Chiron's 'Dis'
Guidance gibberish

1. One Flu Over the Cuckoo's Nest


(CHIR) - Get Report

recent missteps are making some folks uneasy about the nation's public health.

Us, we're more concerned about damage to its vocabulary.

On Tuesday, Chiron said it wouldn't be releasing any of its influenza vaccine during the current flu season. Regulators overseeing the drug manufacturer's U.K. plant concluded it was out of compliance with regulations. Thus Chiron, which had been expected to supply about half of the U.S.'s 100 million flu vaccines during the 2004-05 season, will have zero dollars in flu vaccine sales to show for itself.

As a result, Chiron's 2004 pro forma earnings will be just half of what was expected.

But when it broke the bad news, Chiron didn't tell Wall Street that it would "miss" guidance, or that results would "fall short" -- two typical straightforward expressions describing what happened here. The company didn't even say it would "withdraw" guidance -- the euphemistic, two-syllable verb companies use to say, "Forget that promise we made you."

No, Chiron came up with a new one: "Chiron disaffirms its previous full-year 2004 pro-forma earnings guidance," the company announced in a Tuesday press release.

"Disaffirms"?! That's a new one. In fact, after a search of the Factiva publication archive, we can assure you that this is the first time in the history of the world that a company has used this legalistic verb to revise prior guidance. Companies disaffirm leases and they disaffirm contracts, but until this week they never disaffirmed guidance.

Oh, well. People are always trying to neutralize bad news with obscure writing.

Of course, the day that Chiron disaffirmed guidance, its stock dropped 16% anyway. That goes to show you that on Wall Street, people can usually read between the lines.

2. C-GAITS. C-GAITS Run. Run, C-GAITS, Run.

We're feeling sorry for

American International Group

(AIG) - Get Report

this week.

Well, sort of.

On Monday, the insurance giant disclosed that the

Securities and Exchange Commission

may take legal action against the company.

At issue are three press releases AIG issued related to some old transactions it had with

PNC Financial Services

(PNC) - Get Report

-- not the actual transactions, mind you, but press releases referring to the transactions. One of those press releases came out in January 2002, and two were issued last month.

One of last month's press releases mentioned that an SEC investigation of AIG "involves certain transactions" marketed by AIG, "including three transactions" with PNC.

Now, as we read that press release, we interpret that phrase "including three transactions" as meaning that


than three deals were under investigation.

But the SEC's staff, AIG explained Monday, thinks that AIG was "false and misleading" by not mentioning five other transactions the feds believe were similar. Furthermore, the SEC staff believes AIG should have named the counterparties to these transactions.

In other words, as far as we can tell, the SEC didn't just want AIG to tell the truth in its press releases; it wanted AIG to explain the whole truth, in detail, revealing every dark corner of the company's interaction with the SEC.

What, are they crazy? What do they think a press release is for? It's for getting information out that's true, if not necessarily exhaustive in its ugliness -- sort of like the wedding announcements page in your local newspaper. We'd hate to see the SEC in charge of that.

On the other hand, we note that in its defense of the 2002 press release, AIG seems to argue that the three PNC transactions -- which AIG calls C-GAITS -- are, like, totally, completely different from the other five transactions, known as GAITS.


In deciding that question, we think it would help to know what C-GAITS and GAITS stand for. But an AIG spokesman won't tell us, or anyone else.

This is where AIG loses us. If it looks like a GAITS, walks like a GAITS and smells like a GAITS, we'd have to say it's a GAITS. Even if it's a C-GAITS.

3. But PeopleSoft, What Light Through Yonder Window Breaks?

Speaking of truth, it's getting harder each day to figure out where it lies in the




It all started simply enough: Back in September 2003, earlier in the software marketer's battle to ward off a takeover bid by rival


(ORCL) - Get Report

, then-CEO Craig Conway was addressing Wall Street concerns that Oracle's unwelcome bid was hurting PeopleSoft's business.

Everything was back to normal, Conway suggested. "The last remaining customers whose business decisions were being delayed have actually completed their sales and completed their orders," Conway told analysts, according to Dow Jones Newswires.

But how true that was, we're not sure. On Monday -- at a Delaware trial at which Oracle is trying to get someone to, uh, disaffirm PeopleSoft's takeover defenses -- lawyers played a videotaped deposition of Conway in which he appeared to admit misleading analysts about the effect of Oracle's bid on PeopleSoft's business. "The statements were promotional. I was selling," Conway said, according to the

San Jose Mercury News

. The statements he'd made, said Conway, were "absolutely not true."

And when Conway himself showed up in court to testify Wednesday, he told yet another story, according to our reading of Dow Jones. "Every bit of it was true," he said, referring to his year-ago Wall Street commentary -- though, he said, his original comment shouldn't have referred to "the last remaining customers" but to "many" or "most" of them.

Got that all straight? We certainly don't.

4. Howard Stern Dishes It Out

This has truly been an earth-shattering week for

Sirius Satellite Radio

(SIRI) - Get Report

. Let's just hope it's not a piggybank-shattering one.

Lab's Stern Warning
Sirius is burning up the cash

On Wednesday, the subscription radio service announced a deal under which radio phenom Howard Stern will be an exclusive Sirius broadcaster starting in January 2006.

For the satellite radio business, this strikes us as a pivotal moment in programming. Stern could do for satellite radio what HBO did for cable TV: lure audiences with something they just can't get on the free broadcast medium.

And the deal isn't so bad for Stern, either. He gets the uncensored-by-the-FCC freedom he wants; he also gets a huge portion, we assume, of the $100 million a year that Sirius says the Stern gang will cost the company.

We note, however, that Sirius, still in start-up mode, is a cash-burning machine, on track to vaporize $270 million in 2004 alone. At that rate, Sirius will have run through its $634 million kitty sometime in November 2006 -- about 11 months after Stern first shows up for work.

Yes, we know that Sirius believes it will be able to add the million subscribers it needs to cover the cost of hiring Stern. But who knows?

You'd best play it safe, Howard: If you get your paycheck on a Friday, don't be waiting until Monday to walk it over to the bank.

Darren's Dating Game
Jacob research director has heart

5. The Feeling Is Mutual Fund

We never thought of Wall Street as a bastion of diehard romantics.

But maybe we should start.

Case in point: Darren Chervitz, research director for Jacob Asset Management, which runs the

(JAMFX) - Get Report

Jacob Internet fund.

We admit it: We usually think of research directors simply as people who go around and, you know, direct research. We don't immediately think of a mutual fund research director as a guy who goes to elaborate lengths to propose marriage to his girlfriend -- and does it on national television.

Well, if you feel the way about Wall Street research directors that we do, we suggest you tune into Monday's telecast of TLC's show "Perfect Proposal," a reality TV show that documents memorable marriage proposals. (It airs at 1 p.m. EDT; check your local listings.)

That's when you'll be able to watch the story of how, earlier this year, Darren engaged in an elaborate ruse to pop the question to his girlfriend, Jamie Bonilla.

TLC's capsule description for the episode reads like the promo for a hot-and-heavy late-night flick on Cinemax: "Love is a dangerous game, one Darren is willing to play with Jamie." But we're told that Monday's episode is more appropriate for the Family Hour.

Which suits us fine. You know, all too often, when Wall Streeters pop up in the media, they're engaged in litigation. It's nice every now and then to see one who's just plain engaged.

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