Two former Cisco Systems Inc. accountants are heading to prison.

Geoffrey Osowski, 30, and Wilson Tang, 35, were each sentenced to 34 months in prison for transferring $7.8 million in company stock to their personal brokerage accounts. The maximum sentence for the crime is five years.

Back in August, Osowski and Tang pleaded guilty to the computer-fraud charges. As part of the guilty plea, the two were ordered to pay $7.9 million in restitution to Cisco, including the more than $5 million that they made selling Cisco’s stock, according to published reports. The pair also had to return jewelry and a 2001 Mercedes, according to Bloomberg, citing as its source the U.S. Attorney’s Office for the Northern District of California.

The two accountants illegally accessed Cisco’s programs for managing stock-option disbursements and granted themselves 230,550 shares over six months starting in October 2000, according to wire service reports, citing prosecutors.

Osowski and Tang will begin serving their sentences on January 8. Osowski was a financial analyst while Tang was an accounting manager at the networking specialist. They were fired back in March when the FBI was asked to investigate irregularities in the trading accounts. They were indicted by a federal grand jury in April for stealing the Cisco shares.

Intel CFO Bryant Predicts “Golden Age”

Andy Bryant, chief financial officer at Intel Corp., said his company sees “a 10- to 15-year golden age coming” in technology.

Speaking at the Credit Suisse First Boston annual technology conference at the Phoenician resort in Scottsdale, Arizona, Bryant reportedly said, “I don’t think anyone is very good at forecasting near-term today. If you take a long-term view, I firmly believe we’re going to enter a period of tremendous opportunities.”

One area that should do well in the short term, at least at Intel, is personal computers. According to wire service reports, Bryant said Intel is stepping up its investment in PCs. “We cut desktop (spending) more than most companies last year,” he said, according to Dow Jones. “We really slammed the door on that, to spend on networking, and we’re having to pay this year. In 2002, there will be a dramatic increase in the PC (budget).”

Meanwhile, DoubleClick Inc. CEO Kevin Ryan reportedly told the audience that the Internet advertising specialist will report a surprisingly strong profit in 2002. “People are going to be surprised by the level of profitability in our key businesses,” Ryan told the audience, said published accounts.

Ryan conceded that the next few quarters will be “tough” for advertising. But, he believes DoubleClick’s E-mail business will continue to grow and become the company’s biggest revenue generator next year, according to the reports.

And Veritas Software Corp. Chief Executive Gary Bloom reportedly said there has been growing demand for its stored data management software, especially for data protection and recovery products since September 11. “Veritas is positioned very well for the long-term,” Bloom said, according to Dow Jones. “The storage market is going through a massive change, and this is the sweet spot — software.”

Finally, Alfred Chuang, CEO of BEA Systems Inc., reportedly predicted there will be high demand for his company’s framework software products.

Xerox Raises More Than $1 Billion

Despite the recent shakeup in its finance department, Xerox Corp. raised more than $1 billion through a convertible trust preferred securities offering, double the initial expectations of $500 million.

The company also confirmed that it has received a previously announced financing facility from GE Capital, including $835 million secured by portions of Xerox’s lease receivables in the United States, and $450 million secured by receivables in the U.K. As a result of the funding, Xerox now has about $3.6 billion in cash and cash equivalents in its corporate coffers.

“The completion of these financing arrangements is further evidence of Xerox’s strengthened financial position and the building confidence in Xerox’s turnaround and return to profitability,” said Barry Romeril, Xerox vice chairman and chief financial officer, in a statement.

This is likely the last financing Romeril will ever arrange for Xerox. The 58-year-old finance chief is set to retire in December. As CFO.com reported earlier this month, the copier company is currently under federal investigation for alleged accounting irregularities at its Mexican operations. In addition to Romeril’s retirement, Xerox controller Gregory Tayler has being reassigned to the company’s treasury department, and current treasurer Margie Filter has announced she too will be retiring soon.

From the Junk Heap

It looks like the market for speculative-grade debt is starting to revive.

On Tuesday, several junk issues came to market.

