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NEWS:   (June 03, 2007)  more...

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Chapter 9: The Fall, April 1, 2000 - June 30, 2000 - Episode 8

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Everyone leaves but Larry, Donna, and Aaron. Donna and Aaron move to the other side of the table across from Larry with their backs to the window and the river. The sun has now risen out of view and the smoke and haze are increasing over Brooklyn in the background.

"So, I take it this is attorney-client communication?" asks Larry.

"It is."

"And, let me guess, it has something to do with the quarter. Something like: if we already know we’re gonna fuck up and not meet the Street’s expectations, then we gotta tell people about it or we get our asses sued again."

"We probably get our asses sued again, anyway," says Aaron. "But if we get the warning out as soon as we could possibly know anything then we’ve got a better chance of winning or settling for less. It’s not a good thing to have a discussion with a whole bunch of people around…"

"You mean my staff?" asks Larry. "That’s the whole bunch of people?"

"Right. Some of that bunch of people are likely to remember this conversation some day if they should be asked about it under oath. They might even remember it being more specific than it was. Some of them may even be writing stupid emails right now saying: ‘Oh-my-god, we’re going to miss our numbers for the quarter.’ And that email could end up in a court of law some day. The numbers won’t matter much if we’re prompt about telling people the bad news. It’s going to matter a lot if every one is surprised when we announce our results in July and the stock craters. At least everyone who bought the stock between now and that day in July is going to have a pretty good case. And people who didn’t sell will claim that they could have sold at a better price if only the company had been forthcoming with what it knew."

"We don’t know shit. I still think we can make the quarter. We just need to bear down."

"Larry, we’re not going to make it," says Donna. "We’re not going to make it on the sales side and, this late in the quarter, there is no way we’re going to squeeze enough out of expenses to end up with a profit from operations. We’ll have a profit because of companies in our portfolio being acquired but no profit from operations."

"What are the analysts forecasting?" asks Aaron.

"One to two cents," says Donna.

"We’ll do that easy," says Larry.

"I’m not sure of that at all," says Donna. "And, if we do, it’ll just be because companies sold that weren’t in anyone’s forecast. It’ll still really be a miss."

"It won’t be," says Larry. "Analysts say one or two cents. That’s what it says on Zachs. When we announce earnings, I think we’ll beat that with the equity sales but at least we’ll be there. So what would we be giving a warning about?"

"People are expecting us to continue to have earnings from operations. When you announced that we had positive numbers from operations last quarter, you made a big deal out of it. Said it was a ‘milestone’. You don’t backslide over a milestone."

"I didn’t say we were going to STAY positive. I was very careful not to make projections. Now you and Aaron want me to take back the guidance I DIDN’T give because it might be wrong even though I still think it’s right? Not gonna happen. Doesn’t make sense. What if I do that and then we make the numbers? Somebody’ll sue us for talking the stock down. Besides, if I announce we’re not gonna make the numbers, then for shit sure we won’t because everybody in the company stops trying.

"If I really thought we were gonna miss, if I were sure, then, yeah, we ought to say something. Might as well put out the bad news if we know it and take our beating. I agree with that; we’ll get beat up later anyway. But I’m not sure we’re gonna miss. And even if I’m wrong, we’re gonna make the bottom line anyway because of the equity sales. So it’s dumb to say anything now, especially because that will make it sure that we miss."

"You may be OK," says Aaron. "I’ve got to think about this. If I were you, I’d make sure that there is plenty of email documenting that you’re still optimistic about earnings and that you think the analyst forecast is in the bag because of the asset sales. If the end of the quarter comes and we know we’re not positive from ops, then I think we ought to revisit a warning. But we can wait ‘til then, I think, like Big Router did last quarter because we know we’re offering quarter-end inducements and sales really could close. We should NOT be writing any emails or going around saying that we can’t make the quarter." Aaron addresses the last sentence to Donna.

"You’re the lawyer. This worries me, though. Even if we don’t get sued, the analysts won’t trust us anymore because we left them out on a limb. They made a big deal — at least John Braxton made a big deal — about our earnings from operations. I don’t want to get sued again, that’s for sure, and I don’t want to lose my relationship with the analysts."

"So call them," says Larry. "Call Braxton anyway. Give him a heads-up. Tell him the quarter looks tough even though we’re gonna make the bottom line number. Sales a little slower because of the whole dotcom hiccup thing. Expenses up as we prepare to continue growth. Prospects great. Profits from equity sales, even though we weren’t looking for them. Then there’s no surprise for him and he doesn’t go out on a limb and write something he might regret between now and when we announce earnings. Obviously, tell him this is privileged information. He can’t write it or tell anyone. But he can just keep quiet about us between now and when we can give him a closer fix on the numbers. Then you’re a hero either way. We pull it out like I think we will, and he’ll know you’re cautious and protecting him. He likes that. We don’t make it, at least you kept him out of trouble best you could. Probably he’ll want to marry you after this is all over."


