1. Time to Make Fun of the Doughnuts!
Securities and Exchange Commission
investigation. Falling same-store sales. An unexpected loss. Face it: As each week progresses at
(KKD - Get Report)
, there's less dough and more hole.
Things got so bad this week that the doughnut retailer -- which Monday reported third-quarter results that were
worse than already-lowered expectations
-- wouldn't even take questions from analysts on its conference call.
Instead, the company invited investors to submit questions via email, then later posted a Q&A text on its Web site.
Of course, the A to many of the Q's in the Q&A is basically, "We're not going to tell you." But of the ones that Krispy Kreme answers, our favorite is KKD's analysis of what's gone wrong at its troubled franchisees and joint ventures. In general, says the company, the problem is "(i) operational processes that have not evolved from high opening sales levels to ongoing and sustainable sales levels; (ii) markets that have not aggressively developed all sales channel opportunities; and (iii) overcapacity relative to off premises potential."
In other words, (i) they're not set up to sell the right amount of doughnuts; (ii) they don't sell enough doughnuts; and (iii) they make too many doughnuts. Well, when you're in the doughnut business, that pretty much covers everything, doesn't it?
2. Reality TV Show Bites
Krispy Kreme isn't the only outfit looking a little burnt this week. Take a look at another old favorite,
Trump Hotels & Casino Resorts
As everybody knows, the gaming company headed by Donald Trump filed for Chapter 11 protection Monday. That's the second bankruptcy for The Donald's gambling arm.
But did the company acknowledge it was welshing on its gambling debts? Of course not. Did it mention it's wiping out shareholders again? No, indeed. Instead, the company avoided the ugly truth by saying it had started "recapitalization proceedings."
"It has been a great honor and privilege to deal with and get to know the bondholders and their representatives," Trump said in a statement. "The process has been a very constructive one and should reap great benefits for everyone in the years to come."
Turning over a new Chapter 11
Or, as Trump told
The Associated Press
, "I don't think it's a failure; it's a success. ... It was just something that worked better than other alternatives. It's really just a technical thing."
We should all be so successful.
Somehow, this is reminding us of that wonderfully awful Harrison Ford movie "Regarding Henry" -- the one in which a mean, nasty lawyer turns into a sweet, good man after he has the good luck to be shot in the head.
Say, this nonbankruptcy bankruptcy sounds great! Everybody should do it!
3. You Can't Fool All of the PeopleSoft All of the Time
Speaking of a bankruptcy that isn't a bankruptcy and a conference call Q&A that isn't a conference call Q&A, how about that majority vote that isn't a majority vote?
|PeopleSoft's Electoral College
The shareholders have spoken
We're talking, of course, about
(ORCL - Get Report)
hostile tender offer to take over rival software company
Over the weekend, Oracle announced that more than 60% of PeopleSoft shareholders had taken Oracle up on its $24-a-share offer. So how did PeopleSoft respond?
Well, it said that the 61% acceptance rate for the tender offer did not, in fact, represent a majority. "Our Board is convinced that a majority of our stockholders agree that your $24 offer is inadequate and does not reflect PeopleSoft's real value," PeopleSoft said in a statement. "This majority is comprised of stockholders who did not tender their shares, as well as stockholders who tendered but told us that they believe PeopleSoft is worth more than $24 per share."
Well, it's great that the board is convinced of all that, but we can't help noticing that 61% there. PeopleSoft seems to be saying that a majority vote can be nullified by whining -- an intriguing theory, but one that we can't say bodes well for corporate governance.