Fraud du Jour

What's next after WorldCon? Is AT&T Corp. (NYSE: T) running its books in Rubles? Is Cisco Systems Inc.'s (Nasdaq: CSCO) vaunted billions in cash actually held in the form of wooden nickels? Is McDonald's shipping barley instead of beef in its burgers?

WorldCom Inc.'s (Nasdaq: WCOM) disastrous announcement today of a $3.7 billion trompe l'oeil leaves the telecommunications industry -- and the entire U.S. capitalist system -- reeling in dismay.

That whooshing sound you hear is the flight of capital out of U.S. markets -- especially technology and telecommunications markets. After today, it might be a better bet to fund your next telecom startup in the Republic of Georgia. There's probably less risk.

Yes, today, things are that bad. Yet a bigger problem is that you still run into people in this industry that just don't get it.

Take Jim Crowe, the CEO of Level 3 Communications Inc. (Nasdaq: LVLT), who continually puts on a face in the popular press, saying that "everything's fine." He won't even admit publicly that the reason he bought software companies was to meet debt covenants (see Level 3 Software Play Has Perils). Who's he fooling? His industry is in crisis, yet his company's fine? We don't buy it and never have.

Better yet, the characters at Qwest Communications International Inc. (NYSE: Q), who say the answer lies in selling Yellow Pages on the street corner. One can only imagine what's going to come to light now that former CEO Joseph Nacchio has fled and a new crew has come in to peruse the books (see Notebaert Takes Out Nacchio)

And what's up with Global Crossing Holdings Ltd.? Can they get it to the chop shop and sell the assets already?

It's as if the telecom industry's sole value now comes in funding the operations of high-powered bankruptcy and securities lawyers who delay mop-up operations indefinitely.

Meanwhile, watch stock prices: They tell you more than you'll ever hear from frightened executives. (Pssst! They're still falling.)

The industry won't get better until all of the closets are emptied of skeletons and the needed bankruptcies are accelerated.

So come on, out with it! Fess up or turn out the lights! You're holding it up for the rest of us!

— R. Scott Raynovich, US Editor, Light Reading
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GreyPonyTail 12/4/2012 | 10:12:16 PM
re: Fraud du Jour I agree with the realist approach here. Your right there are skeletons lurking in many corporate closets. The individual consumer and the business consumer are getting screwed at the cost of greed and idiocy. But asking everyone to come out of that closet and fess up or turn out the lights?!

The economy would nose dive.
VC's wouldn't fund ANYTHING new.
Inovation would be stiffled cause no one would buy into an idea.
Unemployment would skyrocket.
You guys would'nt have anything exciting to write about.
coolhand 12/4/2012 | 10:12:11 PM
re: Fraud du Jour Yes, I think Scott is on target. Just think of all the hard working folks that are impacted due to this neligent behavior. How many familes will be cast on the street?

Come'on - you are in business to make a profit - Job 1 - but once integrity goes [yes the I word] then the money goes too.. Witness the stocks..

Telecom will go back to the mid 80's - a few incumbent vendors serving the ILEC's. Forget about Broadband - who's gonna fund it. Technology is an enabler, but economics drives it.

Tough times for telecom - it will take years to get innovation really restarted.

Scott Raynovich 12/4/2012 | 10:12:06 PM
re: Fraud du Jour GreyPonyTail,

Don't worry, I'm light as a feather. Yippee!
erbiumfiber 12/4/2012 | 10:12:04 PM
re: Fraud du Jour They won't go bankrupt (and they have a little bit to do with telecom), but investigations into their shennanigans of former CEO Dennis K. will provide a summer of amusing/scandalous/greedy revelations to rival those of the Adelphia Rigas brothers...
puddlepup 12/4/2012 | 10:11:50 PM
re: Fraud du Jour As you are asking people to fess up to the mistakes they've made, I have only one question...

Shouldn't it be Fraud de Jour?
Scott Raynovich 12/4/2012 | 10:11:49 PM
re: Fraud du Jour nope
GreyPonyTail 12/4/2012 | 10:11:47 PM
re: Fraud du Jour No worry's dude. I am too. Rock on!
gina 12/4/2012 | 10:11:42 PM
re: Fraud du Jour Not a single word about the Williams communications possible fraud. Is it because
your site is doing tests with them...? If you are interested what other journalist are writing about Williams feel free to check lightreading WCGRQ message board.

Kind regards,
Gina Bern
Scott Raynovich 12/4/2012 | 10:11:41 PM
re: Fraud du Jour puh-leese. All you need to do is search on Williams on LR and you will find we were first to break the "Brosscapades."
gina 12/4/2012 | 10:11:39 PM
re: Fraud du Jour Yes, I know. But don't you think that the Williams story now is worth investigating? The parent company is taking over the spun-off child for pennies, wiping out the shareholders. IMO Enron and WCOM are like amateurs compare to

I understand that you are the owner of this site and can write what ever you like here. And I don't blame you, it's a question of survival now days.
Regards and thanks for not deleting the investigative reports from other journalists that were posted on your WCGRQ message board.

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