When it comes to companies, the less murk, the better.
In the new edition of London Review of Books, author and journalist John Lanchester points out that three recent corporate “outrages” – the sale of UK lender Northern Rock to Virgin Money, the collapse of MF Global, and the Olympus scandal – share “a crucial similarity”:
An interested outside party, paying the closest of attention, and immersing herself in all the publicly available information, would have had no chance of knowing what was really going on.
Whether or not Pfizer’s tactics to preserve Lipitor sales as it loses its patent protection succeed, they are a sobering reflection of the lack of success of big pharmaceutical companies in trying to replicate their past days of blockbuster glory.
Alan Rappeport’s report on how Pfizer is heavily cutting the price of its anti-cholesterol drug to see off generic competition illustrates how important blockbuster drugs from the past remain to Big Pharma.
As Forbes noted in a long piece on Lipitor, this reflects the prolonged squeeze on pharma companies, which have been struggling to come up with new products to replace those now falling off the patent cliff – Lipitor being the prime example. Read more
American Airlines finally plummeted into bankruptcy last week, eight years after workers’ wage concessions seemed to have helped parent AMR plot a route out of disaster. Managers hadn’t wrung enough from the workforce in 2003, some claimed. The staff hadn’t pulled their weight since, said others. Many concurred that the “discipline” of bankruptcy would have been good for American.
Fraud did not directly trigger Enron’s bankruptcy 10 years ago. The underlying criminal conspiracy was only fully revealed later. Enron’s failure was, initially, due to a classic collapse in counterparty confidence. It was a death spiral – starkly familiar to everyone who watched the 2008 implosion of Lehman Brothers – that ended on December 2 2001.
It is too easy to blame the energy trader’s demise only on bad people doing bad deeds and fail to learn the lessons. Plenty of watchdogs that should have barked in 2001, if not earlier – directors, auditors and regulators, of course, but also rating agencies, Wall Street research analysts, investors and, yes, the media – kept quiet. Read more