Glaswegian

IBM's lawyers have a busy winter ahead of them as Big Blue attempts to fight off antitrust accusations related to its mainframe business and an IBM employee faces allegations of insider trading.

The US Department of Justice has issued formal requests for information related to a complaint lodged by the Computer and Communications Industry Association (CCIA) about IBM's actions in the mainframe market, as the IDG News Service reported 8 October.

In a separate incident, the US Securities and Exchange Commission last week charged IBM executive Robert Moffat with insider trading.

Moffat, the head of IBM's Systems and Technology Group, was placed on a leave of absence.

Big Blue will suffer a blow to its reputation, but ultimately survive these legal problems, says Bob Djurdjevic, a longtime industry analyst who founded Annex Research in 1978, and was an IBM employee for eight years performing technical, sales and management functions.

"If there's any company that's always been a model of pristine behavior, being above it all, it was IBM," Djurdjevic says. "I don't think it will have an effect on IBM's business because it has deep talent. However, it is a black eye to IBM's reputation."

Djurdjevic writes that IBM is dealing with "triple trouble," referring to the two legal incidents and a beating taken by IBM stock. Out of the three, the insider trading allegation "probably hurt the most," he writes.

According to the IDG News Service, "Moffat allegedly provided insider information when IBM was considering acquiring Sun Microsystems to Danielle Chiesi, a portfolio manager at New York-based New Castle Funds. Chiesi allegedly made trades on behalf of New Castle Funds based on the tips and generated about $1 million in illegal profits."

Djurdjevic notes that "accused doesn't mean convicted," but he writes about what seems to be a negative shift in IBM culture. October 16 may go down as a "Black Friday" in IBM history, he says.


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