1. You Enron, but You Can't Hide
Believe it or not, this whole
business has taught us here in the Five Dumbest Things lab a valuable lesson.
Most of all, it has rewarded our steadfast belief in the integrity of our elected officials. It has been heartwarming for those of us in the lab to confirm that every single elected official in Washington is a true stalwart on behalf of strict accounting standards. Thank your lucky stars for these indefatigable crusaders, who remain steadfast in their belief in strict oversight of financial reporting, no matter how much inconvenience might be suffered by major campaign contributors.
Hand still pressed firmly to our heart, we resolved to look elsewhere for Dumb Things. Specifically, we looked to Chicago, where it was reported this week that Nancy Temple, an attorney for Enron's auditor, Andersen, had a fascinating response to an October email sent to her by Andersen's chief Enron auditor. In the email the auditor raised concerns about a potential misunderstanding that might arise among investors as a result of the wording of an Enron earnings release.
As reported by the Associated Press, Temple's response was to ask the partner to delete her name from his email, along with any reference to having consulted with Andersen attorneys. "If my name is mentioned it increases the chances that I might be a witness, which I prefer to avoid," she wrote.
Well, as you might have guessed from the televised congressional hearings on Enron on Thursday, Temple's strategy didn't work. It wasn't immediately clear how the practice of editing names out of memos jibes with Andersen's document retention policy.
So much for sharing information on a need-to-not-know basis.
2. Hands Across America
Chicago isn't the only place where you can find Dumb Things, fortunately. In fact, despite the aforementioned abundance of stout-hearted public officials, it seems entirely possible that our Dumbness meter might register a significant reading around Washington.
Quick to demonstrate that his finger is on the pulse of an American public that wants its confidence restored in the veracity of financial statements, President Bush took the opportunity of a congressional recess this week to appoint Cynthia Glassman, an Ernst & Young principal, to the short-handed
Securities and Exchange Commission.
That appointment, which because of its timing won't require the usual immediate Senate approval, gives the accounting industry a majority vote at the SEC right now, if one adds Glassman to former accounting industry lawyer and current SEC chair Harvey Pitt. If and when President Bush gets his chance to fill the remaining two empty seats on the five-seat commission, he'd like to appoint PricewaterhouseCoopers partner Paul Atkins, preserving that accountants' majority. Just the lineup of people you'd want at the SEC to get tough with Andersen et al.
Now, we don't know anything about Ms. Glassman personally. Just because she, Mr. Pitt and Mr. Atkins traveled in a particular industry doesn't mean they'll unduly favor it as public servants. And of course, Republicans are entitled to wonder whether Senate Democrats, no matter what Glassman's merits might be, will use approval hearings to carve a giant tilted E in the Republican Party's flesh.
But appointing an accounting insider to the SEC, in a manner designed specifically to avoid debate on the subject? This is supposed to make skeptics happier?
Yes, his finger's on the pulse. But maybe he's wearing those mittens the Secret Service makes him use for watching football games.
3. Han Solo
You know how in Vegas the odds are fixed in the house's favor?
Park Place Entertainment
, we're not so sure.
The casino operator said Monday that it has hired a new senior vice president for electronic commerce, a person who would help the company become an "online leader in the resort, gaming and entertainment industry."
And who would that be, exactly? Why, Frank Han, the co-founder of eToys.
You remember eToys. It was going to be the online leader in the toy retailing industry. Until that bankruptcy thing happened, and the company's $8 billion market cap turned into a $54 million asset sale.
According to Park Place, Han's mission is to "create innovativestrategies for marketing its casino, hotel and resort products on the World Wide Web" and to "develop new Internet-based products."
Notice how there's no mention of actually making money. Perhaps Park Place knows its money is on a long shot.
4. We Feel Like Such Dances
We really thought we'd written all we needed to about Fort Lauderdale-area technology firms that see synergies in operating "upscale adult entertainment nightclubs."
How little we know.
