-------------------------------Toby Harshaw, Letters Editor THE NEW YORK TIMES New York, NY
Subject: Letter to the editor Re. "Value of Spin on Wall Street is $15 Billion to 2 Companies" (5/15/98)
Dear Mr. Harshaw,
A front-page Business Day story alleges in its headline that, "Value of Spin on Wall Street is $15 Billion to 2 Companies." It is not. The value of "spin" has cost IBM shareholders some $20 billion and counting; $7.1 billion of it in 1997 alone. That's how much IBM has paid to Wall Street in stock buybacks for a favorable "spin," its lackluster business fundamentals notwithstanding. By contrast, HP has been paying off Wall Street at a rate of "only" about $1 billion a year. And one thing Wall Street does know how to do is - count the money.
Your article also alleges that, "obviously, Gerstner knows how to manage the Wall Street community well." Your editors must have short memories. On April 17, 1996, for example, IBM's stock dropped like a rock following its first quarter earnings announcement. Nearly $7 billion-worth of shareholders' value was wiped out in less than a day. And on Jan. 21 of this year, following IBM's release of the final 1997 results, about $8 billion of its value vanished in 6 ½ hours of trading. That was equivalent of about 80% of the aggregate net earnings over the five years that Gerstner had been chairman and CEO of IBM.
As for the value of the positive New York Times spin, could it be that its editors' memory was shortened by an eight-page ad which IBM placed on Apr. 21 (yes, 8 full pages!)?
Also check out..."IBM Argentina Bribe Scandal", "Let the Bombing Begin? Not!" , "What's Good for the Goose..." and "Journal's Rotten Apples" (Wall Street Journal); and "Stock buybacks: Wall St.'s duping of Main St.", Business Week).