Donna does call John Braxton the next day. She tells him pretty much what Larry told her to say with a little more jargon and a little more caution. As Larry predicted, Braxton thanks her profusely for the heads-up. He affirms that he understands the need for confidentiality. He tells her, as they hang up, that he wishes he could trust all CFOs to be as forthcoming as she is. In today’s world, he says, too many are just too tight with information. She should never feel she has to wait to be certain before she tells him something.

Then Braxton calls Barcourt’s chief trader Sam Gutfreund. He tells Gutfreund not to cover any of Barcourt’s short position in hackoff.com. Gutfreund asks him why. Braxton tells him that it is just something he heard in the market that makes him think they may be able to cover at a lower price later. He can’t be specific, he explains, because of the Chinese Wall which separates the analysts from the traders to make sure there are no conflicts of interest. Gutfreund says he understands. After the call, he leaves orders to carefully short another two hundred thousand shares of hackoff and to stay tuned for further instructions.

Braxton also calls buy-side analysts at three major mutual funds that are long-time Barcourt clients. The chit-chat is different with each of them but the message is the same. They may want to "lighten up a little" on hackoff. No big deal probably, but it’s a good time to lock in some profits. He declines requests for more information. They each thank him. He says they can trust him to look out for the interests of his best clients.

The next day is Friday, June 9. Hackoff is down more than four points and closes at 56 5/8. Volume is pretty high with some big block trades. On Monday the sell-off in hackoff stock continues. It closes at 51 5/16. Selling pressure continues though out a brutal week. Friday, June 16, hackoff closes at 38 3/16.

On Monday, June 23, trader Sam Gutfreund calls analyst John Braxton and ask him if he’s heard anything further. Braxton says nothing — nothing either way. But there’s been a lot of selling.

"Yeah," says Gutfreund, "lots of it seemed to come from our big clients, at last in the beginning of the week before everybody got spooked and started dumping stock."

"They’re smart people, our clients," says Braxton.

"Whatever," says Gutfreund and hangs up. However, Gutfreund does decide to buy some hackoff to cover Barcourt’s short position which is now up over two million shares. He tells his desk trader just to nibble but to keep buying so long as he doesn’t pay more than forty dollars. Tells him not to buy more than 100 thousand shares each day, either. Never can tell what’ll happen.

Barcourt is buying shares at less than forty dollars to replace shares it previously borrowed and sold at prices from ninety-nine dollars down. The average price Barcourt sold for was $78.67 according to Sam Gutfreund’s calculation. So, if they can replace the two million plus shares they sold at an average price of $78.67 with shares that they buy at no more than forty dollars, their trading desk profit on the deal will be eighty-three million and change.

"Makes the commissions the fucking bankers get look pretty sick," says Gutfreund to his wife that night. "And they get the big bucks. My bonus should be pretty good this year, though, honey. Better than I ever did at poker."

"I think we can afford some Orientals," she says.

"Whatever," says Sam.


The Chat Board


by: thewatcher02 (35/M/New Rochelle, NY)

06/19/00 10:45 am Msg: 12021 of 12036 hackoff’s back up! it’s at 44. no news from the company!


by: ChorusLine (22/F/Paramus, NJ

Long-Term Sentiment: Buy 06/19/00 10:51 am

Msg: 12022 of 12036

Posted as a reply to: Msg 12021 by thewatcher02

The Street should like seeing the stock show some strength. Surely the weakness has been overdone. Surely a recovery is overdue.


by: pooper

Long-Term Sentiment: Sell 06/19/00 10:54 am

Msg: 12023 of 12036

Posted as a reply to: Msg 12022 by ChorusLine

This is whats called a deadcat bounce. Something falls as far and as fast as this stock did, doesn’t matter what it is, could be a dead cat and it bounces. hackoff is dead dead dead.

Re: Larry on MSNBC

by: Jumbo10 (43/M/New York, NY)

Long-Term Sentiment: Buy 06/19/00 10:59 am

Msg: 12024 of 12036

Posted as a reply to: Msg 12023 by Pooper

You can be sure that somebody knows something. The market-makers always find a way to make their money. They were probably selling all last week because they knew something, and now they are buying because they know something. OR because there’s a way for them to make money on a trade, because they can trade in ways that we can’t. As usual, they make money while we lose.

The market has been down, so it’s not too surprising that hackoff is down a lot, too. Especially because so much of its value comes from the portfolio of dotcom stocks that have been creamed. Plus the ones that are pre-ipo in the hackoff portfolio might never get to go public since the market has pretty much shut down for ipos.

