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Checking Back on Cree and More Trampling on Just for Feet

Also, the name game continues.

Mundayne (otherwise known as the summertime blahs, revisited):

Cree-d Off:

On a reread of my last column on

Cree Research


, I kicked myself for having left out something very important -- or at least not making a certain point more clearly. (

Click here to see what I'm talking about.) In the wake of the recent Cree-related emails (Creemails?) suggesting I don't know my own anatomy, let's get to what the point of the column was supposed to be: If any company winds up stuffing a distribution channel with too much merchandise, and that merchandise doesn't sell, future demand drops and the company that touted the high sales winds up suffering. Just take a look at

Network Associates





and a host of others that made their numbers via special deals with customers.


Go back and read this

column's item, from last May, on

Just for Feet


-- the one that quoted a short-seller as saying that the company, in turmoil for having too much obsolete merchandise, wasn't earning money on a real operating basis. His reason was that only the profitable goods were being sold, which would mean that at some point the company could be forced to dump that merchandise in future quarters. "And that," he said, "would be catastrophic because they'd be selling everything at below cost."

To which CEO Harold Ruttenberg replied: "Anonymous sources don't deserve a response. Anybody who is anonymous is not worth commenting on." When pressed about the short's contentions, Ruttenberg added, "it's not true."

Fast-forward to the company's press release of last week: Among other things, it disclosed that it's "experiencing lower net sales and gross margins, higher store operating expenses and higher interest costs which will result in a significantly higher net loss in the second quarter ending July 31, 1999 than the previously revised plan and a significant net loss for fiscal 1999."

In other words, another case of another CEO denying what was really going on. Oh, and Ruttenberg, while remaining chairman, is no longer running the joint. He's been replaced as CEO. (A last-ditch attempt, no doubt, to get the place back on its, uh, feet.)



recent item here recommended the


cover story "Recipe for Jail." That prompted

Lorraine M.

, from Canada, to write: "On the cover of my copy the article is called 'Lies, Damned Lies, and Managed Earnings.' Maybe it's a Canadianized version. Do you think it's because there's no point telling Vancouverites they'll go to jail for fraud? They all know better at the

Vancouver Stock Exchange


Nah, the difference is that you have a newsstand copy; mine was delivered to my home. Many mags,


included, use different covers for newsstands and subscriptions.

A new one to add to the list:


for those Cree investors who sent the

Hostile React-O-Meter

spinning in response to a few questions raised here.

And another new one to add to the list:


. That's what 38% of the readers of this column think they should be called following a

recent poll. But

Stephen Cronk

isn't so sure it's a good idea. "Carnivores eat meat," he says. "Omnivores eat meat and vegetation. Traditionally, herbivores eat vegetation, but in this new incarnation it would mean your readers eat you. Take that any way you want, but any way you take it is still pretty unappetizing. Your readers need to brush up on their etymology."

Pass the hot sauce, please.

Herb Greenberg writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at Greenberg also writes a monthly column for Fortune.

Mark Martinez assisted with the reporting of this column.