Reaping What You Sow In Science And Business

Pundits, engineers and economists are wringing their hands over the Freescale Semiconductor leveraged buyout - at $17.6 Billion it is the largest privatization of a high-technology company in history. Why is this a bad thing? I don't think it is, but I am not doing the hand-wringing. However, if you are one of the people who thinks less corporate accountability and more outsourcing is bad, blame Democrats. I don't mean for that to be a Rush Limbaugh versus whoever Democrats have thing, but that's the way this one worked out. If you make a big stink about something small, you have to be accountable later. The Sarbanes-Oxley regulations might as well have been called The Enron Provision. As a result of them, it has become so difficult to run a public company, much less take one public, that financiers are instead taking them private and abandoning IPOs. Okay, taking one company private is not a big deal. Or two, because now Philips Semi is private also. But the bad thing is that the new government regulations, enacted because politicians wanted to paint President Bush with Enron strokes, prohibit IPOs also. In private companies, only the investors get rich. In an IPO, employees make money too. They have stock options which they can sell. So these new government regulations, ostensibly designed to protect the little guy, do nothing of the kind. The little guy can never go through an IPO and get that bonus. Small companies with cutting-edge technology have relied on sweat equity. Sweat-equity made Silicon Valley great. Today, if I see "pre-IPO" on a company's blurb about itself, it hits 8.3 on the Bullshit Richter Scale for me because I know how difficult it is to do an IPO. Pre-IPO is marketing hoopie for private. Your dry cleaner is "pre-IPO" in that sense. A loss of sweat equity means it costs more in salaries and bonuses to get good employees, which is precisely the kind of cash-burn young companies don't need. What is the solution? Rescind Sarbanes-Oxley? Sure, but aside from Prohibition, when has the government ever rescinded legislation? The Enron guys didn't tank the company because they were unregulated, they tanked the company because they were crooks. Sarbanes-Oxley, and its ceaseless regulations and accounting restrictions, is the kind of meddlesome, innovation-choking tax that American high-technology doesn't need in a competitive global environment. The only thing that could make things worse is meddling with stock options accounting. Oh, wait ...