Paranoia (26 page)

Camilletti went on, “There’s a lot of stuff here quoting some of our resellers—British Tel, Vodafone, DoCoMo—about how the new cell phones aren’t moving. The dogs aren’t eating the dog food. So how does a reporter with a New York byline even
know
to call DoCoMo in Japan? It’s got to be Motorola or Wyatt or Nokia who dropped a dime.”

“Anyway,” Goddard said, “it’s all water under the bridge. My job isn’t to manage the media, it’s to manage the darned company. And this asinine piece, however skewed and unfair it might be—well, how terrible is it, really? Apart from the grim-reaper headline, what’s in here that’s all that new? We used to hit our numbers on the dot each quarter, never missed, maybe beat ’em by a penny or two. We were Wall Street’s darling. Okay, revenue growth is flat, but good Lord, the entire industry is suffering! I can’t help but detect a little Schadenfreude in this piece. Mighty Homer has nodded.”

“Homer?” said Colvin, confused.

“But all this tripe about how we may be facing our first quarterly loss in fifteen years,” said Goddard, “that’s pure invention—”

Camilletti shook his head. “No,” he said quietly. “It’s even worse than that.”

“What are you talking about?” Goddard said. “I just came from our sales conference in Japan, where everything was hunky-dory!”

“Last night when I got the e-mail alert about this article,” Camilletti said, “I fired off e-mails to the VP/Finance for Europe and for Asia/Pacific telling them I wanted to see all the revenue numbers as of this week, the QTD sales revenue numbers broken down by customer.”

“And?” prompted Goddard.

“Covington in Brussels just got back to me an hour ago, Brody in Singapore in the middle of the night, and the numbers look like crap. The sell-in was strong, but the sell-through has been terrible. Between Asia/Pacific and EMEA, that’s sixty percent of our revenue, and we’re falling off a cliff. The fact is, Jock, we’re going to miss this quarter, and miss big. It’s a flat-out disaster.”

Goddard glanced at me. “You’re obviously hearing some privileged, nonpublic information, Adam, let’s be clear about that, not a word—”

“Of course.”

“We’ve got,” Goddard began, faltered, then said, “for God’s sake, we’ve got AURORA—”

“The revenue from AURORA is several quarters off,” said Camilletti. “We’ve got to manage for
now
. For current operations. And let me tell you, when these numbers come out, the stock’s going to take a
huge
hit,” Camilletti went on. He spoke in a low voice. “Our revenues for the fourth quarter are going to be off by
twenty-five percent
. We’re going to have to take a significant charge for excess inventory.”

Camilletti paused, gave Goddard a significant look. “I’m estimating a pretax loss of close to half a
billion
dollars.”

Goddard winced. “My God.”

Camilletti went on, “I happen to know that CS First Boston is
already
about to downgrade us from ‘overweight’ to ‘market weight.’ That’s from a ‘buy’ to a ‘hold.’ And that’s
before
any of this comes out.”

“Good Lord,” Goddard said, groaning and shaking his head. “It’s so absurd, given what we
know
we have in the pipeline.”

“That’s why we need to take another look at this,” Camilletti said, jabbing his copy of the blue Bain document with his index finger.

Goddard’s fingers drummed on the Bain study. His fingers, I noticed, were chubby, the back of his hands liver-spotted. “And quite the handsomely bound report it is, too,” he said. “You never told me what it cost us.”

“You don’t want to know,” Camilletti said.

“I don’t, do I?” He grimaced, as if he’d made his point. “Paul, I swore I would never do this. I gave my word.”

“Christ, Jock, if this is about your ego, your vanity—”

“This is about keeping my word. It’s also about my credibility.”

“Well, you should never have made such a promise. Never say never. In any case, you were talking in a different economy—prehistoric times. The Mesozoic Era, for God’s sake. Rocketship Trion, growing at warp speed. We’re one of the few high-tech companies that
hasn’t
gone through layoffs yet.”

“Adam,” Goddard said, turning to me and looking over his glasses, “have you had a chance to plow through all this gobbledygook?”

I shook my head. “Just got it a few minutes ago. I’ve skimmed it.”

“I want you to look closely at the projections for consumer electronics. Page eighty-something. You have some familiarity with that.”

“Right now?” I asked.

“Right now. And tell me if they look realistic to you.”

