The Five Dumbest Things on Wall Street This Week

This got us thinking about the rest of Liberty's nine-member board, which doesn't exactly inspire you to scream the word "independent."

In addition to Malone and Magness, there are two Liberty corporate officers on the board, Dob Bennett and Gary Howard. Then there's Jerome Kern, formerly chairman of a Liberty subsidiary and the beneficiary of a $19.2 million, two-year revolving credit line guarantee from Liberty. And Larry Romrell, a longtime TCI employee -- one who, according to Cable Cowboy, a Malone biography published last month, was castrating calves with Malone back in the 1970s.

The three remaining directors on the board, according to the Liberty spokesman, are independent. These independent directors include Donne Fisher, a longtime TCI executive and an executor of Bob Magness's estate. After the estate sold TCI a major stake in the company, Kim Magness sued Fisher, complaining he had given Malone a sweetheart deal for the shares; the suit was later settled.

Another independent director is Paul Gould, a banker at Allen & Co. The firm, acknowledges Liberty, has worked for "some of our acquired subsidiaries." Cable Cowboy reports Gould was TCI's longtime adviser and was a frequent sailing buddy of Malone's.

Mark Robichaux, the Wall Street Journal editor who wrote Cable Cowboy, explains Liberty's board in the context of the cable TV industry out of which Malone emerged. "The cable industry has been an extremely insular business," Robichaux says. "The history of it is the history of a brotherhood, almost, of entrepreneurs who all shared the same dream, which was to wire the county."

Malone has pretty much operated the same way for years, says Robichaux. "This is our strategy," as Robichaux paraphrases the approach. "You're either with us or against us. And those of you who want to come along with me, John Malone, and make money, climb aboard. And if you disagree with us, don't buy the stock."

Says Liberty's spokesman, "We will evaluate any new rules that are promulgated by the NYSE. However, we are currently in compliance with their requirements for independent directors and we will, obviously, maintain compliance if new rules are set forth by the NYSE."

4. Put on Your Rally Gaps

Ever since we wrote last month about Gap's (GPS) impressive financial streak, we were getting all excited about going along for the ride.

So what happened Thursday? The streak runs out of gas.

By "impressive financial streak," of course, we meant Gap's epic record of poor results: the retailer's 29 straight months of declining same-store sales, or sales in stores open at least a year.

Yeah, just as we were thinking how fun it would be to follow the streak through its third anniversary at least, Gap felt compelled to announce Thursday that same-store sales at Gap, Banana Republic and Old Navy were all up from a year ago -- 11% in aggregate.

We're happy for the people at Gap, we suppose. But we do feel cheated. Sort of like the DiMaggio fans who bought tickets for Game 57.

5. United We Fall

Pop quiz: Suppose you've got a big stake in a company that's wandering close to bankruptcy. Then the people in charge of your portfolio decide to sell some of those shares, under the philosophy that it might be a good idea to diversify your portfolio. What's your proper response?

• Thank the responsible parties.
  
• Thank them and send them a gift basket in December.
  
• Kiss them at the first possible opportunity.

Well, if you're a United Air Lines pilot, the answer is

D. Throw a temper tantrum.

Yes, a scant few months after employees of WorldCom (WCOEQ) and Enron (ENRNQ) saw their company-stock nest eggs go to zero, United pilots are complaining that State Street Bank (STT), the trustee of United parent UAL's (UAL) employee stock ownership plan, wants to sell about 20% of the UAL shares in the ESOP.

As TheStreet.com's Eric Gillin reports, the chief of United's pilots union thinks selling the stock is a rotten idea.

Yeah, we understand that the pilots want to share in the upside of United's stock, if there is any. And we understand that the ESOP's sale of the stock might look bad in the market.

But is the sale "irresponsible," as the union accuses? Maybe the former employees of WorldCom and Enron should answer that question.

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