The chips are up for Dole and GOP in computer land

0 Comments | Insight on the News, Nov 11, 1996 | by Gayle M.B. Hanson

But if the issue of encryption was put on the back burner during Kemp's visit to this center of computer entrepreneurship, the key issues that have Silicon Valley execs hopping onto the GOP bandwagon are securities-reform legislation, capital-gains tax reduction and the Dole platform for growth. Perhaps the most important of these issues is securities-litigation reform, an area in which Silicon Valley executives feel particularly betrayed by the Clinton administration. The volatile nature of the computer industry that dots the Northern California high-tech community has made it particularly susceptible to predatory lawsuits, in which attorneys file class-action proceedings on behalf of shareholders. In many cases the firms settle out of court to avoid costly litigation. Shareholders may be rewarded with a few bucks, but the big winners are the wily lawyers who specialize in promoting the litigation.

"We had a situation at Cypress several years ago where our fourth-quarter earnings of 15 cents per share were 5 cents below the predicted 20 cents per share," recalls Rodgers. "We were sued. In June 1995 a judge granted our petition to throw the case out of court; the plaintiffs are appealing. We've spent $5 million over four years to produce 750,000 pages of documents. And we're not going to settle."

Rodgers points to the fact that in 1995 Clinton vetoed a litigation-reform bill designed to prevent frivolous lawsuits, only to have the House and Senate override that veto. On Election Day, California voters will have the opportunity to assess a referendum, Proposition 211, that would allow such lawsuits to continue to be filed in the Golden State. While Clinton has come out against that proposition, his flip-flop on the issue is viewed with disdain by many in the valley, who see it merely as political opportunism.

Clinton vetoed the bill largely because of lobbying efforts led by White House dinner guest and Clinton fundraiser William Lerach, who is a professional class-action lawyer and is Proposition 211's author and primary financial supporter. Realizing that he'd burned bridges in Silicon Valley Clinton performed a double flip -- siding against proposition 211 after a $50,000a-plate Silicon Valley dinner, at which support for the president was solicited among many valley heavyweights, including Barksdale, who expressed surprise that there has been so much interest by both parties in getting Silicon Valley backing.

While Silicon Valley executives are hush-hush about where their political money is going, one thing is certain. Millions of dollars are being spent both by the foes and proponents of Proposition 211. As for opening up their checkbooks for the presidential candidates, support is flowing in both directions, with the Dole camp in the lead. However, when it comes to future elections, Silicon Valley likely will loom as an evermore important piece of the California landscape.

As Insight goes to press, the 245 executives who signed the petition supporting Dole's presidential bid are looking for a way to get their message -- that the leaders of tomorrow are supporting the GOP today -- across nationally. Tired of what they believe has been incredibly biased coverage in the news media, which they claim continue to picture Silicon Valley in the pocket of the Democratic camp, they are looking to take their message to the rest of America through a full-page ad to be published nationally However, because they have not organized themselves into a recognized political-action committee, or PAC, some people are concerned that purchasing such an ad might leave the community open for more litigation.