“Jock,” said Jim Colvin, “it’s just about impossible to get honest projections from any of the division heads. They’re all protecting their head count, guarding their turf.”

“That’s why Adam’s here,” Goddard replied. “He doesn’t have turf to protect.”

I frantically thumbed through the Bain report, trying to look like I knew what I was doing.

“Paul,” Goddard said, “we’ve gone through all this before. You’re going to tell me we have to slash eight thousand jobs if we want to be lean and mean.”

“No, Jock, if we want to remain
solvent
. And it’s more like ten thousand jobs.”

“Right. So tell me something. Nowhere in this darned treatise does it say that a company that downsizes or rightsizes or whatever the hell you want to call it is ever better off in the long run. All you hear about is the short term.” Camilletti looked like he was about to respond, but Goddard kept going. “Oh, I know, everyone does it. It’s a knee-jerk response. Business stinks? Get rid of some people. Throw the ballast overboard. But do layoffs ever really lead to a
sustained
increase in share price, or market share? Hell, Paul, you know as well as I do that as soon as the skies clear up again we just end up hiring most of ’em back. Is it really worth all the goddamned
turmoil?
”

“Jock,” Jim Colvin said, “it’s what they call the Eighty-Twenty Rule—twenty percent of the people do eighty percent of the work. We’re just cutting the fat.”

“The ‘fat’ is dedicated Trion employees,” Goddard shot back. “To whom we issue those little culture badges that talk about loyalty and dedication. Well, it’s a two-way street, isn’t it? We expect loyalty from them, but they don’t get it back from us? Far as I’m concerned, you go down this road, you lose more than head count. You lose a fundamental sense of trust. If our employees have upheld their half of the contract, how come we don’t have to? It’s a damned breach of trust.”

“Jock,” Colvin said, “the fact is, you’ve made a lot of Trion employees very rich in the last ten years.”

Meanwhile I was racing through the charts of projected earnings, trying to compare them to the numbers I’d seen over the last couple of weeks.

“This is no time to be high-minded, Jock,” Camilletti said. “We don’t have that luxury.”

“Oh, I’m not being high-minded,” Goddard said, drumming his fingers some more on the tabletop. “I’m being brutally practical. I don’t have a problem with getting rid of the slackers, the coasters, the rest-’n-vesters. Screw ’em. But layoffs on this scale just lead to increased absenteeism, sick leaves, people standing around the water cooler asking each other about the latest rumor. Paralysis. Put it in a way you can understand, Paul, that’s called a decrease in productivity.”

“Jock—” Colvin began.

“
I’ll
give you an eighty-twenty rule,” Goddard said. “If we do this, eighty percent of my remaining employees are going to be able to focus no more than about twenty percent of their mental abilities on their work. Adam, how do the forecasts look to you?”

“Mr. Goddard—”

“I fired the last guy who called me that.”

I smiled. “Jock. Look, I’m not going to dance around here. I don’t
know
most of the numbers, and I’m not going to shoot from the hip. Not on something this important. But I do know the Maestro numbers, and I can tell you these look overly optimistic, frankly. Until we start shipping to the Pentagon—assuming we land that deal—these numbers are way high.”

“Meaning the situation could be even worse than our hundred-thousand-dollar consultants tell us.”

“Yes, sir. At least, if the Maestro numbers are any indication.”

He nodded.

Camilletti said, “Jock, let me put it to you in human terms. My father was a goddamned schoolteacher, okay? Sent six kids through college on a schoolteacher’s salary, don’t ask me how, but he did. Now he and my mom are living off his measly life’s savings, most of which is tied up in Trion stock, because I told him this was a great company. This is not a lot of money, by our standards, but he’s already lost twenty-six percent of his nest egg, and he’s about to lose a whole hell of a lot more. Forget about Fidelity and TIAA-CREF. The vast majority of our shareholders are Tony Camillettis, and what are we supposed to tell
them?
”

I had the distinct feeling that Camilletti was making this up, that in reality his investment-banker father lived in a gated community in Boca and played a lot of golf, but Goddard’s eyes seemed to glisten.

“Adam,” Goddard said, “
you
see my point, don’t you?”

For a moment I felt like a deer frozen in the headlights. It was obvious what Goddard wanted to hear from me. But after a few seconds I shook my head. “To me,” I said slowly, “it looks like if you don’t do it now, you’ll probably have to cut even more jobs a year from now. So I have to say I’m with Mr.—with Paul.”

