What is Digg?Sponsored by Travelzoo
Take Advantage of Ridiculously Low Holiday Airfares view!
travelzoo.com - Flights $52 and up for Thanksgiving, Christmas & New Year. But move on it now.
54 Comments
- ersatzphi, on 10/12/2007, -3/+25Another sad example of the buddy system in the working world.
- Rodzirra, on 10/12/2007, -7/+27This is not surprising. I strongly believe that the US stock markets have more to with gambling than they do with capital markets. They're also great money laundering operations for the Federal Reserve.
- shiftt, on 10/12/2007, -1/+18The transcript
Richard Mackiewicz, lawyer to the defendant “Mr Greifeld, do you under- stand the difference between a 38 per cent mark-up and a 38 per cent gross profit margin?”
Bob Greifeld, Nasdaq CEO “No.”
RM “You do not?”
BG [shakes head]
RM “Would I be correct that you do not know how to compute gross profit margin?”
BG “How to compute gross profit margin?”
RM “Yes.”
BG “Under US GAAP?”
RM “Just do you know how to compute . . .”
BG “No. [long pause] Under US GAAP. [long pause] I have accountants who do that for me.” - argoff, on 10/12/2007, -1/+16I know this is way off base, but something is really bothering me in the news this last week. First they go out of their way to report that terrorists are targeting our financial markets, but then go out of the way to say that there's nothing to worry about. Well, if it was so mundane then why did they decide to report it everywhere all of a sudden. Then they say that a court ruled that the US must change all its currency to make it readable by the "blind", what the hell? After 100 years, now we decide that it needs to be changed out right now - that really stinks to me. Then the news reports that the Bank of America CFO resigns. Is this the same BofA that has over 4 trillion of derivatives contracts in a housing market that is crashing 10 times faster than they said it would a year ago? And then last month a multi billion dollar hedge fund (Amaytha?, I think) collapsed making LTCM look like pie, but no one said a thing. Bush is outside the country now, and his family recently bought a massive estate in Paraguay which has no extradition treaty with the US. Any one of them by themselves would have caused me to think I was just being paranoid, but all of them together IS making me paranoid. Just wanted to get that off my back. Oh, and then there is the USD dollar index, it dropped all the way to 82 this week without warning - it's lowest in 14 years.
- mutatron, on 10/12/2007, -1/+10An MBA? You mean like the degree George Bush has?
- leffunov, on 10/12/2007, -4/+12just because he can't calculate a precise formula that has nothing to do with his job does not mean he's stupid. Accountants usually do the work for them, He may know a ton about economics like how the cuba-US embargo boosts revenues in canada and england on cuba's exported goods. How the US leaving Iraq would shape the stock market and how a foreign government's currency collapsing would lead to an increase in value of the neighbor country's currency.
- inf4my, on 10/12/2007, -3/+10Ummm why does he need to know what it is...as he said he has accountants who do that for him. He is the CEO he doesnt need to know every little calculation that comes with the business he runs. Its like asking Bill Gates, Steve Ballmer, and Steve Jobs if they know how to write the code for windows XP and OS X.
- inf4my, on 10/12/2007, -1/+8those seem like poor examples of him knowing economics because it is to specific. I would say that im pretty sure he knows what terms like Opportunity cost, marginal cost, marginal benefits, marginal revenue, fixed costs, variable costs, average total cost, price, demand, average revenue, etc mean and how to calculate them.
- LCmidas, on 10/12/2007, -2/+8As a business major (and pre-law), I'd have to agree with you. I've researched countless cases where businesspeople who lacked in-depth knowledge of the very systems they worked with were given the reins to operations worth hundreds of millions of dollars. They then took risks and, as luck--pure luck--would have it, were successful, only to lose soon after as their luck caught up with them and they destroyed their companies.
Financial ratios such as the above are fundamental to truly understanding the financial and market position of a company. Knowledgeable investors pour over financial statements, comparing those ratios to previous years' and industry standards. That he was clueless about something so elementary, yet vital, to the business world is not just pathetic--it is frightening. - thegsa, on 10/12/2007, -2/+6"Bush is outside the country now, and his family recently bought a massive estate in Paraguay which has no extradition treaty with the US."
smells fishy, In Mexico Salinas de gortari did the same thing, right before his term ended, he bought a home in switzerland, to which he moved into right after the end of his term. As it turn out, his brother and other family members stole about 84 million dollars from the govenrment. Mexico tried to get extradition charges against him, but they failed, they asked the US for help, no can do. later some mexican government officials find out that one of his accomplices has ties within the US government. So theres nothing they can do. - cliffzdude, on 10/12/2007, -2/+6Have you ever had a manager who micro manages every thing you do? Have you ever had a manager who gives you a goal, and helps and expects you to reach that goal? If you've been in the working world long enough, you've had both or at least managers somewhere measurably between the two. Which manager got more done? Which manager was more able to perform? Again, if you've been in the work force long enough you'll immediately remember how the manage who stood back and let you do your thing, while expecting results was far more successful.
