Maven: Mr. No Cahn Do

The business media fail to note that corporate raider Carl Icahn lacks more than just scientific expertise.
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The Business Press Maven is a critic, which is to say I have an uncanny talent for pointing out the faults of others. But God knows that if you actually put me in charge of something, I'd probably run it into a ditch quicker than you can say, "Those who can, do; those who can't, carp."

To criticize is one thing. To actually accomplish something is quite another. Which brings me to this week's coverage of Carl Icahn's proxy-battle victory giving him control of

ImClone Systems

(IMCL)

. The corporate raider was named chairman of the company, though that passive construction -- "was named" -- is not specific enough.

Icahn, recalcitrant investor and all around troublemaker, named himself chairman. And many major business publications -- from

The Wall Street Journal

to

The New York Times

to the

Financial Times

-- all weighed in with the same observation.

"Mr. Icahn has little experience in biotechnology," noted

The New York Times

, adding for good measure later in the same article, "Mr. Icahn, despite knowing little about biotechnology..."

For its part, the

Journal

said the same: "Analysts are not convinced that Mr. Icahn, who lacks biotech experience, will be able to fix ImClone..."

Although these articles point out that Icahn doesn't have the scientific expertise to run ImClone, they inexplicably fail to note his superseding limitation going forward: He is not managerially qualified to run the company.

Icahn is a critic, which is to say he has an uncanny talent for pointing out faults in others -- and taking money, on occasion, to leave those at fault alone. But if you actually put him in charge of something -- the rare example is TWA -- he'll run it into a ditch.

When it comes to ImClone going forward, just remember that Icahn's lack of a Nobel Prize in science is the least of the stock's worries. The guy has to prove he can turn around and grow a company, not just take control or greenmail it.

"So far," the

Financial Times

let someone opine in an article this week, earning itself the dreaded Business Press Maven "Back of the Hand" award, "people have not lost money betting on Icahn." Tell that to former TWA shareholders.

Money Pit

The business media are always better at extrapolating than predicting, so you can set your watch by what we got this week. With news that the median price of homes fell 9.7% from a year ago, we got a predictable round of follow-ups like this one from

The Wall Street Journal

: "Home Prices Seen Dropping Through 2007."

Some saw solace in the fact that unit sales appeared to be up strong, with the increase coming in at 5.3%. The

Los Angeles Times

, however, greeted that figure wisely, noting that the "rebound in sales came with substantial pain for builders, analysts aid. Increasingly popular incentives -- such as free landscaping, bigger bathrooms, fancier kitchens, no closing costs, cash rebates -- actually made the price declines deeper than the government data indicate. Buyers are getting much more house for the same, or less, money."

Pick your favorite failing home builder:

Toll Brothers

(TOL) - Get Report

,

D.R. Horton

(DHI) - Get Report

,

KB Home

(KBH) - Get Report

,

Pulte Homes

(PHM) - Get Report

,

Meritage Homes

(MTH) - Get Report

,

M/I Homes

(MHO) - Get Report

. But before you buy the stock (muttering those famous last words, "It can't get any worse.") make sure you have a good bead on this issue of incentives -- and plans for incentives. In fact, it is an issue that can color your perception of how well the residential real estate market does over time.

This was captured quite well by

The New Yorker's

James Surowiecki this week, earning the man with the unspellable byline The Business Press Maven's coveted "Nod of Approval" award.

Surowiecki leads by telling us that despite the troubles in the housing business, home prices have remained stable. (Oh well on that -- them's the breaks of writing for a weekly magazine when what you said at the beginning of the week is categorically disproven by the end.) But S-u-r-o-whatever's larger point, ironically, still holds. It is that the median home price statistic is basically worthless and overstates the performance of housing over the long run. That's because it doesn't account for the fact that the average home has gotten bigger and has had more money poured into it for expensive improvements like central air conditioning, granite countertops, home theaters (Note to Mrs. Maven: I want one for Christmas!) and pools. Adjust for all this, Surowiecki writes, and between 1977 and 2003, housing returns are 40% less than assumed with those median numbers. What's more, any long-term look at real estate market performance since the Depression that faills to factor in what a big role inflation has played in housing, is worthless.

Looking forward, The Business Press Maven, as I've said before, is a long-term bear on the American housing market. As much as interest rates, the demographics of baby boomers buying houses have fueled the generation long upswing in housing prices. As they downsize and "For Sale" signs become as ubiquitous as dancing nude in the mud once was, just be glad you can hide from reality in that home theater.

A journalist with a background on Wall Street, Marek Fuchs has written the County Lines column for The New York Times for the past five years. He also contributes regular breaking news and feature stories to many of the paper's other sections, including Metro, National and Sports. Fuchs was the editor-in-chief of Fertilemind.net, a financial Web site twice named "Best of the Web" by Forbes Magazine. He was also a stockbroker with Shearson Lehman Brothers in Manhattan and a money manager. He is currently writing a chapter for a book coming out in early 2007 on a really embarrassing subject. He lives in a loud house with three children.