Marge Norman and Miniscribe Corporation

12 Pages Posted: 21 Oct 2008

See all articles by Robert Sack

Robert Sack

University of Virginia - Darden School of Business

Andrew Wicks

University of Virginia - Darden School of Business

Patricia H. Werhane

University of Virginia - Darden School of Business

Jenny Mead

University of Virginia - Darden School of Business

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Abstract

This case details the rise of a hard-disk storage manufacturer in the mid-1980s and the company's demise after executives manipulated the financial information.

Excerpt

UVA-C-2168

MARGE NORMAN AND MINISCRIBE CORPORATION

Marge Norman stood at her office window overlooking the loading docks at MiniScribe's Singapore production facility. New to both Singapore and her position as plant manager (effective December 1, 1987), she had recently been promoted from her job as a development engineer at the company's facility in Longmont, Colorado. MiniScribe's new facility in Singapore offered her a unique opportunity to gain the kind of management experience she sought. MiniScribe manufactured and distributed a wide variety of hard-disk storage devices for personal computers. Competitive pressures in the industry had forced the company to set up offshore manufacturing facilities in Singapore and Hong Kong.

MiniScribe's inception had been great, but Norman knew that the failure rate for start-up companies was high. Indeed, competitive pressures began to mount in 1984, shortly after her arrival, and MiniScribe was forced to undertake a dramatic management shakeup. By early 1985, things were looking bleak for MiniScribe, after an industry slowdown had caused a loss of $ 7 million at the end of 1984.

Norman had been pleasantly surprised when, in mid-1985, a San Francisco investment bank led a team of investors who injected $ 20 million of new equity capital into the company. The investment bank, Hambrecht and Quist (H&Q), had a history of investing in troubled companies, specializing in turn-around situations with high-tech industries. H&Q contributed $ 8.5 million, and when one of the H&Q partners, Q. T. Wiles, took over as chairman of MiniScribe, he injected $ 1.6 million of his personal funds into the venture. Known as “Dr. Fixit” for his skill in resurrecting companies on the brink of failure, Wiles had reportedly staged successful turnarounds at 12 high-tech companies since he had begun working with H&Q in 1972. By the end of 1985, a clear recovery was under way for MiniScribe.

Norman recalled a recent conversation with her new boss, the general manager of MiniScribe's Singapore operations. He had told her the company was expecting several large shipments of inventory from Longmont that would need to be repackaged for use at the Singapore plant and that the inventory would be rerouted to a rented warehouse to facilitate that repackaging. Norman thought this was odd, but her boss assured her that it was common practice and that it interfered less with the plant's day-to-day operations if the repackaging procedure took place in an off-site warehouse. He told her he would oversee the process, and that she didn't need to worry about it—he was just keeping her informed.

. . .

Keywords: ethical issues, fraud reporting, disclosure, financial ethics, business accounting methods

Suggested Citation

Sack, Robert and Wicks, Andrew and Werhane, Patricia H. and Mead, Jenny, Marge Norman and Miniscribe Corporation. Darden Case No. UVA-C-2168. Available at SSRN: https://ssrn.com/abstract=1276604

Robert Sack (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Andrew Wicks

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/wicks.htm

Patricia H. Werhane

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4840 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/werhane.htm

Jenny Mead

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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