Stand and Deliver
1. Cheering Section
He isn't very popular in some circles right now, but
chief Phil Purcell seems to have a way of making people stand up and cheer.
Facing mounting criticism of his leadership at the investment bank, Purcell this week oversaw another top-level reshuffling.
Eight former partners at the big Wall Street firm, including ex-chief Parker Gilbert, have told the board they believe Purcell should step down because the stock is lagging its peers. The dissidents claim Purcell's failure to stand behind certain key executives -- illustrated by the promotion of co-presidents Zoe Cruz and Stephen Crawford over some other execs -- threatens the brokerage firm with an exodus of talent.
Indeed, last week the firm suffered several high-level departures, notably of former President Stephan Newhouse, institutional securities exec Vikram Pandit and global trading head Guru Ramakrishnan.
But what really caught our eye was Tuesday's departure of capital markets chief John Havens. When he left the trading floor for the last time, according to media reports, he did so to great fanfare. "Havens exited Morgan Stanley's block-long fifth-floor trading area at 11 a.m. Eastern time to a standing ovation, according to people familiar with the matter,"
The Wall Street Journal
The Five Dumbest lab's decidedly unscientific survey of the Purcell literature suggests that standing ovations are far from unprecedented on his watch.
The first one we can find record of happened way back in 1997, when Purcell took the reins of Morgan Stanley. As
On Wall Street reported in its March 1998 issue:
At the first meeting between Philip Purcell and his retail brokers after Dean Witter announced its merger with investment bank Morgan Stanley last year, Purcell received a standing ovation: He had just pulled off the coup of the decade.
Then, four years later, Purcell faced off with a brokerage-industry heavyweight, former Morgan Stanley president John Mack.
reported in February 2001 that Mack was shown the door, but not before he got a last chance to address the company's brokers along with Purcell. "After his valedictory,"
writes of Mack, "he got a lengthy standing ovation, according to an employee who was there."
To be sure, a person familiar with the company says standing ovations are far from unheard of on the trading floor. When a veteran trader leaves the organization, it's hardly unusual for him or her to enjoy a round of applause, this person stresses.
Still, we've noticed a trend in recent ovations reported in the press. The last two seemed to come more at Purcell's expense than in support of him. A Morgan Stanley spokeswoman declined to comment on support for Purcell.
Time will tell whether Purcell can ride out this storm. But it's clear that in one way, at least, he's a stand-up guy.
2. A Little Sunlight
Hank Greenberg's long run at
American International Group
is over. But his tireless crusade for marketplace fairness will stay with us for a long time.
surrendered his chairmanship and his board seat Monday as an investigation into the insurance giant's books picked up steam. He told directors in a
letter sent by lawyer David Boies that he "recognizes the need to promptly and cooperatively resolve all inquiries and investigations by regulators and other authorities."
Just two days later, the company
revealed the eye-popping results of an internal review of its accounting. The company said it was headed for possible restatements that could reduce its net worth by at least $1.77 billion.
Even more shocking, the company admitted it had misbooked a reinsurance deal in order to bolster its numbers. After months of skirting the issue, AIG suddenly agreed with the government to correct its accounting on that deal -- a deal Greenberg reportedly had a hand in personally.
The company also admitted that it had bolstered its numbers through the control of some supposedly independent offshore companies. One of the companies at issue, Richmond Insurance of Bermuda, was the
subject of extensive reporting in
in recent weeks. Of that company, AIG said:
Although AIG owns only a minority ownership interest in Richmond, the review of the operations of the Richmond subsidiaries has shown significant previously undisclosed evidence of AIG control.
It turns out that wasn't all AIG failed to disclose. Issues to be addressed on its books, AIG said, will range from its control of other offshore insurers to its improper booking of investment income to its compensation costs.
So it seems like a lot of disclosure issues suddenly bubbled to the surface once Hank Greenberg stepped aside. We can only assume that AIG was heeding a bit of advice Greenberg helpfully offered in his resignation letter:
It is not in the interests of the company or its shareholders to have members of the Board or their representatives prematurely and selectively leaking to the press (sometimes accurately and sometimes inaccurately) what has been discussed and proposed at meetings of members of the Board without the press release and SEC filing required to accurately convey material information to the entire market.
Yes, that's Hank Greenberg's legacy right there: An unflinching dedication to full and fair disclosure.
3. See Me Now
: No more Mr. Nice
If you had any doubts about Qwest's tenacity, those surely must have been dispelled Thursday, when the company yet again
boosted its stock-and-cash bid for MCI. The move increased Qwest's offer to $8.9 billion and once more confronted MCI's board with a decision between Qwest and chosen suitor
After weeks of complaining that its superior offers were being ignored and that MCI was shortchanging investors, Qwest can't be blamed for having a bit of a chip on its shoulder. By now, the company has raised its offer three times -- even as it weathered a
torrent of criticism from Verizon chief Ivan Seidenberg.
