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Highlights—August 4, 2007

• CNN/Money: IBM cuts 90 jobs in Essex Junction. Excerpt: IBM Corp. announced Monday that it would lay off 90 workers. The cuts at the Vermont plant are part of a plan to eliminate 450 jobs, mostly at IBM's East Fishkill, N.Y. and Poughkeepsie, N.Y., facilities.
• CNN/Money: IBM to cut 300 jobs in New York. Excerpt: About 300 IBM employees in the Hudson Valley will be laid off, company officials said Monday. Most of the job cuts will be made at the company's East Fishkill semiconductor plant in Duchess County, with some also coming from the Poughkeepsie facility, according to IBM spokesman Glen Thomas.
• Poughkeepsie Journal message board: "300 local IBM workers out of jobs". Excerpts: Notice the familiar lies about, "can't find skills" or "skill re-balancing" wasn't used this time. The corporations have been singing that "can't find the skills" song for years as an excuse to replace American workers. Last time the workers didn’t have the skills, this time the excuse is 'overlap'.

  Many highly skilled people were sent packing yesterday, one with dozens of patents and with patents pending was let go, after the completion of a major project. Why was this highly skilled and brilliant person let go? Well for one he was a reasonably highly paid American worker, an perhaps the fact he was over 50 and would getting into those potentially medically expense years of age could be another. Maybe it will take 2, 3 or more visa workers to replace him but from an HR perspective, it looks great on paper. If his temporary replacements don't produce patents, replace them with a few more, they're cheap and that's all most corporations care about anymore, cheap, replaceable, silent, powerless workers, slavery didn’t go away, it’s just been and being refined.

  Are American workers going to remain silent as their future is gutted by those who: “HAVE NO COUNTRY”? Are they going to remain silent as their children’s future is destroyed by those who care more about dollars than this country’s future? In some recent polling, corporate executives are among the least respected public figures in the country, why do workers and the public do nothing as this country is being eaten away from within?

  Don’t expect help from congress who get elected with money taken from corporations to come to your rescue, they only act once it’s too late and economic collapse has already arrived. For employees dealing with a company run by executives and board members who have problems with honesty, integrity, and American workers, there’s only one solution, get organized and get it in writing! Allianceibm.org

• CNN/Money: IBM SVP exercises options for shares. Excerpt: The senior vice president of International Business Machines Corp. exercised options for 54,425 shares of common stock, according to a Securities and Exchange Commission filing. In a Form 4 filed with the SEC Friday, John E. Kelly III reported he exercised the options for shares Wednesday for $78.13 apiece, and then sold 54,000 shares the same day for $115.46 apiece. (Editor's note: Mr. Kelly's profit from this sale was $2,015,820).
• CNN/Money: IBM VP, secretary exercises options. Excerpt: The vice president and secretary of International Business Machines Corp. exercised options for 28,334 shares of common stock, according to a Securities and Exchange Commission filing. In two Form 4s filed with the SEC Friday, Daniel E. O'Donnell reported he exercised the options for shares Wednesday for $78.13 to $88.96 apiece and then sold 32,951.431 shares the same day for $117.24 to $117.31 apiece. (Editor's note: Assuming an average cost of $83.55 and an average sale price of $117.28, Mr. O'Donnell's profit from this sale was $1,111,616).
• CNN/Money: IBM senior VP exercises options. Excerpt: A senior vice president at International Business Machines Corp. exercised options for 14,732 shares of common stock, according to a Securities and Exchange Commission filing. In a Form 4 filed with the SEC Monday, Rodney C. Adkins reported he exercised options for the shares Friday for $51.16 to $104.71 apiece and then sold 12,000 of them the same day for $117.03 to $117.14 apiece.
• Yahoo! message board post: "Re: IBM senior VP exercises options" by "bits_bytes_and_bugs". Full excerpt: Funny how IBM executives always manage to sell near a peak and after they sell the stock always goes down. One would almost think they are engaging in illegal stock price manipulation combined with illegal insider trading based on knowledge that rest of the stock market doesn't have.
• Yahoo! message board post "Re: IBM senior VP exercises options" by "sby_willie". Full excerpt: Also look at the times recently that IBM has been slapped on the proverbial wrist for SEC oversights and violations. Why hasn't the SEC been tougher on IBM when multiple incidents have been found by the SEC? One would figure the SEC would scrutinize options trading more by IBM as well because of it.

  Based on recent history the SEC have proven to be more and more corporate friendly than common investor friendly. So IBM insiders that are corporate officers pretty much have the run of the house.

  By stock buybacks and other actions, the IBM executives and officers can ensure that their options are always viable. But for the common investor who ponies up their hard earned money (instead of being awarded stock options), it's clearly taking your chances.

