1. What Is the Sound of One Hand Clapping?
When is it fair to say a company has ceased being a company and turned into one pensive guy in an office, slowly sharpening pencils?
may soon have to decide.
In its latest earnings release, the public company said that it had cut its staff to a total of three people as of mid-October, and that it planned to "further reduce staff to one person by the end of the year."
Fashionmall said revenue was down 65% from the third quarter a year ago, and in an unhappy admission for any CEO, chief Ben Narasin said he wasn't sure if the company would ever turn a profit.
Its stock has fallen 81% from its high in May 1999, recently closing at $2.45 (leaving it in admittedly better shape than many of its Internet counterparts).
But not to worry, shareholders. Fashionmall says management is now engaged in some belated big-picture thinking, including considering whether the business of managing Internet portals "is the most appropriate for the company to pursue." Our guess:
2. CMGI Chief's Thoughtful Gesture
chief David Wetherell will save the Internet holding company more than half a million dollars by slashing his salary from $530,000 to $1 in 2002. A thoughtful gesture, but it's a little late.
Too bad Wetherell didn't sober up last year, before he pledged 215 times that sum --
$114 million, over 15 years -- for the rights to name the New England Patriots' new stadium, CMGI Field. Shareholders were steamed when the stadium deal was announced a year ago, in light of the stock's precipitous 96% drop in 2000.
Since then the stock has fallen another 45.5%, recently closing at $3.05, as Internet businesses have reeled. In its most recent earnings release, CMGI reported an operating loss of $1 billion for the period ending in July, and pushed back the date to break even on an operating basis until the same quarter in 2002.
Yet according to its proxy statement, the company is still proceeding with its deal to buy the Patriots' stadium rights. It plans to make its first payment this January. The company did not return a call for comment.
Guess when it comes to management, like so many other things, you get what you pay for.
3. Scheming Jackals of High Culture
Still no end to the stream of cringe-inducing revelations at the trial over price-fixing at
and Christie's. The latest tidbit, reports
, is that former Sotheby's CEO Diana Brooks once boasted of her uncompromising ethics during an appearance on
Wall Street Week With Louis Rukeyser.
When she made those comments, Brooks was furtively conspiring with higher-ups at rival Christie's to set auction fees.
Ching! ching! ching!
Vixen points galore.
Our favorite trial anecdote, however, would have to be Brooks' recollection of a conversation with Alfred Taubman, the controlling shareholder at Sotheby's whom Brooks says took part in the scam (he says he's innocent). According to Brooks, when she threatened to spill the beans to authorities, Taubman flourished a copy of the
with her photo on it and warned, "You'll look good in stripes."
Is this really how art-house bad guys talk to each other? Are the scheming jackals of high culture so unimaginative?
We cherish the thuggish undertones of the exchange, but would have expected something a little more clever from the pacesetters of the art world. Where are the dialogue police? Our only consolation: the tantalizing prospect that both parties could be consigned to years of watching "Nash Bridges" reruns in the big house.
4. Morris' Request for a Name Change
change its name is an uninspired move on several counts. The company has said it wants a new name,
Altria, to reflect its diversification into businesses other than tobacco. But Philip Morris is still primarily a tobacco concern, drawing more than 65% of its operating income from that division last year.
In our opinion, the talk of a name change underscores, uncomfortably, that the company knows how much the public loathes it.
Philip Morris claims its reputation has improved because of its campaign to become a "more responsible corporate citizen," a campaign that has involved commercials promoting its aid to battered women and refugees. But we suspect people wouldn't really approve of Big Mo even if it ran a full-length movie of CEO Geoffrey Bible scratching the ears of puppies. A name change won't suddenly render the company likeable.
At the same time, we submit that most investors don't really care that Philip Morris makes cancer-inducing products -- except to note that on the downside, they can lead to irksome lawsuits, and on the upside, their addictive properties attract an unusually devoted following.
The brass-tacks sort who buy tobacco stocks seem the least likely of anybody to be impressed by ersatz Latin. We're curious to see if such investors will vote in favor of the move. In any case, it strikes us as a waste of time.
5. Evergreen's Scam
There's an odd silver lining to the attacks on the World Trade Center: Two firms headquartered there were purported to be embroiled in a massive investor scam.
Evergreen International Spot Trading
, a currency trading outfit, and
, its clearing firm, allegedly devised an international boiler-room scheme that cheated investors out of $100 million.
According to charges filed by the U.S. Attorney's office, Evergreen used cold-calling to convince investors to trade in foreign currency, while allegedly lying about its performance record. Most of the investors' money later was secretly channeled to bank accounts in Hungary and Austria, where the obliging folks at Evergreen and First Equity withdrew it for their own use and to pay millions of dollars in employee bonuses.
The alleged scheme fell apart after Sept. 11 when investors started asking about the safety of their investments. Executives at the firms allegedly lied to them, but after meetings at a Brooklyn golf course and restaurant, couldn't agree on how to cover up the thefts.
("Awright, awright! Criminy! Wouldja just pass the salt then?")
The government says the heads of the two firms face up to five years in prison for mail and wire fraud and up to 20 years for money laundering, plus heavy fines. First Equity president Gary Farberov has reportedly pleaded not guilty, and Evergreen founder Andrei Koudachev is now a fugitive.