Critical Mass

Dennis Kozlowski resigned yesterday as Chief Executive Officer of Tyco, one of the world's largest conglomerates, amid allegations that he will soon be indicted by the Manhattan District Attorney's office for (personal) sales tax evasion. Today's papers are chock-a-block with Tom Wolfean details of Mr. Kozlowski's business excesses, which were legion. In the last four years of his Tyco employment, Mr. Kozlowski was paid roughly $400 million in cash, stock, stock options and other treats from the "shareholder value" goodie bag. He leaves behind a company that has lost roughly 75% of its market capitalization in the last six months and is staggering under the weight of a $27 billion debt load. There are a lot of people who believe that Tyco will shortly sell off its pieces and cease to exist (as a conglomerate) two years from today.

The sheer volume of corporate scandal is beginning to take its toll. Telecom, financial services, energy trading and a variety of other business categories are reeling. It is likely that more bad news is on the way. The possibility of Dow 8000 now looms large. The virtuous circle has become, with all the bad news, a vicious circle.