IBM

  • 07 Jun 2007 at 3:18 PM
  • IBM

Tax Man Wipes Out Killer Bees

killerbtaxesibm.jpgSo the Internal Revenue Service has shut down the Killer B, the tax shelter that has helped fuel the stock buyback programs of many companies with foreign earnings, proving once again that the first rule of Tax Shelter Club is “Do Not Talk About Tax Shelter Club.”
The Killer B, named for a provision of the tax code governing certain corporate reorganizations, was a tax-shelter scheme that was well-known among lawyers and corporate accountants. It’s use was thought to be fairly common among corporations with substantial foreign earnings. Essentially, companies employed it as a way of repatriating foreign profits for the benefit of shareholder without getting hit by US corporate taxes. Surprisingly, however, the Internal Revenue Service seems only to have learned of it when IBM publicly disclosed that it had employed the shelter in connection with a recent stock repurchase. And once it got word of the Killer B, the IRS acted quickly to shut it down.
[After the jump: How the Cold War gave birth to the Killer B.]

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underpants-gnomes.jpg IBM settled with the SEC, without admitting any wrongdoing, over charges that it deliberately used a misleading chart (pictured) in a 2005 earnings call. The IBM chart in question portrayed the impact of expensing employee stock options on EPS in 2005. IBM said in the chart that the negative impact of expensing employee stock options would be 14 cents a share in Q1 and 55 cents in 2005, despite internal estimates that EPS would dip by only 10 cents a share in Q1 and 39 cents a share in 2005.
IBM produced the bogus numbers because it didn’t want analysts to increase the company’s expected growth rate, in a partial attempt to offset an increased pension cost. No IBM executives were named in the complaint and the company was not fined. IBM did agree to not do anything wrong in the future. Let that be a warning to companies that want to make up numbers. The SEC’s teeth are awfully sharp.
Did IBM Show Analysts a Phony Chart? [CFO.com]

  • 25 May 2007 at 11:50 AM
  • IBM

IBM does not support our troops

platoon.jpg Just when you thought IBM’s strain of red, white, and at least Blue ran a little Deeper, the company refuses to give the brave men and women who fight overseas a chance to succeed in corporate America. IBM faces a $5mm lawsuit for firing Vietnam War veteran James Pacenza for treating his post-traumatic stress disorder. His medicine just happens to be cyber sex. From the BCC:

Mr Pacenza says that seeing his best friend killed in action while they were on patrol in Vietnam in 1969 brought on his post-traumatic stress disorder. He says that his psychological problems have left him addicted to sex, especially adult internet chat rooms. When a fellow employee at IBM told managers that Mr Pacenza was visiting such sites while at work, he was fired. The stated reason was that he visited an internet chat site for a sexual experience after he had previously been warned.

Pacenza’s lawyers claim that sex addicts don’t get a fair shake, and that the “disease” should be treated like alcoholism (as a great PR move?), or rabies.
US ‘sex addict’ sues over firing [BBC]