• Boulder Daily Camera editorial: Qwest's greedhead: Prison time's appropriate. By Clint Talbott. Excerpts: Joe Nacchio was famously unsympathetic to the people who worked for Qwest. After the telecom giant gobbled up the former US West, Qwest CEO Nacchio dubbed his employees "clowns." Signaling his intention to cut the company's work force, Nacchio spoke in a demeaning metaphor. "Because you wear a clown suit doesn't mean you work for the circus. We'll take off the suits and get down to work, then we'll send out the clowns," he told TheStreet.com.

  Anyone who views rank-and-file workers with such open contempt is probably unlikely to worry about treating them fairly. It should come as little surprise that such a man misled investors and employees into believing that Qwest was on solid fiscal ground in 2001 even as he sold $100 million in spuriously inflated shares. [...]

  Six years in prison, U.S. District Judge Edward Nottingham ruled Friday, was the appropriate response to Nacchio's "overarching greed." "If it is perceived that there is one law for the rich and one law for everybody else, the law will ultimately fall into disrespect," Nottingham said. Of course, there is a justifiable perception grounded in some reality that wealth does tip the scales of justice. But Nacchio is one who didn't get away. Like the crooks at Enron, Worldcom and Tyco, Nacchio was not troubled by the human toll of his avarice and dishonesty. [...]

  Nacchio's sentence is said to be the toughest insider-trading punishment in U.S. history. That's encouraging. The sentence was meant to send a message — that rapacious CEOs may not ignore the law in their pathological pursuit of more and more millions. The little people may not matter to the titans of modern industry. But in some cases, we have the law on our side. We can only hope that Nacchio's brethren take heed.

• Yahoo! message board post "Re: FHA eligibility age" by "tiger4062". Full excerpt: I retired on 12/31/06 after 32 years of service at the age of 58 years and 9 months. My date of employment was 9/9/74. I remember on my 25th anniversary in 1999, I was given to option of choice between the old pension plan and the cash balance. I chose the old plan. During my discussions with the benefits representative, I asked about the FHA eligibility, I was told that it wasn't part of my plan. The representative said "this other plan is better, trust me".

  Now I find myself paying well over $500 a month for coverage for me and my wife. Probably nothing I can do about it now anyway. Just thought that I would throw that out as evidence of what happened to me.

• Yahoo! message board post "Re: FHA eligibility age" by Kathi Cooper. Full excerpt: I'm in the FHA and I pay about $675 for me. Just me. No one else. You did good if you are paying $500 for two.
• InformationWeek: The Myths And Facts Driving The H-1B Debate. By Marianne Kolbasuk McGee, Alice LaPlante. Excerpts: The emotion around the H-1B debate is as intense as ever. The facts and concerns about the U.S. guest worker program are changing, however, as demand for foreign-born talent soars, the IT job market improves, and worries about abuse or unintended uses of the H-1B grow. Offshore outsourcers have helped reshape the debate, as a handful of the largest ones scarf up more than a quarter of all unrestricted H-1B visas for their U.S. offices. Congressional reformers are questioning how companies use these visas, and new research is providing better insight into who gets them. The comprehensive immigration reform championed by President Bush died in June, taking with it several proposals for revamping H-1B visas. But there's still a chance the H-1B program will look markedly different next April, when the government again accepts applications. Here are the myths--and facts--that will go a long way toward driving the H-1B debate. [...]

  MYTH: H-1B visas are a battle for the highest tier of talent--the world's best and brightest technologists. Most companies don't even make the case that they're chasing the most skilled people. A full 56% of visa requests in 2005 asked for H-1B workers at the lowest of the Labor Department's four-tier skill level--just 5% were for the highest level, 8% for the second-highest. Programmers Guild founder Miano says this shows that these workers either aren't contributing substantially to America's ability to compete, or employers are understating workers' skills to justify paying them less. The former assessment, however, ignores the possibility that having a good supply of lower-tier talent could be what companies need to compete. But Norman Matloff, a professor of computer science at the University of California at Davis who has studied the H-1B issue, sees the visa fundamentally as a way to hire cheaper foreigners or to avoid hiring older U.S. workers seen as more expensive. "This is about cheap labor, period," says Matloff. "H-1Bs are being exploited, even as U.S. workers are being displaced."

• America Public Media's Marketplace: H-1B visa just a ticket to the way station. H-1B visas used to be a way for immigrants to secure green cards. But these days, many foreign workers obtain the U.S. work permit with no intention to stay. Aswini Anburajan reports.
• CNN/Money: Retirement at risk: Who's falling short. New studies find shortfalls in retirement savings are significant in most age and income groups. By Jeanne Sahadi. Excerpts: How would you feel about doubling or tripling your 401(k) contributions? For some people, that may be the only solution if they want to maintain their current lifestyle in retirement.

