Newsletters:

Coming Clean

Oct 19, 2004
By

CIO Update Staff






It was less than two years ago that Wall Street analysts Jack Grubman and Henry Blodget paid $19 million in fines and were banned from the securities industry for life to settle allegations that they'd promoted stocks like WorldCom and Global Crossing as the telecom companies swan-dived into an empty swimming pool.

Shortly after that, in April 2003, 10 of Wall Street's biggest players agreed to pay $1.4 billion after a lengthy investigation into the practice of writing sunny research reports and issuing "buy" recommendations to win investment banking business from companies, predominantly in tech and telecom.

Is a similar cleanup required in the world of technology analysts?


The business of predicting which new technologies are worth buying -- from digital video recorders to telecom equipment to supply chain software -- was born in Boston, when Pat McGovern started International Data Corp. in 1964, and its center of gravity is still here.

Firms such as the Yankee Group, Forrester Research, AMR Research, Nucleus Research, and the Aberdeen Group help advise major corporations and the US government on how to spend about $700 billion a year on information technology.

Their research reports typically compare the cluster of companies selling a similar product: How does Cisco's voice-over-Internet equipment compare with Avaya's and Nortel's? While the reports may not move Cisco's stock price the day that they're published, as the pronouncements of Wall Street analysts sometimes do, they influence how big companies (and the government) invest their IT dollars and develop technology strategies, which can have a big effect on long-term performance.

See thecomplete story on www.boston.com.


 

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