The Five Dumbest Things on Wall Street This Week
4. Some Vivendi Universal Truths About the Music Business
Here at the research lab, we like to acknowledge not only Dumbness on Wall Street, but the executives who are open enough to acknowledge that such Dumbness exists -- especially in their personal history.
Which is why this week we give a big shout-out to Edgar Bronfman Jr., the CEO of Warner Music Group.
Speaking at the UBS Media Week Conference this week, Bronfman had occasion to mention Vivendi Universal (V) -- the money pit in which Bronfman and other investors lost billions.Just as he mentioned Vivendi Universal in his speech, Bronfman, as far as we can tell, accidentally hit his microphone, creating a burst of static as disruptive as the noise that Jewish children make on the holiday of Purim when the name of Haman, the villain of the Book of Esther, is spoken. Remarking on the noise, Bronfman said, "That's probably what it deserves -- the Vivendi Universal merger." Bronfman also wins extra points for the high-finance vocabulary lesson in his answer to a question about whether Time Warner (TWX) made a mistake by selling him Warner Music Group rather than continuing to operate the record company itself. Bronfman said Monday that Time Warner CEO Dick Parsons had intelligently hedged his bets on the WMG sale by giving himself a chance to capitalize on any postdeal improvements at WMG -- specifically, by retaining an option to buy back a minority stake in WMG. That way, if it turns out that Time Warner wildly underestimated WMG's prospects, Parsons wouldn't look like a complete idiot for giving away the store. That history lesson explains the sophisticated terminology Bronfman used to describe the buyback option. He called it "schmuck insurance."
5. Barbarians at the Colgate-PalmoliveAnd this week's award for Exquisitely Bad Timing goes to ... Colgate-Palmolive (CL). On Tuesday, the consumer products giant said it would do what a lot of companies are doing these days: lay people off. Some 4,400 workers will be hitting the road over the next four years. But that wasn't the only reason C-P was in the news that day. Also on Tuesday, The Associated Press reported that 800 top executives at C-P can receive anywhere from $2,000 to $11,500 a year for -- well, for nearly anything they want, as far as we can tell. Fishing equipment. Baseball tickets for the family. Racquetball club memberships. Swimming pool maintenance. It's all covered. After all, as the AP quotes a C-P Securities and Exchange Commission filing, "routine household chores can consume precious personal and family time." A C-P spokesman told the AP that the "fair and modest" program "puts Colgate well below the median for perquisite programs among a very large comparative group." Well, that's reassuring. We're sure that the 4,400 soon-to-be-ex-Colgate-Palmolive employees are reassured by the company's equitable distribution of sacrifice, as well as its concern for top execs' precious personal and family time. We know we are.
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