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The Mouth and the Manager

NEW YORK -- Several emailers pointed out Ralph Acampora recanted his neutral stance last Friday on

Wall Street Week

, one week after turning neutral on the same program.

While I appreciate the heads-up (on this or anything pertinent), it was far from the most interesting part of the show.

The program got about as provocative as it can get when Jim Callinan, manager of the


RS Emerging Growth fund, said


is "triple counting or quadruple counting revenue."

Callinan was answering Louis Rukeyser's question about Internet stocks he doesn't like. Amazingly, the fund manager's inflammatory reply didn't generate so much as a "come again?" from the host or any of the panelists. I can't imagine something like that happening on's

TV show. Even if I'm not there.

I seized the initiative and called Callinan, who backtracked a bit, saying he meant to say is "double counting" revenue. That isn't as bad as triple or quadruple, but having read

Herb Greenberg

, I can assure you it certainly isn't "good," especially if you're long.

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"What I meant by that is they count as revenue the actual price of the ticket as if they were a retailer," Callinan explained. "It's

generally accepted accounting principles but it's a way to get more revenue intensity and better price-to-revenue valuation for your company."

Callinan isn't allowed to short stocks in the RS Emerging Growth fund. Moreover, "at this price I wouldn't short it, but I wouldn't own it" either, he said. "I don't like the business model. It's heavily dependent on a few airline companies.

Chairman Rick Braddock has the right idea in terms of efficiency of what they're doing

but I wouldn't give him credit for the revenue he gets for the ticket. I would give him credit for the revenue net of the ticket."

Brian Ek, a spokesman, (surprise) categorically denied Callinan's accusation.

"We make the spread between the amount the customer buys it for from us and what we can buy it for from the airline," Ek said. "What you see in our gross revenue is the price of the ticket as sold to the customer."

Callinan could not be reached for rebuttal. Still, I suspected there was something significant about Ek's use of the term "gross revenue" vs., say, net revenue. (Remember, dumb spelled backwards is "mud.")

For an objective opinion, I called Bob Willens, managing director and tax and accounting analyst at

Lehman Brothers


Given takes the risk of reselling the goods vs. acting as an agent who earns a commission, "they should be reporting revenues in that manner," Willens said. "It is totally appropriate."

For the record, reported revenue of $111.56 million for the three months ended June 30, up from just over $7 million in the prior year.

But "revenues in and of themselves don't tell you a lot," Willens said. "The idea is to be profitable."

Ah, so it's a profit game. didn't fare as well on that front. The company's total cost of revenue (mainly, what they paid for the tickets) was $101 million, leaving it with gross profits of $10.5 million. Minus expenses and adding interest income, the company reported a net loss of $14.3 million or 10 cents a share. supporters no doubt cheer that the EPS loss was narrower than the 17 cents per share loss a year ago. But note, the firm had 81.3 million shares outstanding at the end of June last year vs. 142.3 million this year.

A fairer comparison, I'd suggest, is "net loss applicable to common shareholders" (that's you), which totaled $14.3 million this year vs. $13.9 million a year ago.



why's stock has fallen more than 50% from its April 30 high of 162 3/8. Today, the stock rose 1% to 70 3/4.

Willens didn't know and Lehman's PR department didn't respond to inquiries as to whether the firm has done any underwriting for

TSC Special

Associate editor (and TV star)

Dan Colarusso

gets the nod today for

Oy, the Paine: Why Rumors About a PaineWebber Buyout Won't Go Away.

Duty Bound

Prudence dictates otherwise, but the nature of this column's brief history demands I address a "huge" development today on



Ron Insana


au natural


The venerable anchor did not get nude (whew), but he did appear on screen sans the hairpiece.

Before I delve any further into this, let me say I respect Insana as much as anyone at the network (or anywhere else in financial journalism for that matter). Moreover, a person's appearance is inconsequential vs. his intellect and credibility, attributes Insana posses in spades. (

Steve Frank

just bugs me, OK?)

More moreover, Insana was gracious enough to return my call.

"I've been thinking about doing it for a while and there's no way to do it gently except buy a new hair piece every six months, " he said. "I didn't want to pay for the privilege of going bald again. I just did it."

The "95 degrees and 95% humidity" was a factor, Insana noted. "I'm trying to emulate Cramer," the anchor continued with a laugh. "I'm contemplating a goatee."

I recommend goatees for everyone (including women and children), but can't speak to trying to emulate the mercurial hedge fund manager.

Meanwhile, on the issue of "substance over style," I asked Insana if there is any reason to air "Business Center" from the floor of the


long after the market is closed.

"We can access some people who wouldn't otherwise go to Fort Lee, N.J.," he said, referring to


headquarters, to which, I can attest, you don't want to go, having worked there for


. "Also, I'm sure it's part of a broader strategy to get us closer to the center of the universe."

Finally, Insana acknowledged if and when the exchange extends trading hours "we'll be in the thick of things."

See, I


play nice.

The Call, Redux

In yesterday's

'splanation of my "scary" prediction from the TV show, I focused on sentiment and some misguided thinking about the


. Today reminded me of another potential threat -- the falling dollar (and we haven't even gotten to valuations yet).

It's understandable if you're skeptical as to why a falling dollar threatens stocks: "What, people are going to worry U.S. multinationals will make


money?" one colleague quipped.

But Ronny Kraft, CEO of

Gotham Capital Management

notes "two-thirds of dollars are held by foreigners. If you want to play Japan, you need yen."

Thus, a weak dollar will entice Japanese investors to repatriate (Wall Street lingo), by selling U.S. stocks and bonds, that is.

Kraft was on the road today and thus unable to explain the bond market's rise in the face of the falling dollar. "Weird," he dubbed it, then summarily predicted, "the bond market is going to crack."

Yes, the hedge fund manager has been bearish for some time.

Meanwhile, I'd like to offer you another opportunity to register your two cents about what is heretofore known as "the call."

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Aaron L. Task writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at