb to see it. They are purposely trying to cause more panic to lead to more Enrons. They are traitors as much as Walker is.
Comment #32 Removed by Moderator
Comment #33 Removed by Moderator
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