  The Center for Retirement Research (CRR) estimates that 36 percent of high-income households - those with a median income of $117,000 - won't be able to live as well in retirement as they do today. Among middle-income households, 40 percent are at risk of having to downsize, while 53 percent of low-income households are likely to fall short.

  That hasn't always been the case. "We're at the tail end of the golden era of retirement," said CRR Director Alicia H. Munnell. [...]

  But a 51-year old who makes $80,000 but only has $164,000 in savings would need to put away 23 percent of his salary - or close to $19,000 a year - if he wanted to retire at 65, according to savings guidelines from Ibbotson Associates. That would give him enough money, in combination with his Social Security benefits, to live on 80 percent of his pre-retirement income minus his annual 401(k) contribution.

• Wall Street Journal: In Hunt for High Pay, Be Specific. More-Exclusive Sites Might Net Better Results For Experienced Workers. By Sarah E. Needleman. Excerpt: If you're in the market for a high-paying job, consider narrowing your search to online career resources specifically aimed at experienced professionals. Many job boards that service professionals at all career levels don't list salary ranges, leaving job hunters uncertain as to how a position fits with their financial expectations. Meanwhile, a growing number of lucrative opportunities have been showing up on job sites in the high-paying category in recent years. For example, theladders.com now averages about 70,000 job listings at any given time, up from around 40,000 in 2005, according to a company spokeswoman.
• Wall Street Journal: Exit Your Current Job By Building Bonds, Not Lobbing Bombs. By JoAnn Lublin. Excerpts: A disillusioned fund-raiser for a big animal-protection charity penned a bitter resignation letter during a February business trip. He blew off steam about his blocked promotion, inadequate title and other unfair treatment.

  The 43-year-old manager read his five-page missive multiple times, then ripped it up and erased the computer file. The fantasy letter "reduced my frustration and enabled me to stay positive," he says. Returning from the trip, he calmly announced that he had accepted a job with greater chances for advancement. His departure without rancor helped to persuade charity officials to offer him re-employment after his new gig didn't pan out this spring. [...]

  Building solid bridges generates more than a rosy reference letter when you resign. It can boost your future job prospects. "Leaving well is a basic career competency," observes Dory Hollander, an executive coach at WiseWorkplaces in Arlington, Va. "If you leave on a high note with connections that are real and true, you create opportunities for yourself down the road."

• Computerworld: Execs list hurdles to offshore development. Developer skills, limiting risk vital to outsourced projects. By Heather Havenstein. Excerpts: Companies face significant challenges when outsourcing development work offshore. For example, they must ensure that the offshore workers possess adequate technical skills, that outsourcing firms retain qualified workers and that projects sent overseas present minimal risk to the organization, according to a panel of experts yesterday at the IBM Rational Software Development Conference 2007 here.

  Cisco Systems Inc. has struggled with the attrition of workers at outsourcing firms in India, Israel and China that develop software for the firm, said Jan Roberts, Cisco's senior director of its central engineering tools & services group.

  Cisco first used outsourcing firms to supplement teams in the U.S., she said, but found that the attrition rate was "terrible." After that, she said, Cisco sent core projects overseas, so that developers at outsourcing firms "don't feel like we are giving them work we don't want to do." Since then, she said the attrition rate has been cut significantly.

  The company now is struggling to ensure that its intellectual property is protected in projects sent to outsourcing firms in China, Roberts added. Cisco is working to create an automated process of separating key pieces to ensure it is not sent overseas, she said.

• Yahoo! message board post "IBM says a mistake was made in crediting my service when I returned" by Candis Wilson. Full excerpt: I worked for IBM from 1974 and left in 1986 when IBM sold the Product Centers to NYNEX. I was rehired to IBM in 1996 and received my service credit from 1974 to 1986. IBM is now saying that was a mistake that they transferred my service to NYNEX and I was not eligible to receive it from IBM.

  I accepted employment back to IBM with the knowledge I would receive my service credit and I did with all associated benefits. I took a severance package from IBM in 2000 when my division closed. At that time I received my pension worksheets and I took a lump sum.

  Now May 2007 IBM is coming back to me and asking me to pay back the lump sum and they have discontinued my monthly pension payments that I've been receiving since 2000.

  I disagree with IBM that a mistake was made - I was rehired based on the facts IBM provided me.

  Has anyone else experienced this? Any help will be appreciated. Thanks, Candis Wilson.

