The Rude Awakening
Wall Street, New York
Tuesday, September 20, 2005 

First, A Word From Eric

I don't like Dennis Kozlowski, the multi-millionaire
former-CEO/embezzler of Tyco Inc. He's a bad guy and I'm
happy to see him leaving New York City in handcuffs.

                                        * * * * *

SO LONG,DENNIS KOZLOWKSI...
By Eric J. Fry

Fare thee well, Dennis Kozlowski. We will miss you. We will
miss you each and every day of your 8 1/3 to 25 year
sentence...We only regret that we will not have the
opportunity to miss you for longer.

Yesterday, a bailiff slapped handcuffs on Kozlowski and led
him out of a New York City courtroom to begin serving his
multi-year sentence. The judge also ordered Kozlowski to
pay nearly $200 million in restitution and fines.

"Family members wept in the gallery as the sentences were
imposed," the Associated Press reported. Meanwhile, most of
America cheered.

We will miss you, Dennis Kozlowski.

We will miss your beaming mug on the cover of sycophantic
business journals. We will miss the adoring columns about
your "can do" management style. We will miss your bravado,
tinged with condescension, that wowed the press and cowed
your critics. We will miss your ostentatious misuse of
stolen funds: your $6,000 shower curtain; your $17 million
apartment; and your $2 million dollar birthday parties,
complete with ice sculptures of Michelangelo's David
spewing vodka from his private parts.

In short, we will miss your pathetic caricature of
capitalism...

I never liked Dennis Kozlowski. He was – and is - a
selfish, predatory jerk. He's the kind of guy who can't
seem to enjoy his own life unless he's destroying someone
else's.

Dennis Kozlowski used to be the embezzling CEO of Tyco
International, a company once hailed as the "Next GE" by a
widely read business magazine. Now he is a convicted felon.
Justice is served.

Tyco was not the next GE, nor was it ever going to
be...Kozlowski was not the next Jack Welch, nor was he ever
going to be. Kozlowski was no Jack Welch...and he was
certainly no Jack Kennedy. Kozlowski was not even a Jack
Lalane. In short, Kozlowski wasn't Jack.

But he was a marvelous imposter.

Dennis "the Menace" was not a capitalist, he was merely a
thief. His masquerade cost millions of investors billions
of dollars. But he did not fool everyone. Jim Chanos, a
legendary short-selling hedge fund manager here in
Manhattan, identified Tyco as a questionable corporate
entity, long before the rest of the world recognized that
fact.

Taking my cue from Chanos, I quickly reached a similar
conclusion. In the early days of 2001, aided by a savvy
securities analyst named Robert Tracy, your editor
published the following observation:

"Even as Tyco International CEO Dennis Kozlowski stacks
floor after floor on the Tyco revenue edifice, the
structure's financial underpinnings are rotting away. Sure,
Kozlowski's GE wannabe has engineered some aesthetically
pleasing numbers. But the numbers-behind-the-numbers give
cause for concern. Essentially, Tyco is a growth stock
without the growth. Free cash-flow growth pales next to the
net cash spent on acquisitions, and the marginal increase
in cash from operations also looks pretty skimpy alongside
the increase in cash spent. Meanwhile, tangible book value
- the stuff that you can put a real value on - has
literally disappeared, falling from $701 million at the end
of fiscal 2000 to a negative $4.4 billion as of the second
quarter."

Eventually, Tyco's mysterious accounting became less
mysterious. The English language, helpfully, provides a
word to describe Tyco's accounting. The word is "fraud."
The same word aptly describes Dennis Kozlowski. He is a
fraud...a preposterous fraud.

So long, Dennis Kozlowski. We will miss you...we only
regret that we will not have the opportunity to miss you
for longer.

You don't have to break the law to get rich....

[Joel's Note: In all walks of life one must, at some point,
perform a cost-benefit analysis. Is cooking the books worth
the best part of my life in a six-by-eight cell? The hefty
profits options plays can deal out may seem criminal
too...the only difference is that they don't come with a
complimentary pass to the big house.