ShadowRAM: May 27, 2002
- LEGATO GETS REPRIMAND FROM SEC
- IBM ROLLS OUT RED CARPET FOR KEY SOLUTION PROVIDERS
- SUN SEEMS RIGHT AT HOME ON THE PEACOCK NETWORK
- Networking software maker Legato Systems last week closed out a long-running issue with the Securities and Exchange Commission stemming from its treatment of large enterprise deals sold through resellers in 1999.
- According to the SEC, Legato sold the enterprise license agreements through VARs to some government accounts and recognized the revenue in its financial reports,but also gave the VARs "side letters" that enabled them to back out of any agreements.
- One of the side letters the SEC got its hands on seemed to spell out the reason for Legato's strategy: "In the unlikely event that we do not reach 'mutually agreeable terms and conditions,' (reseller) will have the right to terminate the order letter and all obligations," wrote Legato's unnamed but now former North American sales vice president. "This contingency may not be expressly stated in the order letter because of the impact on revenue recognition."
- The side letters were never reported, the deals ultimately fell through, and Legato was forced to restate its earnings. The SEC said it was only giving Legato and its ex-CFO a "cease-and-desist" order,in part because the company took quick action to correct the irregularities. (Legal terminology for "Bad boy! Don't do that again!")
- This makes us wonder how many side letters from other vendors there might be floating around out there that the SEC doesn't know about. If you've gotten one, drop us a line at [email protected].
- We hear that IBM gave the red-carpet treatment last week to 170 of its "cream-of-the-crop" solution providers, inviting them to a confab in Naples, Fla., for a day or so of meetings and strategy sessions. The computer giant,whose CEO, Sam Palmisano, quietly laid off about 1,500 employees, mostly from IBM's server group, late last week, a move expected by just about everyone,wooed the solution providers by telling them how much IBM needs them, the opportunity out there if they work together, yada, yada, yada.
- We didn't hear that any specific promises were made, but IBM has put the word out through the analyst community that it expects its mainframe sales to spike this quarter, with the number of MIPS shipments to show some healthy growth.
- Meanwhile, on the left coast, Microsoft is staffing a new group called Knowledge Worker Solutions with about 50 new people who will be working out of the old Visio headquarters in Seattle, sources said.
- Jeff Dachis may be gone, but he's not forgotten. Razorfish,remember that one?,revealed in its proxy statement that before he quit as CEO last year, Dachis received stock options that could be worth $8.8 million by the time they vest. Maybe that's a tad optimistic, as the once high-flying Web integrator, whose shares once traded at upward of $50 per share, are now down to less than a quarter. The company is hoping a reverse stock split, which will be the subject of a shareholder vote set for July 11, will keep Nasdaq from delisting it.
- Seems like you can't sit through a prime-time television show on NBC these days without being bombarded by commercials for Sun Microsystems. Maybe Sun Chairman and CEO Scott McNealy is finally getting a "director's discount" on ad time at NBC, since he's on the board at GE, which owns the Peacock network. Speaking of NBC, does anybody know when the network's commitment to the MSNBC partnership with Microsoft runs out?