Yes, soon after the Five Dumbest Things lab wrote about not
two different spring break-soaked tech firms that announced such business plans, we learned that one of those companies, Internet Advisory Corp., was hosting a New York reception to discuss its expansion plans. This reception, the company noted, would take place at Scores, the upscale adult entertainment nightclub that Internet Advisory hopes will be the linchpin of such a chain.
Hot diggety! A chance to do some field research!
On Wednesday evening, we raced over to Scores to collect data on the Dumbness of the venture. After an hour and a half of hard work, we emerged much the wiser about the proposed venture.
First thing we learned: What one person calls an upscale adult entertainment nightclub, an FDT lab technician might call a strip joint with a $30 cover charge.
Not to mention $10 for a beer, $18 for a gin and tonic, and a bargain-basement $5 to make it past the checkroom. Tipping, of course, is extra.
While less diligent journalists on the scene headed straight for the showroom, we sat down for a quiet chat with John Neilson, Internet Advisory's vice president, secretary and director. Shock of all shocks, by the time we finished, the UAEN business looked a lot more attractive than most of the
What Neilson -- a 25-year UAEN veteran -- and his cohorts propose to do is essentially be the H. Wayne Huizenga of the naked dancing woman business. Remember what Huizenga did with
to garbage hauling, what he did with
to video retailers, and what he's doing with
to car dealers: take an industry full of mom-and-pop businesses and roll them up into a national brand.
Got any objections? Neilson mows most of them down. Like, are there really any synergies between Internet Advisory's ailing Web-hosting business and strip clubs? No, says Neilson; they're just using Internet Advisory as a shell to get the UAEN business publicly traded, so they can start issuing stock for acquisitions. Hasn't another such roll-up,
Rick's Cabaret International
, been a lousy investment? Yes, says Neilson, but they didn't have the right management.
The UAEN business has a low cost of goods sold and operating margins as high as 25%. The average Scores customer, he claims, drops $380 a night. "It's one of the safest industries you can invest your money in," he says.
Well, we were just about ready to replace the
shares in our 401(k) with Internet Advisory stock, but, sad to say, Neilson overreached. Attempting to persuade us that what went on in the showroom was tame stuff -- you know, topless women dancing within inches of salivating guys, fondling their five o'clock shadows -- Neilson complained that Olympic ice skaters in Utah could do things that Scores dancers weren't allowed to.
What? Is there a law out there forbidding nude triple axels?
No, says Neilson. The dancers can't touch the customers in the strike zone -- above the knee or below the shoulders.
But go figure: Despite those restrictions, they can still reach the wallet.
5. What the Hell Happened to This Ad Campaign?
Well, however fun the party was at Scores, you know it's over once you see the new TD Waterhouse ads.
We see them all the time these days on the TV set in the lunchroom, and maybe you've seen them, too. They star television's premier Cranky Old Man: Steven Hill, the actor who for a decade on the show
Law & Order
played the unhappy elder-statesman D.A. Adam Schiff, a man who deserved an entry in the
Guinness Book of World Records
under the heading "Longest Uninterrupted Gas Attack in the Known World."
Once upon a time, sunny-dispositioned basketball star Grant Hill was among the celebrities who told you how carefree you'd feel to invest your money through TD Waterhouse, the online broker subsidiary of
But times have changed. Now you have a more world-weary Hill, one who stares you in the eye like a crotchety grandpa and tells you, "You want a fortuneteller? Go to the circus."
It's a sign of the times, says Janet Hawkins, TD Waterhouse's chief marketing officer. "What we've seen in the last year and a half is ... people are getting more serious about doing their investing," she says. "It's less of a plaything for them to do online investing. ... And so we found the change in the customer perceptions meant that we needed a shift in the direction of our advertising."
Hill's image fit in nicely with that theme, Hawkins says. "He was sort of the moral center of the show," she says. "He was always the voice of of reason in the midst of all that chaos. And we think that's kind of an analogy to the current investing climate."
Hawkins wouldn't disclose which other celebrities the company considered. But we at the FDT lab have our sources. Word is the other leading candidate was willing. But his contract with
forbade Grumpy from making any public appearances without the other six dwarves.