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Minh Uong/The New York Times

For young Wall Street employees who live their lives through social media, working at a big bank can feel as if the plug has been pulled. Most financial firms ban Facebook, Twitter and Gmail, while blocking most music and video streaming sites.

Working on Wall Street is “a full life commitment, and without access to social media or personal e-mail it can often feel like nothing exists outside of work,” said one JPMorgan Chase analyst who spoke on condition that he not be named because he is not allowed to talk to the media.

So he and other first- and second-year analysts, who commonly work more than 80 hours a week, are fighting back. They are relying on an informal network of strategies to subvert company firewalls and stay connected.

To watch soccer highlights, for example, one analyst said he translated the names of the teams through Google and looked for them on Rutube, YouTube’s Russian equivalent.

“It’s draconian,” the analyst said of his company’s Web site blocks. “It’s a job where you spend a lot of time waiting to get assignments back from superiors, and you have to find ways to kill the time.”

“YouTube is the biggest obstacle,” agreed an analyst at Bank of America Merrill Lynch who also spoke anonymously. He says that, instead, he searches Vimeo for videos, but it is not nearly as satisfying.

Steven Neil Kaplan, a professor of business and entrepreneurship at the University of Chicago Booth School of Business, said killing time had always been part of the job of a young analyst. While working as an analyst at Kidder Peabody in the early 1980s, he, too, would spend hours talking to his friends on the phone.

“You work very long hours,” Mr. Kaplan said, “and often you’re waiting for someone to turn something around.”

Time spent slacking is acceptable as long as an analyst completes the material when it is assigned. “At the end of the day, if they don’t get their work done, they’re toast,” he said.

Investment banks say regulation is the primary motivator for blocking social media. According to the Financial Industry Regulatory Authority, firms must keep a record of any business communication for three years. The rule applies to correspondence on any device or Web site. While firms are able to monitor e-mails and instant messages internally, it is impossible to track what one employee among hundreds of thousands is communicating on Twitter or through a Facebook chat.

“You have to be able to monitor what people are saying in real time,” said a Goldman Sachs spokesman, Richard Siewert Jr.

Still, bans on YouTube and other streaming content sites suggest the firewalls are also intended to stifle distractions in the workplace. While banks are wary of media sharing sites because of their comments sections, they say it is also a bandwidth issue; 200,000 employees streaming YouTube videos hinders their software systems.

“It’s about the culture,” said the JPMorgan analyst. “We’re not a start-up. It’s a buttoned-up workplace.”

To access blocked content and stay connected, he said he connected to JPMorgan’s guest Wi-Fi using his iPhone or iPad. “It’s nice to be able to have touch points to connect with your life, whether that’s checking your Gmail or Facebook to see whose birthday it is.”

Personal mobile devices are a prime workaround, and Mr. Siewert said even many senior executives used them throughout the day. “Even Bloomberg TV is hard to watch on our computers,” he said. “In the office, you’ll often find people gathered around an iPad watching something on CNBC or Bloomberg they didn’t see in real time.”

Yet analysts say streaming video on phones and tablets is clunky and does not fill the void generated by the Internet blocks.

The ability to access media, both for social and personal entertainment purposes, varies by bank and group. At Credit Suisse and Deutsche Bank, social networks are blocked but not media sharing sites. The occasional crowding around a desk for a funny YouTube video can offer solace during the grind of a long day. Still, there are formalities by which to abide.

“I’ll plug in music usually around five or six in the afternoon, when my bosses start to go home and the environment becomes more relaxed,” said one Credit Suisse analyst. Unable to access Spotify or Pandora, analysts said they streamed music through Web start-ups like SoundCloud and Grooveshark.

According to the research firm Gartner, the number of global organizations blocking social media is declining 10 percent annually. By 2014, fewer than 30 percent of all large organizations are expected to be blocking employee access to social media. As other traditionally straight-laced industries like consulting and law increasingly incorporate social media in the workplace, the financial services lag behind.

“They have such tight regulations, and the fines and the consequences are so extreme, that it’s easier to understand why they are taking this approach,” said Brian Platz, chief operating officer for the human resources technology firm SilkRoad. “The bigger problem they have is, whatever approach they’re taking isn’t preventing it anyway.”

Bank of America Merrill Lynch, Barclays and JPMorgan declined to comment for this article.

Goldman Sachs, however, is working with the software company Hearsay Social to make social media platforms more accessible. Last month, Goldman started making its Twitter feed available to employees through the company’s intranet.

“You don’t want to be so restrictive that people are conducting activity on their nonwork computers because that’s not allowed,” Mr. Siewert said. “ So we have to make the system inside our walls as modern as possible while staying within the rules. The impediment at institutions like ours is often technology or lawyers, and in both cases, I found that wasn’t really true here. It was just culture.”

