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Study: Tech Firm Web Sites Lack Basic Information
A report in the August 19th issue of The Wall Street Journal examines the results of a recent study of corporate Web sites at technology companies. The study, produced by the consulting firm Shelley Taylor & Associates, found that many sites make it harder than neccessary for customers, investors, and prospective employees to contact them or gather information. According to the study, only four of the sampled sites provide the name of a customer contact person, and only 16 of the 50 sites allow customers to make on-line purchases without going through a registration procedure that could take several days.
The study found the investors in technology companies fare the worst of all users, despite the companies' high level of interest on Wall Street. Only about a third of the sites provide the name of an investor relations contact, or enable investors to request financial literature. Although 49 of 50 technology firms provide information about job openings, half don't allow prospective employees to submit employment application electronically. Only 10 of the sites provided the name of a person to contact about a job, and 42 sites didn't include the date the job was posted.
According to the study, several of the lowest-ranking companies, in terms of dispensing information about themselves, are some of the most popular Web sites. Both Yahoo! Inc. and Excite Inc. were ranked close to the bottom. According to Shelley Taylor, the managing director of the London consulting firm that produced the study, Silicon Valley technology companies have different priorities than multinational firms. The differences show up in their corporate Web sites. The article was written by Journal staff writer Don Clark and appears on page B5.
Mike Barnicle Resigns from Boston Globe
Mike Barnicle, the Boston Globe columnist who was suspended earlier this month, then asked to resign, then granted a reprieve from being fired, was forced to quit today after his editors could not confirm the existence of two cancer-stricken children he wrote about in a 1995 column.
The Globe acted after Kenneth Tomlinson, a retired Reader's Digest editor and former director of the Voice of America, alerted the Globe about the column, which Tomlinson wanted to reprint until he found that his fact-checkers could not confirm the childrens' existence. The Globe caught Barnicle in a apparent lie when he acknowledged that he had never spoken to either of the cancer victims' families described in the column.
Barnicle's editor at the Globe, Matthew Storin, claimed that Barnicle's journalistic transgressions were "a sufficient violation of journalistic ethics to merit ending his career here." Globe Assistant Managing Editor Walter Robinson said: "The fact of the matter is, even if we accept it at face value how he got the story, the reporting standards he admits to are so abysmally low as to be a disgrace to this newspaper."
According to The Washington Post, Barnicle came under heightened scrutiny two months ago when the Globe accepted the resignation of Patricia Smith, a black Globe columinist who acknowledged fabricating parts of four columns. Critics inside and outside the paper questioned why Smith was fired while Barnicle had been accused of making up material and plagerism over the years. The article was written by Post staff writers Howard Kurtz and Pamela Ferdinand and appears on page B1.
WSJ: Russians Accounting by Soviet Standards
A front page report in the August 20th issue of The Wall Street Journal bemoans the sad state of Russia's financial data and accounting practices. Although the Soviet Union fell apart seven years ago, Russia's businesses still use Soviet-era accounting methods - with disasterous results.
Like communism, Soviet-era accounting practices are completely at odds with those of Western capitalist economies. Accounting in the Soviet era was never designed to account for profits. Soviet accountants served as the state's quartermasters. In a system driven by production rather than profit, they tracked the flow of inputs andoutputs - without caring whether value had been added or subtracted, money made or lost.
The fundamental purpose of accounts in Russia is still to help the state (formerly central planners and now the tax police) stop people from stealing by keeping track of inventories, not to help managers develop their businesses. Encumbered by the past, Russian accounting impedes the way business works in a market-driven economy.
During the Soviet era, central planners set depreciation rates that were completely inaccurate. These are still being used. Russian banks still keep bad loans on the books for years. The Soviet system didn't bother to advertise products and services, or with accounting for costs of employee training or business travel. In Russia today these costs are an important part of doing business. Russian firms also have difficulty accounting for employee benefits like housing and health care.
According to the Journal, the Soviet era had a profoundly negative effect not only on accounting and finance, but on the Russian economic, statistical, and tax systems. The Russian economic system is largely based on barter. The state statistical system still churns out data of dubious quality. The tax system pits increasingly punitive tax collectors against increasingly sophisticated tax evaders.
Unfortunately, the Journal article fails to mention the increasing disparity between the haves and have nots since the collapse of the Soviet Union, and the Russian peoples' reluctance to give up more of the socioeconomic "safety net" they had under Communism. The article was written by Journal staff writer Andrew Higgins.
NSA Overwhelmed by Data?
A report in the August 20th issue of The New York Times characterizes the U.S. National Security Agency as being overwhelmed by data from surveillance satellites and other modes of electronic surveillance. According to the Times, the NSA is supplanting the CIA as the primary source of information about terrorist groups like the one that was accused of bombing American embassies in Kenya and Tanzania. According to the Times's Congressional sources, the U.S. Central Intelligence Agency's human capabilities have dwindled since the end of the cold war. At the same time, the most violent foreign terrorist organizations have become nearly impossible for agents to penetrate. Many are made up almost exclusively of members who have known one another for generations. Some groups have divided into semi-autonomous cells. Therefore one small group may not know the plans or even of the existence of otheres within the same organization.
On the other hand, even the most tightly knit terrorist group must occasionally communicate. From various orbits in space, NSA satellites can "listen in" on all types of communications - telephone, telegraph, optical, and a wide spectrum of radio frequencies. Moreover, NSA has the brute supercomputer power to decrypt almost all communications that are encrypted by algorithms. (Unfortunately, messages encoded using random characters generated by simple expedients - decks of well-shuffled playing cards for example - cannot be decrypted from radio intercepts. Nor are communications intercepted on "noisy" channels of much use to the NSA. In 1993, Somali clans successfully used Radio Shack citizens band "walkie-talkies" for short range daytime tactical communications over extremely noisy CB channels against a U.S. Army expeditionary force. And during the Vietnam conflict, North Vietnamese soldiers were ordered to wander around North and South Vietnam sending coded radio messages to nonexistent units.)
