Reconnaissance

RECONNAISSANCE

There is no time in the world for all of the reading we would like to do to keep up with news, business, technology, law and politics--and other light fiction. Please check this page for items you may not have noticed before recycling the papers. If you would like to add something here with your own name and contact information, please let me know.

NEWS

Image © igenkin.iStockPhoto

Food for Thought:

What's New in Gov't and Cybersecurity? (RSS)
What's New in IT? (RSS)

SEC Enforcers: They've Got a Ticket to Trade You thought perhaps that SEC enforcers had to put their investments in a blind trust? Not so. Try 200 trades in one year. Now after we, briefly, heard how former SEC senior inspections and examination official Eric Swanson married Madoff niece and compliance attorney Shana Madoff, we hear that three SEC enforcers are under investigation for insider trading. In what looks like a very busy year for SEC inspector general David Kotz, the SEC started out examining the relationship between the Madoffs and Swanson, now general counsel for a new electronic stock exchange, Bats Trading, who not only was in charge of examination of the Madoff operations, but, yes, is a former supervisor of the SEC's "inspection program in charge of trading oversight at stock exchanges and electronic-trading platforms," according to the Wall Street Journal. Meanwhile Forbes details several interesting developments: SEC enforcement staffers, including two attorneys, are being investigated for trades in a financial institution while it was being investigated by the SEC. One of the attorneys spent a substantial proportion of her time at the office researching and trading stocks, 247 trades over two years, reflecting lax oversight, rules and and internal enforcement. And just try to investigate an insider trading case against Wall Street outsider like Martha Stewart, Mark Cuban, or Steven Jobs. David Kotz concluded in 2008 that when in 2005 then SEC staffer Gary Aguirre even tried to interview a Wall Street megafigure regarding a case involving a star hedge fund and star investment bank, Aguirre was fired by the SEC which then mounted a cover up. How level is your trading field?

As if Swine Flu Were Not Enough: Conficker at the Hospital Near You

Fierce CIO reports that the Conficker worm has spread to diagnostic systems, such as MRI's and workstations in hospitals. That makes no one feel any better about going to a hospital as the world analyzes the pandemic potential of swine flu as continent to continent the cases share a unique genetic ID: of "human virus, avian virus from North America and pig viruses from North America, Europe and Asia," acccording to the CDC and Mike Stobbe of AP.

What Color Is Your Parachute? The Financial Times reports that lately on the Continent, when CEO's ditch, the boards are appointing
one of their own to run the company rather than rely on a groomed in-house successor and any, if any, presumably, carefully drafted succession plan. The FT reports that boards are doing so because the remaining managers, who once would have been thought heirs apparent, have so many boom years and so few bad years under their belt that these managers are perceived not to have the skill sets for this financial crisis, by and large the predicament precipitating the CEO's departure. I note the very interesting point, however, that the directors or their friends now being appointed to be CEO tend to have tangential to no industry experience: Lemoine (Areva, nuclear power) to Wendel, private equity; Quiros, (Prosegur) to Metrovacesa; Perol (Sarkozy Deputy chief of Staff appointed by Sarkozy) to Groupe Caisse/Banque Populaire; Verin (Corus) to Peugeot-Citroen. (FT, April 20, 2009) The question then is how successful these new leaders can hope to be when they not only don't know the company, they don't necessarily know enough about the industry to ask the questions. Meanwhile Total is merging the positions of CEO and Chairman, back again. (FT, April 20, 2009.) Separating the roles only does good when you think the CEO is bad and strong arming the company and the board, but then that suggests we need a different calculus for choosing CEO's and boards. Perhaps a little less arrogance and compensation. lowering the stakes, would get CEO's and boards back into perspective. Does power corrupt or is it money?

When Microsoft Falls; You Need Your Parachute: It happened. It happened for the first time in in its history, our history. Microsoft quarterly revenues fell 5.6% YOY and profits collapsed 32 %. What Neelie Kroes and the EC antitrust case, the US and the antitrust case, ASP's and Open Source have never been able to do, and Cloud computing has not had the time to do, this recession did, in spades. Distracted perhaps by Office Live and other Internet services likely to further provoke antitrust enforcement, Microsoft has seen segment after segment chewed away as the economy hunkers down.