• Yahoo! message board post "Re: More on FHA ..." by "madinpok". Excerpts: After you have used all the funds in your FHA (Future Health Account), the FHA plan provides what is called "Access Only" coverage. That means you can still buy health insurance through IBM, but you have to pay 100% of the cost.

  There is some risk in allowing your FHA balance to go to zero, however. If your balance is zero and you ever drop out of the Access Only option (say because you took a job for a couple of years that provided you with other coverage), you will NEVER be allowed back into the IBM plan.

  If, on the other hand, you leave at least $1 in your FHA account, you can switch to other health insurance coverage and then come back to the FHA plan at a later date.

  So, when your FHA balance drops below the amount you need to pay for your annual coverage, you should choose the amount you wish to withdraw in the next year very carefully. I believe IBM asks you to specify a percentage of the annual premium that you want to pay from the FHA account. Make sure that you choose a percentage that will leave you with a non-zero balance. You might find that you have to just choose 0% and end up leaving more than $1 in your account to make this work.

• New York Times: The Richest of the Rich, Proud of a New Gilded Age. By Louis Uchitelle. Excerpts: These days, Mr. Weill and many of the nation’s very wealthy chief executives, entrepreneurs and financiers echo an earlier era — the Gilded Age before World War I — when powerful enterprises, dominated by men who grew immensely rich, ushered in the industrialization of the United States. The new titans often see themselves as pillars of a similarly prosperous and expansive age, one in which their successes and their philanthropy have made government less important than it once was.

  “People can look at the last 25 years and say this is an incredibly unique period of time,” Mr. Weill said. “We didn’t rely on somebody else to build what we built, and we shouldn’t rely on somebody else to provide all the services our society needs.”

  Those earlier barons disappeared by the 1920s and, constrained by the Depression and by the greater government oversight and high income tax rates that followed, no one really took their place. Then, starting in the late 1970s, as the constraints receded, new tycoons gradually emerged, and now their concentrated wealth has made the early years of the 21st century truly another Gilded Age.

  Only twice before over the last century has 5 percent of the national income gone to families in the upper one-one-hundredth of a percent of the income distribution — currently, the almost 15,000 families with incomes of $9.5 million or more a year, according to an analysis of tax returns by the economists Emmanuel Saez at the University of California, Berkeley and Thomas Piketty at the Paris School of Economics.

• New York Times: A Test for Democrats. By Paul Krugman. Excerpts: It’s been a good Democrats, bad Democrats kind of week. The bill expanding children’s health insurance that just passed in the House makes you want to stand up and cheer. Reports that Senator Charles Schumer opposes plans to close the hedge fund tax loophole make you want to sit down and cry. [...]

  The hedge fund tax loophole is a crystal-clear example of unjustified privilege. Because of a quirk in the law, the people who run these funds don’t pay taxes like ordinary mortals.

  For example, the salaries that pension fund employees receive for managing other peoples’ money are taxed as ordinary income, at rates up to 35 percent. But if that money is invested with a hedge fund — and 40 percent of the money in hedge funds comes from public, corporate and union pension plans — the fees the hedge fund manager receives for his services are mainly taxed as capital gains, with a maximum rate of 15 percent.

  The arguments usually made on behalf of this unique privilege make no sense. We’re told that the tax rate on hedge fund managers has to be kept low to encourage risk-taking. But the managers aren’t risking their own money. The only risk they face is the uncertainty of their fees — and as any waitress who depends on tips or salesman who depends on commissions can tell you, most people with uncertain incomes don’t get any special tax breaks.

  We’re also told that management fees would rise, reducing returns to investors, if the privileged status of fund managers is eliminated — as if someone with a $100-million-a-year hedge fund job would walk away if his take-home pay fell from $85 million to $65 million.

  And we’re talking about a lot of lost revenue here. The Economic Policy Institute estimates that the hedge fund loophole costs the government $6.3 billion a year — the cost of providing health care to three million children. Of that total, almost $2 billion a year in unjustified tax breaks goes to just 25 individuals.

  If being a Democrat means anything, it means opposing this kind of exorbitant privilege. Yet according to a report in The Times earlier this week, Mr. Schumer says that he opposes any increase in hedge fund taxes unless tax breaks for the energy and real estate industries are also eliminated, and pigs start flying. Seriously, his claim that he really would support closing the hedge fund loophole if other, deeply entrenched tax privileges were eliminated at the same time is a fig leaf that hides nothing.

• eTypewriters.com: A timeline history of the IBM Typewriter with old ads to show what the machines looked like. Click on the thumbnail to see an enlargement of that ad. (Editor's note: IBM electric typewriters going back to 1935 are displayed.)