Date: January 15, 2002
Dear Mr. Smith,
The recent collapse of Enron has heightened public interest in how the regulation of the stock market could be improved. One of the issues being examined is what duty government officials have, to see that the public is informed of a pending collapse of a company's stock, when they become aware that the public hasn't been given an accurate picture. Another issue is how much analysts really understand about the stocks they are recommending. Your "A Titan Falls" article has proven uncannily accurate in both scope and timeframe as to Intel's fortunes, whereas analysts that are paid to do this for a living were nearly all "as taken back" by Intel's collapse as they now are by Enron's.
You may recall that I sent information regarding the pending collapse of Intel to the FBI and Tennessee's senator Fred Thompson in a Sept 23, 2000 letter (copied to you and others) complaining of how an article on thestreet.com which was mysteriously re-written, leaving off comments material to the pending collapse of Intel's stock. In a matter of hours, the story changed from the lead article on abcnews.com, when it contained the statements "Thursday's waning comes at a dicey time for the stock market, which has been tumbling most of this month. Besides being a bellwether on the technology-driven Nasdaq Stock Market, Intel is also one of the 30 companies that make up the Dow Jones Industrial Average", to a footnote article using the smallest point type size used on the abcnews.com home page. In addition, all of the negative comments about Intel's prospects made by Drew Peck, starting with "Others aren't as sanguine..." were deleted.
It was replaced with a headline, "Tapping the Reserves", with the implication that ABC's audience would be more interested in the release of oil from the strategic reserves, than the possibility of a total market meltdown (another point raised in your "A Titan Falls" article). This was significant since your article had predicted that once Intel could no longer hide the facts, it would exert its considerable influence to pressure the news media to prevent their wide scale dissemination.
Six months later, Intel's stock price had fallen from $75/share to $28/share, probably affecting more people than the current Enron collapse. On October 17, 2001 Intel reported that its earnings had decreased 96% for the 3rd quarter, mostly for the reasons that had appeared in thestreet.com article. As far as I know, nothing ever became of my letter. I never heard back from any of the people I sent it too, except for you. As the Washington Post's Howard Kurtz mentioned yesterday, there was scant media interest in the cause of the Enron collapse, until it touched the Whitehouse.
Senator Thompson is now co-chairing one of the committees investigating Enron. He appeared on the Newshour with Jim Lehrer last night with senator Lieberman. I had also copied Jim Lehrer on my Sept 23 letter, and the thought occurred to me that the roles may be soon be reversed, with Mr. Lehrer appearing before congress explaining why he took no action, and with Mr. Lieberman asking the questions.
I have contacted David S. Hilzenrath of the Washington Post, who has written a series of articles on the deficiencies of securities regulation and analysts' conflict of interests as well as the Tennessean's government affairs staff writer Frank Gibson. You may also wish to give this matter some attention on your website.
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