For the young analyst at Bank of America, he has replaced Web procrastination with a quick walk outside.

“My bosses say it’s healthier,” he said. “At the same time, I just want to laugh. Watching a video is one of those things you can share with the guy in the cube next to you and relax during some downtime.”

Article source: http://dealbook.nytimes.com/2012/11/22/banned-on-wall-street-facebook-twitter-and-gmail/?partner=rss&emc=rss

The “kitchen sink” charge, in which all kinds of write-downs and costs are rolled into one gargantuan number, is something of a ritual in corporate America. The $8.8 billion charge that Hewlett-Packard announced on Tuesday, however, shows why such moves should be scrutinized carefully.

H.P. took the charge in its fourth quarter to reflect the reduced value of Autonomy, the British software firm that it bought last year for about $10 billion. The computing giant said it had discovered “serious accounting improprieties” at Autonomy, including what it said were ruses that inflated revenue and profitability metrics.

H.P. contends that such accounting improprieties were behind more than $5 billion of the $8.8 billion charge. For some analysts, that didn’t add up.

“Out of the $8.8 billion, I’d be very surprised if more than a couple of billion was due to accounting improprieties,” said Aswath Damodaran, a professor of finance at New York University’s Stern School of Business.

In other words, the skeptics say they think H.P. may be overstating the financial effects of the supposed accounting chicanery. They say that H.P.’s management may have wanted to write off as much of Autonomy as possible, and that the accounting allegations allowed it to increase the charge.

This move, of course, hurt H.P’s fourth-quarter earnings. But a big charge has the advantage of cleaning the slate for the next fiscal year for the company’s chief executive, Meg Whitman. With Autonomy now only a small part of H.P.’s balance sheet, there is a much smaller chance that the troubled division will lead to more embarrassing write-downs. The Autonomy acquisition was initiated by H.P.’s previous chief executive, Léo Apotheker.

Evaluating the validity of the charge requires understanding exactly what H.P. was writing down.

When a company accounts for an acquisition, it assesses the value of the target, subtracting its liabilities from its assets. It then compares this so-called fair value with the price it is paying. If it is paying more than the fair value, the difference is recorded as good will on the buyer’s balance sheet. When H.P. acquired Autonomy, it got roughly $4 billion of intangible assets (Autonomy’s expertise, intellectual property and brand recognition) and recorded roughly $6 billion of good will. In the charge announced Tuesday, H.P. slashed the value of both, effectively saying Autonomy was worth 80 percent less than it originally thought.

In some ways, an 80 percent reduction might seem deserved, if Autonomy was in fact cooking its books. But despite their accusations, H.P. executives in a conference call did not seem to present a dire picture of Autonomy. The ruses, if that’s what they were, helped revenue and profits, but probably not enough to account for $5 billion of the charge, said Anup Srivastava, an assistant professor at the Kellogg School of Management at Northwestern University. “I can’t justify it,” he said.

Autonomy’s revenue benefited from one alleged ruse, but only by 10 to 15 percent, according to Hewlett. Catherine A. Lesjak, the H.P. chief financial officer, said Tuesday that without accounting tricks, Autonomy would have appeared less profitable. But it was still making money, according to her figures.

Without the tricks, Ms. Lesjak said, Autonomy probably had operating margins as high as 30 percent, compared with as much as 45 percent with them. And on Tuesday, Ms. Whitman said Autonomy could still be something of a “growth engine” for H.P.

Still, some people think the charge may be reasonable. In assessing the size of an impairment charge, companies focus on projections of cash flows from the affected divisions. If H.P. can show that Autonomy’s cash generation is far below its expectations, and that cooking the books largely hid that, the charge may be sound, said Cynthia Jeffrey, associate professor of accounting at Iowa State University.

“If there’s fraud involved and that wasn’t found during due diligence, the whole thing could be valueless,” she said.

H.P. could argue that the high valuation it placed on Autonomy’s cash flows looks all the more untenable in light of the legerdemain allegations, and that that’s why it had to take the charge.

When asked to comment on the charge, an H.P. spokesman, Michael Kuczkowski, e-mailed a list of what he said were the improper accounting maneuvers at Autonomy.

“Because our investigation into the accounting improprieties and misrepresentations at Autonomy remains ongoing, and given our referral of this matter to regulatory authorities in the U.S. and the U.K., it would not be appropriate for us to provide a more detailed description at this time,” he said.

Article source: http://dealbook.nytimes.com/2012/11/21/does-hewletts-big-charge-add-up/?partner=rss&emc=rss

DealBook: Banned on Wall St.: Facebook, Twitter and Gmail

DealBook: Some Analysts Question Numbers in H.P.’s Write-Down

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