COPYRIGHT Paranoia by Joseph Finder. Copyright 2004 by Joseph Finder. All Rights Reserved. Sharing not permitted.
Part Four: 44 (Cont'd)
"Last night when I got the e-mail alert about this article," Camilletti said, "I fired off e-mails to the VP/Finance for Europe and for Asia/Pacific telling them I wanted to see all the revenue numbers as of this week, the QTD sales revenue numbers broken down by customer."
"And?" prompted Goddard.
"Covington in Brussels just got back to me an hour ago, Brody in Singapore in the middle of the night, and the numbers look like crap. The sell-in was strong, but the sell-through has been terrible. Between Asia/Pacific and EMEA, that's sixty percent of our revenue, and we're falling off a cliff. The fact is, Jock, we're going to miss this quarter, and miss big. It's a flat-out disaster."
Goddard glanced at me. "You're obviously hearing some privileged, non-public information, Adam, let's be clear about that, not a word—"
"The revenue from AURORA is several quarters off," said Camilletti. "We've got to manage for now. For current operations. And let me tell you, when these numbers come out, the stock's going to take a huge hit," Camilletti went on. He spoke in a low voice. "Our revenues for the fourth quarter are going to be off by twenty-five percent. We're going to have to take a significant charge for excess inventory."
Camilletti paused, gave Goddard a significant look. "I'm estimating a pretax loss of close to half a billion dollars."
Goddard winced. "My God."
Camilletti went on, "I happen to know that CS First Boston is already about to downgrade us from 'overweight' to 'market weight.' That's from a 'buy' to a 'hold.' And that's before any of this comes out."
"Good Lord," Goddard said, groaning and shaking his head. "It's so absurd, given what we know we have in the pipeline."
"That's why we need to take another look at this," Camilletti said, jabbing his copy of the blue Bain document with his index finger.
Goddard's fingers drummed on the Bain study. His fingers, I noticed, were chubby, the back of his hands liver-spotted. "And quite the handsomely bound report it is, too," he said. "You never told me what it cost us."
"You don't want to know," Camilletti said.
"I don't, do I?" He grimaced, as if he'd made his point. "Paul, I swore I would never do this. I gave my word."
"Christ, Jock, if this is about your ego, your vanity—"
"This is about keeping my word. It's also about my credibility."
"Well, you should never have made such a promise. Never say never. In any case, you were talking in a different economy—prehistoric times. The Mesozoic Era, for God's sake. Rocketship Trion, growing at warp speed. We're one of the few high-tech companies that hasn't gone through layoffs yet."
"Adam," Goddard said, turning to me and looking over his glasses, "have you had a chance to plow through all this gobbledygook?"
I shook my head. "Just got it a few minutes ago. I've skimmed it."
"I want you to look closely at the projections for consumer electronics. Page eighty-something. You have some familiarity with that."
"Right now?" I asked.
"Right now. And tell me if they look realistic to you."
"Jock," said Jim Colvin, "it's just about impossible to get honest projections from any of the division heads. They're all protecting their head count, guarding their turf."
"That's why Adam's here," Goddard replied. "He doesn't have turf to protect."
I frantically thumbed through the Bain report, trying to look like I knew what I was doing.
"Paul," Goddard said, "we've gone through all this before. You're going to tell me we have to slash eight thousand jobs if we want to be lean and mean."
"No, Jock, if we want to remain solvent. And it's more like ten thousand jobs."
"Right. So tell me something. Nowhere in this darned treatise does it say that a company that downsizes or right-sizes or whatever the hell you want to call it is ever better off in the long run. All you hear about is the short term." Camilletti looked like he was about to respond, but Goddard kept going. "Oh, I know, everyone does it. It's a knee-jerk response. Business stinks? Get rid of some people. Throw the ballast overboard. But do layoffs ever really lead to a sustained increase in share price, or market share? Hell, Paul, you know as well as I do that as soon as the skies clear up again we just end up hiring most of 'em back. Is it really worth all the goddamned turmoil?"
"Jock," Jim Colvin said, "it's what they call the Eighty-Twenty Rule—twenty percent of the people do eighty percent of the work. We're just cutting the fat."