CEO's are managers of managers. They have to point the ship in the right direction at the right speed. You do not want a ships captain who is an engine mechanic. You also don't give a ***** if your CEO can calculate margin on the spot. You do want a leader who can surround himself with the best of the best who can report what gross margin is, what it was, and what it will do to/for your company if you do "x" tomorrow. Give me a CEO who knows people and can hire the right management team, and I'll give you the CEO who is making money for his company before the micro manager who tries to keep his hand on every aspect of the business. The job is just too damn big... - leffunov, on 10/12/2007, -1/+5They reported it like you say because the want people to freak out. Everyone watches the news on days of crisis or panic. Ever watch the ten o'clock news?
- wazzadoin, on 10/12/2007, -0/+3Look this is my major. Any dumb **** who barely passes a standard financial analysis and accounting course would know this ratio. This is sad and depressing.
- mightytribble, on 10/12/2007, -0/+3Well, to be fair, this wasn't a 'precise formula'. This is Accounting 101. He has an MBA; he /has/ to have taken Accounting 101. Heck I've not got an MBA, I'm not an accountant, and all I do is read Kiplinger's when it's in the bathroom and even *I* know how to calculate Gross Profit Margin, and know that it is different from 'profit markup'.
Not knowing how to calculate GPM shows that this man just doesn't /understand/ basic financial principles. Also, the fact that this lawsuit that he's involved in revolves around basic financial principals, and /he lost/, also speaks to that.
Sounds like he's the kind of guy who has 'other people' to do all the hard work, and he just 'makes decisions' and 'provides vision'.
Yeah, give me his salary and I'll 'provide vision', too. - LCmidas, on 10/12/2007, -2/+5This doesn't depend on GAAP. He was just gambling that it involved GAAP, and he could simply explain that he didn't have that specific knowledge under those principles, rather than admitting that he simply didn't know what he was talking about.
- kindpastor, on 10/12/2007, -1/+4It's a conspiraaacyyyyy!
Seriously--why would he need to know something like this? - dognose, on 10/12/2007, -2/+5totally misleading headline. Just because he didn't know a specific formula in complex regulations does NOT mean that he doesn't know "basic economics". He is actually SMART enough to know that he doesn't know the regulations when it comes to this calculation, which he rightly defers to his accountants.
- misterdoodi, on 10/12/2007, -1/+4I bet he has accountants that do all that. And, the accounts have software, where you plug in the numbers, or better yet automatically get the numbers from various places and processes it, and it displays the needed information.
- inactive, on 10/12/2007, -0/+2Exactly what I'm wondering. Most of my math professors at uni, for instance, barely know any formulas by heart anymore. But ask them about conundrums in set theory and you'd keep them talking for hours.
- toomuchgreentea, on 10/12/2007, -3/+5@LCmidas
If you were really a pre-law business major, then you should know admitting under oath that you know how to do ANYTHING is a big no no. Given the way the US system is being setup, it's always better to look stupid than to say you know how to do something, and open up a huge can of worms leading to who has the responsibility under the law.
Judging from the excerpt, he is mixing the intended question into something completely irrelevant - he is AVOIDING to say he knows how to do ANYTHING to rid his responsibilities.
You can ask him how to brush his teeth, and he'll mix it with not knowing the best way to bleach them. - EuroMarkus, on 10/12/2007, -1/+3He's an idiot.
It doesn't matter that he should/shouldn't know how to calculate a gross profit margin.
What matters is that he should have researched if he was right BEFORE suing!!!
Before you sue, you do a lot of research to see if you have a legal standing.
Obviously, he did not, and now his ignorance is public record. - senseigmg, on 10/12/2007, -0/+2He is not the successor to Greenspan, Ben Bernanke is.
- ubica, on 10/12/2007, -0/+2I hate people like this, who think they are smart, but are only ***** annoying.