Camilletti reached out a hand and patted me on the shoulder. I recoiled a little. I didn’t want it to look like I was choosing sides—against my boss. Not a good way to start off the new job.

“What sort of terms are you proposing?” Goddard said with a sigh.

Camilletti smiled. “Four weeks of severance pay.”

“No matter how long they’ve been with us? No. Two weeks of severance pay for every year they’ve been with us, plus an additional two weeks for every year beyond ten years.”

“That’s
insane
, Jock! In some cases, we’ll be paying out a year’s severance pay, maybe more.”

“That’s not severance,” muttered Jim Colvin, “that’s welfare.”

Goddard shrugged. “Either we lay off on those terms, or we don’t lay off at all.” He gave me a mournful look. “Adam, if you ever go out to dinner with Paul, don’t let him choose the wine.” Then he turned back to his CFO. “You want the layoffs effective June 1, is that right?”

Camilletti nodded warily.

“Somewhere in the back of my mind,” Goddard said, “I have this vague recollection that we signed a one-year severance contract with the CableSign division we acquired last year that expires on May thirty-first. Day before.”

Camilletti shrugged.

“Well, Paul, that’s almost a thousand workers who’d get a month’s salary plus a month’s pay for each year served—if we lay them off one day earlier. A decent severance package. That one day’ll make a huge difference to those folks. Now they’ll get a lousy two weeks.”

“June first is the beginning of the quarter—”

“I won’t do that. Sorry. Make it May thirtieth. And as for those employees whose stock options are underwater, we’ll give ’em twelve months to exercise them. And I’m taking a voluntary pay cut myself—to a dollar. How about you, Paul?”

Camilletti smiled nervously. “You get a lot more stock options than I do.”

“We’re doing this once,” Goddard said. “Doing it once and doing it right. I’m not slicing twice.”

“Understood,” Camilletti said.

“All right,” Goddard said with a sigh. “As I’m always telling you, sometimes you just gotta get in the car, get with the program. But first I want to run this by the entire management team, conference in as many of them as we can get together. I also want to get on the horn to our investment bankers. If it flies, as I fear it will, I’ll tape a Webcast announcement to the company,” Goddard said, “and we’ll release it tomorrow, after the close of trading. And make the public announcement at the same time. I don’t want a word of this leaking out before then—it’s demoralizing.”

“If you’d prefer, I’ll make the announcement,” Camilletti said. “That way you keep your hands clean.”

Goddard glared at Camilletti. “I’m not hanging this on you. I refuse. This is my decision—I get the credit, the glory, the magazine covers, and I get the blame too. It’s only right.”

“I only say it because you’ve made so many pronouncements in the past. You’ll get skewered—”

Goddard shrugged, but he looked miserable. “Now I suppose they’re all going to be calling me Chainsaw Goddard or something.”

“I think ‘Neutron Jock’ has a better ring to it,” I said, and for the first time, Goddard actually smiled.

45

I left Goddard’s office feeling both relieved and weighted down.

I’d survived my first meeting with the guy, didn’t make too big a fool of myself. But I was also in possession of a serious company secret, real inside information that was going to change a lot of people’s lives.

Here’s the thing: I’d made up my mind that I wasn’t going to pass this on to Wyatt and company. It wasn’t part of my assignment, wasn’t in my job description. It had nothing to do with the skunkworks. I wasn’t required to tell my handlers. They didn’t know I knew, anyway. Let them find out about the Trion layoffs when everyone else did.

Preoccupied, I stepped off the elevator on the third floor of A Wing to grab a late lunch in the dining room when I saw a familiar face coming at me. A tall, skinny young guy, late twenties, bad haircut, called out, “Hey, Adam!” as he got into the elevator.

Even in that fraction of a second before I could put a name to the face, my stomach clenched. My animal hindbrain had sensed the danger before my cerebrum figured it out.

I nodded, kept on walking. My face was burning.

His name was Kevin Griffin, an affable if goofy-looking guy, and a decent basketball player. I used to shoot hoops with him at Wyatt Telecommunications. He was in sales in the Enterprise Division, in routers. I remembered him as very sharp, very ambitious behind that laid-back demeanor. He always beat his numbers, and he used to joke with me, in a good-natured sort of way, about my casual attitude toward work.