1. Fast and Lucent With the Numbers
Forgive us for our skepticism. But occasionally we at the Five Dumbest Things Research Lab suspect the worst of the companies we write about.
Every now and then we wonder -- believe us, we feel really rotten about suggesting this -- but, yes, every now and then we wonder whether companies are -- there's no way to put it nicely -- whether they're telling fibs.
As in stretching the truth. As in lying through their teeth.
Believe us, we're ashamed to bring this up.
But bring it up we must, especially in light of
announcement last Friday that it plans to cut its staff to 35,000 by the end of September 2003. The telecom gearmaker, which earlier this year announced it was cutting its workforce to 45,000 by 2002's close, now plans 10,000 more job cuts over the following nine months.
What's bugging us about this is that back in August -- nearly two months ago -- Lucent scoffed at a
story reporting that these massive layoffs were in the works.
Yes, telecom reporter
Scott Moritz wrote Aug. 23 that
Lucent was preparing to cut total staff an additional 25% below the already public 45,000 target, eventually bringing total staff to between 30,000 and 35,000 workers.
Lucent's Loopy Labor Lop-Off
Back then, Lucent issued vehement denials of this report. Lucent has "no frame of reference" to get the head count to 35,000 or below, a spokeswoman told Moritz. "To speculate that Lucent is going to cut a further 30% is ludicrous," she told AFX News. (
report, you'll recall, said 25%, not 30% -- but maybe the spokeswoman or AFX reporter got confused in the righteous heat of the moment.)
As things turned out, of course,
the report was right. The aforementioned spokeswoman no longer works for Lucent, and we didn't feel like chasing her down to ask her to explain what she meant in August.
But a Lucent spokesman this week did try to explain the company's reversal. "A lot has changed in the industry since Aug. 23," he says. "Since that story, several customers have announced further capex spending reductions totaling more than $5 billion." As a result, he says, the company is assuming quarterly revenue of $2.5 billion to reach break-even earnings per share, and is adjusting its operations accordingly.
Of course, that's what
wrote in August: "With the loss of several unpopular and unprofitable products, Lucent's total sales will likely drop to a range between $9 billion and $11 billion annually, or $2.5 billion per quarter, these people say."
Let that be a lesson to you, kids. On Wall Street, nothing is true about a company until the company says it is.
2. Croc Solid. Market Wise
You've learned a tough lesson over the past two years: Wall Street can tear you limb from limb. It can eat you alive.
Well, look on the bright side. In other countries, that isn't a metaphor. When people say the markets can chew you up and spit you out, they mean it literally.
Specifically, we're talking about Singapore. One morning late last week, the locals discovered an unwelcome visitor to Singapore's financial district: a crocodile.
Yes, a crocodile in a storm drain. A 5 1/2-foot-long, 50-pound estuarine crocodile, according to
The Straits Times
. The kind of animal that makes America's most intimidating financial reptile --
Michael Douglasas Gordon Gekko -- look like a wuss.
No one's quite sure how the crocodile got there. Did it float to Singapore from across the ocean? Is it an abandoned pet? Or was it just hoping to trade some gold futures?
At least we know it didn't take the subway. Unlike in New York City, there are very strict rules in Singapore against carrying crocodiles on the subway.
3. Fall Into the Gap. And Stay There for 29 Months
Speaking of a load of croc, how about
recent comments on West Coast port closures?
Late last week, you may recall, the clothing retailer warned that the longshoremen lockouts could mean trouble for the company's fourth-quarter results. Late deliveries of merchandise to the company's Gap, Banana Republic and Old Navy stores, says Gap, translate into an estimated "earnings risk" of between 2 cents and 7 cents per share.
Hmm. Gap blaming its troubles on the 10-day shipping freeze? That would be like Sam Waksal announcing he won't be appointed to the
Securities and Exchange Commission
because he doesn't have an MBA. As in, perhaps there are other forces at work.
Agape Over Gap
Research lab correspondent Hickman Beckner thinks he knows what those forces are. "The West Coast port closures just mean that the Gap has less inventory in their stores that they cannot sell," writes Beckner. "It's not that the goods are late arriving that causes the markdowns; the goods just suck." Beckner says he has no position in the stock.
We're with Beckner on this one. Like the Columbia University football team of the late 1980s, Gap is on
a losing streak of heroic proportions. With the September monthly sales report issued last week, Gap has posted same-store sales declines for 29 months in a row. Gosh. We're talking Joe DiMaggio territory here, or Cal Ripken: This is the streak that will never be broken.
Yes, Gap has ably demonstrated it doesn't need any stinking lockouts to founder. It can fail very well by itself, thank you.
4. For Some Reason We Can't Quite Explain, This Reminds Us of the Story About the Beauty Contest in the Lithuanian Jail
You think things are bad at Gap? Well, imagine a college football conference in which Columbia's 1987 squad is the best of the lot.
That's the situation with the
magazine's announcement this week of its All-America Research Team, the annual survey that's pretty much the Oscars among sell-side analysts.
Yes, portfolio managers and analysts at mutual funds and investment firms have for the 31st year singled out a few sell-side analysts as the best of the bunch.
But, boy, do they have misgivings about the bunch.
Fifty-four percent of portfolio managers, research directors and equity analysts polled by
say they simply don't trust sell-side research.
Fifty-four percent! Makes you realize that
's mission is akin to asking inmates on Death Row to pick the best prosecuting attorney. Or surveying 30 kindergartners to name their favorite leafy green vegetable.
Of course, we can't help point out another Dumb Thing about the All-America Research Team: the winners. First place went to
Salomon Smith Barney. You know, the firm whose most famous research analyst is role model Jack Grubman.
Tied for second is
. You know, the company that paid $100 million to settle charges, which it neither admitted nor denied, related to the public and private statements of a research team led by Henry Blodget.
For the record,
editor Mike Carroll says neither Grubman nor Blodget made the team this year.
But get ready for next month's
poll: Research analysts name their favorite state attorneys general.
5. Staking an Acclaim
Hey, it worked for Madonna.
made some news this week after Reuters and other news outlets reported that certain retailers were refusing to stock Acclaim's upcoming game
Toys R Us
, among others, is refusing to carry Acclaim's new biking game.
Of course, this may have something to do with certain elements of the game -- the pimps, the hookers, the copulating dogs and the product-placement of Scores, the research lab's favorite
strip club and
investment opportunity. The game is rated "mature," for audiences over 17.
What? And Toys R Us won't carry it?
It's not Dumb that Acclaim put out a release Friday in which it responds to the "widespread controversy" about the game.
After all, sex sells. Controversy about sex sells better. Remember Madonna's book
? Remember that adult-yet-not-pornographic movie
Henry and June
Of course you don't. They were both boring disappointments. The brouhaha that preceded their release was a heck of a lot more interesting than the actual product.
Don't be Dumb enough to forget that in the coming weeks.