- dpierce, on 10/12/2007, -1/+3For those who are curious:
To calculate gross profit margin, use this formula:
Gross Profit
----------(divided by)----------
Total Revenue - MyNameIsFred, on 10/12/2007, -2/+3...BG “No. [long pause] Under US GAAP. [long pause] I have accountants who do that for me.”...
I think this is the key quote. He is specifically qualifying his answer in terms of US GAAP (Generally Accepted Accounting Principles). I am not an accountant, but my understanding is that GAAP rules evolve. Even if he understands the general concept, unless he is an accountant keeping up with the changes, he probably don't know how to do the calculation under GAAP. The general principles may stay the same, but specific exemptions and rules change. - enemyofstate430, on 10/12/2007, -4/+5OMG, economics almost has NOTHING to do with accounting. I'm an econ major and almost every teacher I've had that is very intelligent and profound makes jokes about accounting majors, because accounting is simply about memorizing formulas that don't really tell you anything to begin with, unless they are taken in context with much more complicated models. Even my finance teachers make cracks about accountants. Book value has little to do with market value, and most financial ratio analysis is performed by a computer to begin with. Why would this guy remember a stupid formula that he would never even use other than on a test question in school? That's just dumb. I'd think a marketing major might be more concerned about gross profit margin, and they're probably about the second dumbest business "major," aside from accounting.
- chjb, on 10/12/2007, -1/+2It isn't so much a regulation-dependent formula, which makes his testimony from the transcript a little bit weirder. Gross profit margin is pretty much universally defined, it is simply the profit as a percentage of the gross payment (profit + cost) as opposed to just cost. Think what you want about whether he should know it, but it's definitely not a complicated or obscure quantity.
- ggko, on 10/12/2007, -0/+1fwiw, John Maynard Keynes, considered to be one of the greatest economists of the past century, apparently had little formal education on the subject.
While the Wikipedia entry on him seems to suggest he earned his degrees in economics, it doesn't explicitly state so. The discussion page even notes he only took one term in it. The book "Introducing Keynesian Economics" also comments he taught the subject despite not taking a degree in it. - vampares, on 10/12/2007, -0/+1Legally, if you miscalculate or mismanage money you are responsible. If an accountant say, makes a mistake on your taxes or gives you bad advice, you are not responsible. I don't think he would have been responsible for anything in giving a wrong answer though.
- simpleblob, on 10/12/2007, -0/+1John Maynard Keynes' father was an economics lecturer at Cambridge University. Apparently he is familiar with the subject since he was a child.
- geronimo, on 10/12/2007, -0/+1But he looks so smart and he has an MBA. Just look at those snappy glasses.
http://appserv.pace.edu/emplibrary/lgGreifeld.jpg - scott1, on 10/12/2007, -0/+1It doesn't to hard to cacluate( but I don't know to much about economics):
http://beginnersinvest.about.com/cs/investinglessons/l/blgrossmargin.htm - inactive, on 10/12/2007, -0/+1"You won't hear this in the US news: Nasdaq chief lacks skills in economics" thats odd becuz i did see it in the US news.
- kd1s, on 10/12/2007, -0/+1Wow - it's been awhile since my accounting classes and I'm an info sci guy, but I recall you take revenue - cost of goods sold and divide it by net sales to get the margin.
(R-C)/S
Simplistic profit is revenue - expenses. - greyfedora, on 10/12/2007, -1/+1Hold on a second -- the guy might be a genius at everything else, but he should have learned this one his first week in B-school. "Markup" and "gross profit margin" aren't arcane GAAP terms -- they're pretty fundamental to business in general. If you don't know the difference, you're going to have trouble reading an income statement. You can delegate a lot in business, but you can't delegate basics like this. Either NASDAQ is headed by someone who is not up to the job of running a lemonade stand, or he was playing dumb to try to win a court case.
- useful, on 10/12/2007, -1/+1"gross profit margin" isn't even on wikipedia
kinda funny :) - inactive, on 10/12/2007, -1/+1Utter *****.
- scifipirate, on 10/12/2007, -1/+1oh yeah, no way I'd eeevvvveeerrr hear this in US news, the American press just hates to criticize.
- rhombus, on 10/12/2007, -0/+0The Amaranth collapse got plenty of press -- it was on the front page of the New York Times. Brian Hunter (the 75 million dollar wonderboy) was fired and the fund was dissolved. Lots of people took a bath on that one.
Just because it wasn't on the front page of People magazine doesn't mean it didn't get press.