• Nextel Partners, Inc. placed $225 million in 8-year senior notes in the private debt market, up from an originally planned $200 million, led by Credit Suisse First Boston. The junk issue, rated B3 by Moody’s and CCC-plus by S&P, was priced at a deep discount to yield 13.875 percent, or a whopping 892 basis points over comparable Treasurys.

• Toll Brothers Inc. issued $150 million in 10-year senior subordinated notes, priced at par to yield 8.25 percent, or 322 basis points over comparable Treasurys. The junk issue was rated Ba2 by Moody’s and BB-plus by S&P.

• Hasbro Inc. issued $225 million of 20-year senior bonds convertible into company stock, $25 million more than planned. The bonds carried a 2.75 percent coupon and are convertible into Hasbro shares at $21.60, a 25 percent premium over their closing price. The junk issue was rated Ba3 by Moody’s and BB by S&P.

These offerings could mark the beginning of a turnaround in the high-yield market. That market has not exactly been a great place to borrow money since 9/11, as cautious lenders have demanded sky-high spreads from issuers. Conversely, there has already been a record issuance of investment-grade bonds and convertible securities this year — not surprising given interest rates are at their lowest levels in decades.

Other Financing News

• Alcoa Inc. plans to raise $1.5 billion from a two-part debt issue, according to published reports. The company is expected to issue 3-year floating rate notes priced at around 30 to 35 basis points more than comparable Treasurys and 10-year fixed rate notes priced about 85 to 90 basis points over Treasurys.

• Maytag Corp. issued $200 million in 5-year notes, $50 million more than company management had initially planned to raise. The Maytag medium-term notes were rated Baa1 by Moody’s and BBB-plus by S&P, and were priced at par to yield 6.875 percent. The underwriting was led by Lehman Brothers and Banc One Capital Markets Inc.

• Vectren Corp. issued $250 million in 10-year senior notes, led by ABN Amro Securities Inc. and Banc One Capital Markets Inc. The notes were priced to yield 6.722 percent, or 170 points over Treasurys. The Vectren debt was rated A2/A-minus.

• Wells Fargo & Co. announced that its board has authorized a repurchase program for up to 30 million shares of company stock.

Health-Care Costs Expected to Surge

Health-care cost increases will be steeper than originally expected for many corporate benefit plans in 2002.

Consultant Watson Wyatt now expects corporate health-care benefit costs to increase by more than 15 percent next year. The consultancy’s recent health-care cost survey showed employers were bracing for a 13.6 percent increase.

“The additional projected increase in costs for 2002 can be attributed to the post-September 11 upswing in behavioral health and employee-assistance-plan services, as well as a rise in anti-anxiety and anti-depressant prescription drug expenses,” notes Randall Abbott, a senior health care consultant at Watson Wyatt, in a press release.

Another reason for the larger-than-expected increase: COBRA. It seems that employees moving to COBRA plans typically incur costs at least 50 percent greater than active employees, according to Watson Wyatt. For example, the added COBRA costs associated with a 10 percent reduction in staff can produce an additional 10 to 15 percent increase in overall health-benefit costs per active employee for as long as 18 months.

In Brief

• The insurance industry will take a $50 billion to $70 billion hit from the September 11 terrorist attacks, says PricewaterhouseCoopers. At a conference on Tuesday, John Scheid, chairman of PwC’s Americas insurance group, told reporters that he expects the attacks to cost life insurers between $1.5 billion and $4 billion. Scheid also forecasts insured property damage of between $22 billion and $25 billion.

• Attention retailers: Walgreen Co. announced plans to raise its fiscal 2002 capital spending by about 8 percent from the prior year.

• UBS Warburg economist Maury Harris on Tuesday told clients that overall, various reports show that retail sales growth is “back to around where it was pre-Sept. 11. They do not suggest that the recession is over (especially with capital goods and exports likely still declining sharply), but they further lessen fears of a deep recession.”

• Through last week, 224 publicly traded companies had filed for bankruptcy protection, according to research firm Bankruptcydata.com (yes, Bankruptcydata.com). This year’s total easily surpasses the 176 companies that filed for Chapter 11 protection in 2001 — the previous record year for going bust.