I’m going down from a strong buy to a buy because of all these factors. I would be even lower at a hold, but I think the market has overreacted and that it really should correct some from here. I don’t think we’re going back to our highs in the 150s right away, but there should be some correction, even if the market doesn’t come back right away. Then, when the market does come back, we should makes some real money. But you can be sure the greedy mms and management will make more. That is the one thing you can be sure of. And you can also be sure they’re not getting hurt now the way we are.


by: scooper

Long-Term Sentiment: Buy 06/19/00 11:05 am

Msg: 12025 of 12036

Posted as a reply to: Msg 12023 by pooper

pooper, your brain is what’s dead. Probably you fried it with drugs. HOFC is recovering because it went too low. The market panicked and now it is coming to its senses a little. This is a time to make some money and to double up on down positions.


by: thewatcher02 (35/M/New Rochelle, NY)

06/19/00 11:06 am

Msg: 12026 of 12036 We’re falling again. We’re back down to 41!


by: Alaska60-60

Long-Term Sentiment: Strong Sell 06/19/00 11:07 am

Msg: 12027 of 12036

Posted as a reply to: Msg 12026 by thewatcher02

jerkoff is going to keep on falling no matter how much pumping and dumping jumbo does. This company sucks. The lizard is looting it for all he can. He went home with a pile of dough from the secondary and now what does he give a shit if the company comes down. He is probably short. He is probably in your shorts.

antihack is a real business. They charge real money for their software and dont have a portfolio full of bullshit stock that is a fantasy fror all you jerkoffs becase it is going to go down and never get up. help Ive fallen and I cant get up. that’s jerkoff.


by: scooper

Long-Term Sentiment: Buy 06/19/00 11:09 am

Msg: 12028 of 12036

Posted as a reply to: Msg 12027 by Alaska60-60

Alaska, you asshole, you are probably the one that’s short and now your afraid the company is going to come back up. you are trying to talk it down. We are recovering now from what all you shorts have done and probbly you’re desparate now because you will have to cover at a higher price. Why else would you be here on the hackoff board if you love antihack so much why arent you on that board more? I looked there and your hardly ever there and when you are you are still talking about hackoff. Do you have a hardon for Lazard or something?

there’s something rotten at jerkoff

by: Alaska60-60

Long-Term Sentiment: Strong Sell 06/19/00 11:12 am

Msg: 12029 of 12036

I heard from a guy who knows somneone that used to work at jerkoff that there is something wrong there and that’s why the stock is going down. The lizard doesn’t know how to run the company or care and the cunt is trying to cut all the expenses but she is cutting all the good stuff and leaving all the bad stuff because this is the stuff the lizard and her like. So you jerkoffs who like to ride down can ride down more because this company is headed for the crapper and soon the stock will be less than 10. dont say I didn’t warn you.


by: thewatcher02 (35/M/New Rochelle, NY)

06/19/00 11:18 am

Msg: 12030 of 12036 HOFC’s at 43! The volume is up and there are some blocks trading.

More on the future

by: Jumbo10 (43/M/New York, NY)

Long-Term Sentiment: Buy 06/19/00 11:22 am

Msg: 12031 of 12036

You have to believe that the dotcom stocks are going to come back if you are going to invest in hackoff. From what e-commerce sites buy, it looks as if hackoff’s software is perceived to be about the same as antihack’s, so if that’s all there was, the companies should have the same market cap. But they don’t; hackoff is still valued at more, even though it’s fallen further.

There are two differences. One is that antihack sold debt as well as stock. So now they have more cash than hackoff, but they also have to repay the debt at some time. And the other difference is that antihack has a portfolio of dotcom stocks that are a liability right now. The market is very afraid because of what has happened to dotcom, but it will come back and then the market will probably overreact in the other direction. That may be the time to execute an exit strategy from hackoff.

But as I said before, at this price the portfolio is being undervalued, which is why hackoff is a buy as long as you believe dotcom will come back — which it is sure to, except for some of the worst companies. That’s not entirely a bad thing.

Re: More on the future

by: PacPhil (22/M/New York, NY)

Long-Term Sentiment: Buy 06/19/00 11:24 am

Msg: 12032 of 12036

Posted as a reply to: Msg 12031 by jumbo10

Good points, Jumbo. You’re probably right. The market certainly has to come back. It always does.

Where are we trading?

by: CLess

06/19/00 11:26 am

Msg: 12033 of 12036

What’s the stock at? Why did it go down last week? When will it go up?

Porn rules

by: TestTost (32/M/San Francisco, CA)

Long-Term Sentiment: Strong Buy 06/19/00 11:30 am

Msg: 12034 of 12036

hackoff has a very strong position with the porn sites. The porn sites are not dot com. They are not public. They charge money for their content most of them and more and more are. It’s harder and harder to get hard for free. And they pay real money to hackoff so you don’t even have to wait for the dot coms to come back to see hackoff get good again.

Re: More on the future

by: ChorusLine (22/F/Paramus, NJ)

Long-Term Sentiment: Buy 06/19/00 11:35 am

Msg: 12035 of 12036

Posted as a reply to: Msg 12031 by Jumbo10

The stock was way down. The Street doesn’t like it anymore. But the stock is moving up a little so maybe the Street doesn’t hate it either. What will the Street think?

Stock Down

by: thewatcher02 (35/M/New Rochelle, NY)


11:40 am Msg: 12036 of 12036

HOFC at 42! Big volume.


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