To your other point -- yes, it's an old boy network. That's the reason Harvard exists -- not because it's a particularly unique and high quality educational institution. Harvard is a doorman for the elite. - doubleblack, on 10/12/2007, -2/+2Just because someone is big, and bad and famous doesn't mean they are smart. I mean, congress is filled with high school graduates, and look at Paris Hilton!
- kayjay, on 10/12/2007, -0/+01+1=2
- Jerim, on 10/12/2007, -0/+0Right, economics and accounting are two seperate entities, even if they do overlap sometimes. Our entire educational system is built on specialization. Even doctors specialize in certain areas. Lawyers too. Try going to a heart doctor for you ear infection. They will refer you to an ear/nose/throat specialist. Go to a real estate lawyer for your divorce, and he will refer you to a lawyer who specializes in divorce. Even among scientists you have bilogical, nuclear and computer specialties. A scientist is not a scientist in every area. A person who specializes in economics, is not the same as a person who specializes in accounting.
- thepeephole, on 10/12/2007, -0/+0I have a friend who was there when he testified.!!!!
What no one has alluded to is that perhaps he knew exactly what GPM was and was trying to claim ignorance to solidify his case that the deal was based on mark up versus gross profit margin. According to testimony, he claimed that he was not only overcharged but sued for a refund on "over payments" of tens of thousands of dollars. How could a man with his pedigree write a check for the equivalent of a new convertible sports car? Despite his "credibility", the judge dismissed his case due to testimony that was not "convincing" despite almost 2 years of court proceedings and testimony.
A bigger question might be what he was doing fighting a case he did not prevail in while compromising his professional reputation by being forever branded with this story worldwide, particularly while in the process of his life's biggest "move". why would a smart man risk this kind of PR ?? In my opinion it is EGO and arrogance in spades.The biggest question has to be....why would he risk lying as he certainly knew what Gross Profit margin was when he directly quoted Top line, gross margin and net earnings in his last many quarterly NASDAQ performance press releases and is very aware of SOX and the responsibility he has as the CEO to know these things.......especially when it is a $600k trip out of his pocket!! - Blitzenn, on 10/12/2007, -1/+1So what? Sounds like someone wants to make it illegal to succeed unless you have the right degree from the right college. That's crap. Why not just say "We're smarter and have the paper (degree) to prove it so how dare you show me up!" I have found the most successful people are not those that have memorized formulas and languages, but they are the ones who have learned where to go for the answers. How to search for the right possibilites. The ones that can be acheived and successfully work toward them. The right degree might help those that could not find their way there on their own. It doesn't preclude the reality that a great number of people may very well be able to find them without that background. It's the ultimate in stupidity to proclaim that reason cannot be applied with the right 'training'. Who is really being stupid here?
- Akilestar, on 10/12/2007, -1/+0"OMG, economics almost has NOTHING to do with accounting."
That is right on the money. Economists even look at how you calculate profit differently then an accountant does. While accountants keep the books the economists take into consideration opportunity costs. Im sure he would understand that if you asked him.
"I would say that im pretty sure he knows what terms like Opportunity cost, marginal cost, marginal benefits, marginal revenue, fixed costs, variable costs, average total cost, price, demand, average revenue, etc mean and how to calculate them."
These are the fundamentals of economics that he would need to know. Gross profit margin is a fundamental of Accounting that an accountant would know. Im sure he learned GPM when he was studying for his undergrad but how long ago was that. - misterdoodi, on 10/12/2007, -1/+0LTMC had far more impact when it crashed than Amaranth. Amaranth was not even a blip on the radar.
- apheleon, on 10/12/2007, -2/+1im sure if i was rich i'd have people doin that crap for me too.
- muikano, on 10/12/2007, -4/+1I don't know. Remember, he is the successor of Allen Greenspan. Therefore he has to work harder to measure up. Why don't you go ask Greenspan how to compute Gross Margin? Tell me how many digits after the decimal he replies with.
Also, about that management philosophy--no. Good Managers know how to your job better than you do. They know when to step in and bail you out, know when to let you do your job--because the inept never know that their task is over deadline, that's why their inept. Good Managers both micro and macro manage. - AaronS2000, on 10/12/2007, -4/+1Who thinks we should adopt the Amero? (the joint currency of US, Mexico, and Canada). Some conspiracies say the dollar will drop until we go into panic and adopt the amero. I hope this isn't the case, but some are saying it.
-
Show 51 - 55 of 55 discussions
The Digg Toolbar for Firefox lets you Digg, submit content, and keep track of Digg even when you're not on the Digg site. Download the official 
© Digg Inc. 2009
— Content created and posted by Digg users is 