Tuesday, December 19, 2006

No one cares about Si Valley scandals

The business pages have been relentlessly trashing Si Valley companies because of the stock option and HP spying scandals. And yet no one really case. The Si Valley paper reports:
So far this year more than 40 of Silicon Valley's biggest companies have been entangled in the [stock option backdating] scandal -- yet their stock prices are up an average of 19 percent, with a median gain of 8 percent. This exceeds the 13 percent gain for the Mercury News 150 and the 11 percent gain in the tech-heavy Nasdaq index. Though one-third of the implicated companies have seen their stocks sink this year, they're outnumbered by the companies enjoying double-digit gains.

The options scandal ranks as one of the most far-reaching in U.S. corporate history. It has toppled more than 60 executives and directors, forced scores of companies to make restatements topping $5.7 billion and triggered more than 325 lawsuits. Yet investors apparently are betting that factors like rising sales and profits outweigh the unquantifiable risk of the scandal's collateral damage.
The next day, it also reported:
Applicants flood HP: Hewlett-Packard's spying scandal may have battered the legendary computer company's reputation, but plenty of folks still want to work there.

The Palo Alto giant, whose 150,000 employees are spread across every time zone on Earth, said hiring is still on track. Even though news surfaced during the first week of September and dominated front-page headlines throughout the month that HP had used deceit to obtain the private phone records of board members and journalists to trace leaks to the media, the company received 102,000 applications from external job candidates that month -- more than twice the 44,800 applications it received in November 2005.

According to the company, the number of external job seekers knocking on HP's door over the past year "has been steadily rising".
These scandals might sell newspapers or give govt bureaucrats something to do, but the investors, employees, and customers just don't care. They may even be mystified as to why anyone would even consider these scandals. It is not obvious that anything was illegal or unethical, and it is doubtful whether anyone was really harmed.

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