According to the Times, the sheer volume of raw data NSA supercomputers have to sift through is awesome. Several million new cellular telephone numbers are activated in the Third World alone every year. Several million new cordless telephones are sold each year in Third World countries. And Third World governments are increasingly using algorithm-generated encryption.
According to the Times, even with supercomputers searching through communications for specific words and phrases, NSA is able to process only about 1% of its intercepts. The Times believes that NSA needs hundreds more analysts to process incoming data, not more satellites and supercomputers to pull in and sift through more phone calls. The article was written by James Bamford (author of a recent book about the NSA) and appears on page A27.
NWS Modernization - Future Data Quality Problems?
A report in the August 18th issue of The Washington Post questions what will happen to weather data when the 12,000 volunteers who take weather measurements for the U.S. National Weather Service are "phased out" in favor of automated data collection.
The National Weather Service's Cooperative Observer Network was created in 1890 to collect weather data for American agricultural industries. Observers include individuals, corporations, airports, and universities. The data the observers collect is used by a variety of public and private interests for estimating drought frequency, predicting fire-fighting conditions, developing architectural design criteria, estimating labor needs, and more. The data the volunteer observers provide allows for accurate analysis of weather patterns, but the Weather Service would like to speed up the process of taking weather observations. Although the Weather Service would like a more automated system, volunteer observers won't go away any time soon because they are so cost-effective. Volunteer observers also provide information that automated collection devices can't, like the location of flooded roads and the amount of snowfall.
The Weather Service is carefully considering the effect of future automation on weather data quality. Weather data is being scrutinized as never before because of concern about global warming. Therefore, automated weather data collection will have to be phased-in carefully. The article was written by Khiota Therrien and appears on page A13.
Web Sites Seek User Data for Advertisers
A front page article in the August 16th issue of The New York Times examines the practices of commercial Web site providers, who have agreed to feed information about their customers' reading, shopping, and entertainment habits into a system developed by a Massachusetts company that is tracking the Web moves of over 30 million Internet users - recording where they go and what they read, often without the users' knowledge.
The agreement calls for participating Web sites to track their users so that advertisements can be precisely aimed at the most likely prospects for goods and services. But the underlying technology disturbs privacy advocates, who have long worried about the growing ability of on-line companies to collect and store personal data about Web users. Participating Web sites include Lycos and Geocities. The company behind the system is CMG Information Services of Andover, Massachusetts. The CMG system, known as "Engage" does not record the name, street or E-mail address, or credit card numbers of the people it profiles, according to CMG.
Internet service providers have begun to amass detailed records of who uses their sites and how their sites are used. For example, an ISP can direct ads for charter fishing boats to people who visited deep sea fishing Web sites. According to the Times, Web advertisers and marketers constantly seek more high quality data about Web users' socioeconomic and demographic characteristics and their habits. What greatly concerns privacy advocates is that Internet advertisers and marketers who lack all scruples will use the most sophisticated Internet surveillance techniques as they please.
Fortunately, Internet users have some defenses. They can set their Web browsers to not put any "cookies" (identification numbers) on their computer. Subscribers of services like America Online can use an anonymous URL (which AOL calls a "screenname") just to browse the Web. AOL subscribers can also activate and deactivate screen names (AOL keyword: screen names) so that spam E-mail addressed to a deactivated screen name is returned as "undeliverable." The article was written by Saul Hansell.
Different Focus, Different Profit Data
A report in the August 21st issue of The New York Times compares corporate data about corporate profits versus the National Income and Product Accounts produced by the U.S. Commerce Department. According to the Commerce Department, corporate earnings as measured in the National Income and Product Accounts have declined in the fourth quarter of 1997, the first quarter of 1998, and are expected to decline in the second quarter of 1998.
The National Income and Product Accounts have diverged - often significantly - from the reported earnings of the companies that have made up the Standard & Poors index during the past decade. Profits for the S & P 500 companies rose 8.2 percent in the fourth quarter of 1997 from their level a year earlier, 1.2 percent in the first quarter of this year, and 3.4 percent in the second quarter of 1998, based on nearly final data.
The National Income and Product Accounts, gleaned from income and other Government data, show changes from quarter to quarter rather than from year to year. NIPA data form the basis for official Government reports on economic growth, including gross domestic product, personal income, and several broad measures of inflation. They also provide an unofficial tally of profits from thousands of corporations, filling a gap left by the S & P 500, which accounts for about three-quarters of corporate profits.
The major difference between Government data and S & P 500 data is that the data that corporations report to the IRS are not adjusted for extraordinary items - like financing of company pension funds - that acountants strip out. Nor are they altered by one-time charges, like restructuring or acquisition costs, that Wall Street analysts deduct to produce what they call operating or continuing earnings.
The Government data reflect these extraordinary and other costs as they occur. The S & P data, based upon quarterly earnings reports, allow companies to take such costs all at once. Companies generally prefer to take one-time costs so earnings growth can quickly recover.
For these reasons, there can be a sharp disparity between the Government profit report and the S & P 500 report. Some Wall Street analysts prefer to use the S & P 500 report because write-offs are an accepted corporate strategy. But the Government data are "bullet proof" because they are difficult to manipulate. According to the Times, neither are good predictors of an impending market downturn. The article was written by Jonathan Fuerbringer and appears on page C1.