Case Summaries

Case Summaries - Dr. Terri Feldman Barr Business 101...

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Dr. Terri Feldman Barr Business 101 January 22, 2009 Case Summaries Case 6.3: MiniScribe and the Auditors: MiniScribe was a disk drive manufacturer. In the 1980’s, MiniScribe’s business decreased. The company had lost its biggest customer, IBM. The board of directors for MiniScribe brought in Q.T. Wiles to fix the technology industry. Wiles engaged the venture-capital and investment banking firm, Hambrecht & Quist, to raise the capital that was needed in order for the company to improve. MiniScribe’s sales went from $113.9 million in 1985 to $603 million in 1988. In 1988, the company’s business hit another slump. As a result, Wiles and other officers were selling stock. Once the shares were sold, MiniScribe had high inventory and high receivables. The sales of MiniScribe were down and customers were not paying their bills. When MiniScribe released new financial information, an in-house audit, shareholder lawsuits, and an investigation of stock trading by SEC were all soon to follow. The investigation revealed that sales were booked at the time of shipment even though titles would not pass to the customer until completion of the shipment. In addition, in the 1986 audit by Coopers & Lybrand, it was found that the company officials broke into trunks containing the auditors’ work papers and increased year-end inventory figures. With all of these discoveries, MiniScribe’s stock continued to drop and by 1990 MiniScribe had filed for bankruptcy and was purchased by Maxtor Corporation. Primary stakeholders: owners/financers, customers, shareholders, employees, suppliers.
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This note was uploaded on 02/22/2012 for the course BUS 101 taught by Professor Rollins during the Spring '08 term at Miami University.

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Case Summaries - Dr. Terri Feldman Barr Business 101...

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