Schwarzman Bashes Birthday
The party of the century is giving Steve Schwarzman the hangover of a lifetime.
The CEO of private equity giant
finally admitted last week at a New York press conference that his multi-million dollar 60th birthday celebration was a mammoth public relations mistake. The garish gala, held on Valentine's Day 2007, featured British rocker Rod Stewart, comedian Martin Short, singer Patti LaBelle, two Harlem choirs and a marching band.
"Obviously, I wouldn't have wanted to do that and become some kind of symbol of that period of time -- who would ever wish that on themselves? No one," said Schwarzman at the conference.
Schwarzman was also quick to point out that his 61st birthday party was held this year with far less fanfare.
But it sure was one heck of a fiesta, wasn't it Steve? It was a business blowout second only to former
chief Dennis Kozlowski's infamous Sardinia bash.
Unfortunately, aside from bad taste, Schwarzman's party also suffered from bad karma. Blackstone went public a few months later at the peak of the buyout boom at $31 a share. The stock recently traded as low as $7 a share and now hovers at $8.60.
And it's going to get worse for the former private equity princes, says Doug Kass of
. Kass contends that a slew of pension fund capital calls and unbearable debt burdens make "private equity the next shoe to drop."
That may be good news for Schwarzman. He can use the shoe to repeatedly kick himself for being so stupid.
Dumb-o-meter score: 100 -- If this keeps up, next year's party is at Chuck-E-Cheese's.
Trump's Hair Cut
Donald Trump is taking a massive hair cut. Just not the kind he needs.
agreed last week to reduce his price for the struggling Trump Marina Hotel Casino property in Atlantic City. His company,
Trump Entertainment Resorts
, is accepting an offer for the casino-hotel of $270 million, down from $316 million, its listing price in May. The buyer, New York developer Richard Fields, is teaming with singer Jimmy Buffett's business venture to re-brand the property as "Margaritaville."
In return for the discount, Trump will get a slightly larger deposit of $15 million upfront and another $2 million to be held in escrow until the deal closes. The restructured deal also means Trump will no longer pursue a lawsuit against Fields over a Florida casino project.
Trump toasted the new owners saying they "are making a wonderful deal for the building."
Trump retained the right to cancel the deal if it does not close by May 28. But we wouldn't wager on
star taking back the cut-rate casino.
Despite Trump's praise, the last thing he or his debt-burdened company -- trading around 75 cents a share this week -- needs is another underperforming property. Trump Marina's revenues are down 12% for the year, making it the third-worst performer among Atlantic City's 11 casinos.
Trump's travails are particularly acute in Chicago, where his 92-story Trump International Hotel & Tower, which will be the tallest building constructed in the U.S. since 1973, is getting hammered by the credit crunch and a souring economy. Trump is said to be begging his bankers for loan extensions as unit sales slow to a crawl.
The bright side for Trump? He may have lost money on Trump Marina, but he gained a title for his next book:
The Art of the Bad Deal
Dumb-o-meter score: 95 -- Pretty soon an Apprentice will be firing Donald.
Putting a Fox In the Financial Henhouse
is hiring a Wall Street fox to guard the nation's financial henhouse.
The New York Fed announced last week it is enlisting Michael Alix as a senior vice president in the Bank Supervision Group, under William Rutledge, executive vice president in that group. Prior to joining the regulatory body, Alix served as chief risk officer at
from 2006 through 2008 and as Bear's global head of credit risk management from 1996 to 2006.
Yes, dear readers,
Bear Stearns. The global investment banking giant that ran aground earlier this year because its traders used outlandish leverage to make wild bets on subprime debt.
The Bear Stearns whose CEO was off playing bridge while the firm was spiraling into bankruptcy, only to be saved by a forced sale to
with the help of a $29 billion loan from the Fed.
The out-of-control casino that almost single-handedly brought down the global economy because its risk managers, including Alix, were not doing their jobs.
Dumb-o-meter score: 80 -- Employment on Wall Street is falling off a cliff, but this is not the way to solve the problem.
Yahoo!'s New Search
It's time again for
to search for salvation.
got sick of the antitrust battle and abandoned its planned advertising partnership on Wednesday, leaving
Yahoo! in the lurch
David Drummond, Google's chief legal officer, wrote on a company blog that while disappointed the deal was dead, "we're not going to let the prospect of a lengthy legal battle distract us from our core mission. That would be like trying to drive down the road of innovation with the parking brake on."
No kidding. The whole idea of teaming up with Yahoo! was the least innovative idea ever to arise from a company that prides itself on doing things differently.
Maybe this was all some part of Google CEO Eric Schmidt's grand design to rid the company of a competitor?
As for Yahoo!, the company's prodigal CEO, Jerry Yang, is returning, cap in hand, to
. But now Yahoo!'s stock is trading at half the value it had earlier in the year when Microsoft was offering $33 a share.
Yang should have known his wild plan to escape Microsoft would never work out. All he had to do was Google "antitrust" and they would have seen the futility, let alone stupidity, of the whole plan.
Dumb-o-meter score: 75 -- Poor Yahoo! The government is helping everybody but it.
Boeing's Pipe Dream(liner)
Even with a Dreamliner full of fasteners, the good folks at
just can't keep it together.
Fasteners are, in fact, the latest setback to Boeing's troubled 787 Dreamliner program because the company needs to replace thousands of them, delaying the plane's debut flight until deep into next year. The faulty fasteners, basically specialized nuts and bolts, were discovered during a routine quality-control inspection, according to the company.
"There just aren't enough days left on the calendar this year to do everything that needs to be done," said Boeing spokeswoman Yvonne Leach this week to the
Wall Street Journal
, adding that Boeing won't know the extent of the holdup until it has a chance to fully evaluate the problem.
The Dreamliner has already been pushed back almost two years due to manufacturing and labor problems, with union machinists just returning to the job this weekend after a 57-day
Customers, however, are tiring of the endless string of slip-ups. Boeing reportedly has 900 orders for the aircraft which sports an average list price $178 million.
Boeing's clientele will keep waiting, however, because the outsized plane promises to be 20% cheaper to operate and a third as much to maintain as previous planes its size.
Right now, the Dreamliner is 100% embarrassment for its manufacturer.
Dumb-o-meter score: 70 -- You may think we're nuts, but investors are bolting from this stock.
Before joining TheStreet.com, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high net-worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business, and a B.A. in history from Amherst College.