Is That The Way GM Was Supposed To Do Business? Of course, in the bad firings category is Rick Wagoner, former CEO of GM, forced to resgn at mic point by Steve Rattner, the would be Auto Tsar who is himself with his Quadrangle Group now under federal and state investigation into a kick back scheme for obtaining investment funds from the NY State Common Retirement Fund. (WSJ, April 17. Quadrangle and Rattner, not accused but through a an affiliate did pay $88,000 for rights to a movie produced by the NY State Deputy Controller and family, as well as a $1 million (legal) finders fee.) Criticism of GM's Rick Wagoner is of course that he increased Union wages to irresponsible levels and gave Americans the SUV's and trucks they wanted rather than the hybrids and compacts which went into high gear only with the Peak Oil price hype and trauma. One could have sworn it was the very political factions which now criticize GM which enforced the power of the Unions, even amid thei endless bruising strikes. The banks may take billions and billions in federal funds, but it is not Jamie Dimon and Ken Lewis who are forced out even though it is the financial services' credit debacle which has finally devastated the auto industry. Apparently for the sin of burning gasoline and creating CO₂,the auto industry faces punishment by death. That leaves the U.S. without a viable auto industry. Beyond the economic destruction, can anyone seriously want that?. Do we leave that industry to Asia too? And in event of war, what then? (Wars will continue to happen.)

Think Loan Recovery Rates Low at Below 25% This Time Around? Try 2% for bonds. That was the result for Lyondell at auction, also according to the Financial Times, April 20. Where does that leave Mezzanine? Try 8.5%, according to Fitch Ratings. More money lost. The cascade downward continues.

Who Says M & A Is Dead? With prices this cheap, bring them on? Oracle buys Sun Microsystems for $7.6 billion. Is this a good deal for Oracle? With almost 3 times the number of employees as Sun, in 2008, Oracle turned $22.43 billion in revenues into $5.52 billion in profits, while Sun turned $13.88 billion in revenues into a mere $403 million in profits. And now Q3 results show that Sun's reven ues fell by more than 30%, and it posted a loss of $201 million for the quarter, with $46 million in restructuring costs alone. Oracle gets Sun's cash but also debt.

That's a lot of Java.

Who Says IPO's Are Dead? Rosetta stone smashed through that barrier, rising 40% above its IPO price on the first day. Perhaps this will give encouragement to the VC sector, or to new entrants into the sector, as the veteran VC's still assess the carnage which perhaps began with start ups' loss of cash which had been invested in auction rate securities as first noted by the Wall Street Journal back at the beginning of the collapse, spring, 2008, as was a problem in Seattle (Seattle Business Journal),,Silicon Valley (Wall Street Journal), and elsewhere. In 2009 auction-rate securities investments still pose a critical problem to businesses and their owners, according to Bloomberg.

USEFUL TECHNOLOGY

Image © JosephJustice.iStockPhoto

Your Cell On Lockdown: How much vital confidential data do you push through your cellphone, your BB or your iPhone? Ever lose your device and worry? Ever wonder where it's been? Ever forget your password? According to Apple Insider, Apple understands and has invented a means to embed biometric sensors in the iPhone for immediate recognition of you, the rightful owner, by fingerprint, retinal pattern or facial structure recognition without your having to wait for a scan.

Green Winds Blow: Under pressure to make your facilities green? Wind and solar are almost there. Coordinate it with Green rain collection tchnology, and you look a lot better. There are several vertically axis wind turbines (VAWT) (See this Ecobusiness site.) which approach the power needs, equipment footprints and "ecosystem" considerations of noise, visual appearance, visual field disturbance and bird chop for a small facility, even above the urban forest, or make distributed energy make sense for a remote facility. These go beyond the pitiful 500 watts and 1.2-1.5 kilowatts technology which has been batted around for the past decade and beyond 10 kilowatts to promise 50 and 100 kilowatt models,as from Everwind in Ontario. They shut off in high wind, begin to cruise on low wind and could actually make a difference. Quiet Revolution's Qr5 manufactured in the UK can produce up to 10,000 kWh but its Qr12 in development stages will produce around 50,000 kwh. Regenedyne is developing an industrial class turbine, the MagLev, anticipated to replace standard wind farms with one central device on a kilometer of land. VAWT's are expensive and you need to look at the warranties.

USEFUL READING

Boards of Directors: Directors often ask me for a quick read on the duties, liabilities and environment of boards of directors. There are two, one which you can read in an evening on the deck or on the terrace and is now a bit out of date (ABA), and one which you can use as an ongoing reference (Lipman) for the tricky situations you find.
Technology: There is no better source than InformationWeek, online and in print, for keeping up with developments in information technology. In a really cool feature, you can install a shortcut on your BlackBerry which will enable you to browse news about technology, security and software while you're waiting on line at Starbucks or waiting for the conference to begin.