Good morning
The headlines:
- Adoboli sentenced.
Link: the jury is in.
The ex-UPS trader with the $2.3 billion trading loss was convicted yesterday of fraud and sentenced to 7 years in prison.
But all is not lost. The trial itself had all the juicy hypocrisy of a bad Shakespearean spoof: the boys who “sold him down the river”*; his boss, a Mr Hughes, confessing via email “I love and loathe you in equal measure”; accusations of false accounting entries; high salaries; massive losses; bar meetings…
Mr Adoboli has a lifetime ahead of biographies, film versions and invitations to lecture at the LSE about banking excess.
It’s great to be a trader.
*according to the text messages sent on the night before he confessed.
- Ceasefire.
Link: but only from 9 o’clock sharp.
The ceasefire took effect at 9pm local time last night. And there were still bomb sirens going off in the hour before the ceasefire came into effect.
Building and Construction shares on the Tel Aviv stock exchange? Anyone?
- Autonomy.
Link: an update of accusation.
Former Autonomy CEO, Mike Lynch:
“After being ambushed by all this yesterday, I’ve had a chance to look at some of the things that they’re saying – it just doesn’t add up.“
Well when you put it that way, it does sound bizarre that $200 million of incorrectly-recorded revenue caused $5 billion of an $8.8 billion write-down.
On the other hand – if we assume that the $200 million was completely false, then that means that the profits, and forecasted future profits, would all have been based on a number that began life significantly overstated. And if you say that the company was bought at a Price-Earnings multiple of 25 (and, after all, FACEBOOK was first sold at a PE multiple of, like 107), then a shortfall of $5 billion is bang on the money. Ironically.
Outside the realm of possibility? Hardly. High tech companies often have high PE ratios. Even in today’s market, Facebook has a PE ratio of 126… Crazier things have happened!
- Hostess judge.
Link: “yes, liquidate”.
After giving everyone a last chance to reconsider, the Hostess/Twinkies judge has recommended/allowed liquidation. 15,000 workers will be fired immediately so that they can start applying for unemployment benefits.
The real question is whether this will still be supervised by the current management team of Hostess, or whether the supervision of the process will be handed over to a court-appointed trustee.
Bankruptcies are a sad time. Particularly as we will see more of them as the recession multiplier grows.
That’s all for now.
Have a good day.
