- The Washington Times - Thursday, January 4, 2001

MicroStrategy Inc. workers will set sail next week on the company's seventh annual Caribbean cruise.
But with free spending over at technology companies, Vienna, Va.-based MicroStrategy won't fund the full cost of the cruise for the first time since it began what once was one of the best corporate perks available.
And the company, beset by problems last year amid the technology sector's own upheaval caused by falling stock prices, may abandon the annual trip.
"A lot of companies have had to readjust their perks," MicroStrategy spokesman Aaron Radelet said.
About 2,000 MicroStrategy employees and their friends and family have signed up for the cruise. Unlike years past, people going on the trip must pay 40 percent of the cost of their ticket this year. It had been a free cruise and open only to employees.
MicroStrategy will pay the remaining 60 percent of the cost of the cruise on the Royal Caribbean Voyager of the Seas.
The cruise cost the company about $3 million, Mr. Radelet said, but it still is not clear how much this year's trip will cost.
Fines handed down by the Securities and Exchange Commission (SEC) cost MicroStrategy Chairman Michael Saylor, Chief Operating Officer Sanjeev Bansal and former Chief Financial Officer Mark Lynch a combined $11 million in December.
MicroStrategy was cited for filing inaccurate financial reports. From its initial public offering in June 1998 through March 2000, the SEC said, the company "materially overstated" its revenue and earnings from sales of software and services. While the company's financial reports showed net income during that time, it should have reported net losses, the regulators said.
The SEC troubles began in March after MicroStrategy reserved the vessel for next week's cruise. The company wouldn't have reserved the ship for the trip if it had learned about the SEC charges first, Mr. Radelet said. Instead of abandoning the cruise when it learned about the violations, the company chose to share the cost of tickets with employees.
"We had to be more price-conscious after the restatement," Mr. Radelet said.
The SEC violations forced MicroStrategy to reduce its reported revenues for 1999 to $151.3 million, down from the previously reported $205.3 million. The company also revised its financial reports for 1997 and 1998.
The company's stock price has fallen from its 52-week high of $333 a share to yesterday's close of $10.94 a share on the Nasdaq Stock Market.
In August, MicroStrategy laid off 234 employees.
In light of the company's financial difficulties, analysts view perks like the Caribbean cruise with skepticism. The tight labor market is forcing companies to spend money on workers, but extravagant spending is frowned upon.
"You want to foster an environment where people want to work because attracting and keeping people still is very difficult. But it would be nice if they found another way of attracting and keeping people," said David Hilal, managing director and technology analyst at Arlington investment banker Friedman, Billings, Ramsey and Co.
Even though MicroStrategy says it hasn't decided whether to fund a cruise next year, Mr. Hilal said he expects the trip won't happen again.
But perks like the cruise and last year's Super Bowl party at FedEx Field held to help promote its Super Bowl ads helped land MicroStrategy on Fortune magazine's list of the 100 best companies for which to work during the past two years. In a list to be published in Fortune this month, MicroStrategy ranks 73rd.
"It really shocked me that MicroStrategy was still on the list after the disastrous year it had," said Milton Moskowitz, a San Francisco-based freelance writer who has compiled the list with Robert Levering annually since 1984.
MicroStrategy made the list because employees still say it's a cutting-edge company, Mr. Moskowitz said. Whether a company makes the list depends largely on what employees tell Mr. Moskowitz and Mr. Levering about the company.
Despite the fact employees still rave about the company, MicroStrategy may have to find new ways to reward employees if it stops sending them on annual cruises.
"When you tighten your belt, you have to look at how you're spending money, and that includes perks," Mr. Radelet said.


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