Case 4: MiniScribe (1989)

• Prof. Dr. Klaus Henselmann
• Dr. Stefan Hofmann

The downfall of MiniScribe Corp., resulting from a major accounting fraud, has become one of the most scandalous episodes in the history of the computer industry. MiniScribe was a manufacturer of computer disk drives with its headquarters in Longmont, Colorado, and manufacturing facilities in Longmont, Singapore, and Hong Kong. Founded in 1980, the company fell on hard times in the mid-1980s. It lost its biggest customer, IBM Corp. (which decided to make its own disk drives), as well as several other critical supply contracts. With the industry-wide slump in disk drive sales, MiniScribe was facing a severe liquidity crisis. However, when times are hardest, the temptation to fudge the numbers is greatest.

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