Let’s say that a group of corporate executives uses scads of debt to take over a struggling company, sells off some profitable assets, lays off thousands of employees while achieving miserable results. And then, less than a year after saddling the company with $8 billion in debt, they opt for bankruptcy.
You’d expect them to walk the plank, or at the very least, spend a good stretch of time in the naughty corner. But you wouldn’t expect the top 700 managers to collect $66 million in bonuses.
But that’s just what might happen at the Tribune Company. A week ago Friday, lawyers for the company, which publishes The Los Angeles Times, The Chicago Tribune, The Baltimore Sun, and owns other newspapers and television stations, were in Federal Bankruptcy Court in Delaware suggesting that the proposed 2009 bonuses were critical for the health and survival of the company.
At a hearing on the bonuses, a union accountant testified that if the maximum incentives were paid, they would eat up 15.5 percent of operating cash flow.
The bonus plan, which is an effort to replace awards of equity given to managers in the past, was announced in February, just about the time that the company was issuing memos about wage freezes and “shared sacrifice.” At a hearing in May on the previous year’s bonuses, which the bankruptcy judge granted, Mr. Bigelow said, “I will tell you that not being rewarded for hard work and hard effort is demotivating.”
Simmons says it will soon file for bankruptcy protection, as part of an agreement by its current owners to sell the company — the seventh time it has been sold in a little more than two decades — all after being owned for short periods by a parade of different investment groups, known as private equity firms, which try to buy undervalued companies, mostly with borrowed money.
For many of the company’s investors, the sale will be a disaster. Its bondholders alone stand to lose more than $575 million. The company’s downfall has also devastated employees like Noble Rogers, who worked for 22 years at Simmons, most of that time at a factory outside Atlanta. He is one of 1,000 employees — more than one-quarter of the work force — laid off last year.
But Thomas H. Lee Partners of Boston has not only escaped unscathed, it has made a profit. The investment firm, which bought Simmons in 2003, has pocketed around $77 million in profit, even as the company’s fortunes have declined. THL collected hundreds of millions of dollars from the company in the form of special dividends. It also paid itself millions more in fees, first for buying the company, then for helping run it. Last year, the firm even gave itself a small raise.
Wall Street investment banks also cashed in. They collected millions for helping to arrange the takeovers and for selling the bonds that made those deals possible. All told, the various private equity owners have made around $750 million in profits from Simmons over the years.
How so many people could make so much money on a company that has been driven into bankruptcy is a tale of these financial times and an example of a growing phenomenon in corporate America.
Every step along the way, the buyers put Simmons deeper into debt. The financiers borrowed more and more money to pay ever higher prices for the company, enabling each previous owner to cash out profitably.
But the load weighed down an otherwise healthy company. Today, Simmons owes $1.3 billion, compared with just $164 million in 1991, when it began to become a Wall Street version of “Flip This House.”
A Ministry of Defence guide to preventing information leaking into the public domain has leaked into the public domain.
There was what President Obama likes to call a teachable moment last week, when the International Olympic Committee rejected Chicago’s bid to be host of the 2016 Summer Games.
“Cheers erupted” at the headquarters of the conservative Weekly Standard, according to a blog post by a member of the magazine’s staff, with the headline “Obama loses! Obama loses!” Rush Limbaugh declared himself “gleeful.” “World Rejects Obama,” gloated the Drudge Report. And so on.
So what did we learn from this moment? For one thing, we learned that the modern conservative movement, which dominates the modern Republican Party, has the emotional maturity of a bratty 13-year-old.
But more important, the episode illustrated an essential truth about the state of American politics: at this point, the guiding principle of one of our nation’s two great political parties is spite pure and simple. If Republicans think something might be good for the president, they’re against it — whether or not it’s good for America.
50 years ago today, IBM announced the 1401 Data Processing System.
Originally designed as a spooling system for the larger machines, the 1401 became very popular as a mainframe in its own right, eventually being called ‘The Model T of Computers’. By the end of 1961, the number of 1401s installed in the United States alone had reached 2,000 – representing about one fourth of all computers installed by all manufacturers at that time. 15- 20,000 were eventually built.
Here’s what $125,600 (or $2500/month rent) would get you:
1401- 6-bit processor with 1400 bytes of core storage. Clock speed 87KHz
1402- combination card reader (800 cards per minute) & punch (250 cards per minute)
1403- 600 lpm printer
If you’re willing to spend more you could get up to 16k of memory by getting a 1406
Then you might want some 729s (featured here) for card to tape or tape to print operations, at $30k-60k apiece.
If you need some disk space, you could try the 1405, for up to 20MB.
The processor was approximately 30″x58″x58″, and used a 30A, 208V power connector (3 phase). The entire system needed 23,000 BTU of cooling per hour.
The Computer History Museum has been restoring two systems for the last 5 years, the second of which it acquired from a father and son who were using it to operate a billing service business until 1995 out of their home in Darien, Connecticut.
Those without access to their own 1401 can download an emulator.
Linux creator Linus Torvalds says the open source kernel has become “bloated and huge,” with no midriff-slimming diet plan in sight.
During a roundtable discussion at LinuxCon in Portland, Oregon this afternoon, moderator and Novell distinguished engineer James Bottomley asked Tovalds whether Linux kernel features were being released too fast, before the kernel is stabilized.
Citing an internal Intel study that tracked kernel releases, Bottomley said Linux performance had dropped about two per centage points at every release, for a cumulative drop of about 12 per cent over the last ten releases. “Is this a problem?” he asked.
“We’re getting bloated and huge. Yes, it’s a problem,” said Torvalds.