All the same, there's one part of Qwest's strategy we can't figure out. Qwest said for the second time Thursday that it would withdraw its offer if MCI doesn't respond by early next week.
Of course, Qwest made the same threat back in Monday, regarding its previous $8.5 billion bid for MCI. At the time, it promised that it would yank the offer if MCI's board didn't respond by April 5.
What was strangest about that pronouncement was that when Qwest rattled its saber, MCI already had set plans to respond to Qwest by the next day -- which, as promised, it did, snubbing Qwest again in favor of Verizon's upgraded $7.6 billion bid.
So what's up Qwest's sleeve, a proxy fight? We can't be sure, because a Qwest spokesman didn't return a call seeking comment. But it looks to us like this battle marching on well into the summer could be no April Fools' joke.
Cheesy Mouse Head Tribute
4. Mouse Ears
You may think you're a big fan of the movies Bob and Harvey Weinstein made for
After all, the two Miramax execs made many popular and critically acclaimed pictures during their 12 years at Disney, which ended earlier this week when the media giant bought them out for some $130 million.
But what we learned from that buyout was no matter how much you like Gangs of New York or Pulp Fiction or The Piano, you can't say you're the Weinsteins' biggest fan.
That's right. That distinction, we learned Tuesday, goes to none other than departing Disney CEO Michael Eisner.
Of course, some of us had assumed there were some touchy issues between the sides regarding creative control and things like that. Many people thought that there might have been some bad blood behind Eisner's decision not to distribute the anti-President Bush documentary Fahrenheit 9/11.
But in corporate departure letters, as we have learned, everyone lets bygones be bygones.
"We know that there is no bigger fan of our movies than Michael Eisner and think it was pretty brave of him to give us the ability to make movies like
City of God
," the departing Weinsteins said.
Way to put on a brave face.
5. Real Value
real estate ambitions may have been thwarted, but the Dolan family that runs the Long Island cable outfit continues to cover plenty of ground.
The state transit agency auctioning a contested New York City rail-yard parcel awarded the construction rights Thursday to football's New York Jets. The news comes as a setback to Chairman Charles Dolan and his CEO son James, who have fought tooth and nail to block the proposed Jets stadium on Manhattan's West Side.
Of course, you might think that running a cable TV business serving 3 million customers, along with some big sports properties and a theater chain, would be enough to keep these guys busy.
But you'd be wrong. No, though we've made it through just the first quarter of 2005, already we've racked up enough Dolan hijinks to fill up an entire cable channel.
First off, there's the cash-burning Voom high-definition satellite television service that Charles and James have been facing off over. James and most of the board wanted to shut it down, and Charles wanted to keep it going, despite its tiny user base and huge competition.
The feud resulted in Cablevision striking a February deal with EchoStar (DISH) - Get Report, a satellite broadcaster with millions of actual subscribers, to take a $200 million satellite off its hands. But Charles Dolan subsequently challenged that deal with regulators -- after he struck back at the rebellious board by stuffing Cablevision's board with hard-hitters of his own choosing. Ensuring that the flap won't die down too soon, Charles Dolan recently pledged $400 million of his own money to keep Voom running.
All this was happening as Cablevision -- which already runs the Madison Square Garden sports business -- was offering $760 million for those rail-yard rights in order to thwart the Jets' stadium ambitions. The company had promised to build apartments and hotels there. In the end, the Jets' $720 million offer won out, though no one could say Cablevision failed to play the sore loser.
"It is obvious that the Bloomberg fix was in," MSG said in a press release Thursday afternoon. "It's no wonder that the MTA is in financial crisis when its own Board declares that $210 million is worth more than $400 million in cash. Today's decision will only serve to galvanize the two-thirds of New Yorkers who are bitterly opposed to spending more than $1 billion in taxpayer money for a football stadium that they do not want."
Anyway, so what ever happened to the plain old cable business? We're getting there. News emerged this week that Cablevision, on top of all its other projects, was discussing participating in a deal to take over fallen cable rival
-- a concept that Wall Street analysts could only shrug about, considering a rival bid by deep-pocketed
and the lack of overlap between Cablevision and Adelphia systems.
"I wouldn't believe it unless it was Cablevision," Richard Greenfield, an analyst with Fulcrum Global Partners, told
The Wall Street Journal
, referring to Charles Dolan's challenge of the EchoStar deal. A Cablevision spokesman didn't immediately return a call seeking comment.
Call us crazy. But just maybe, as one correspondent suggests, the Dolans are the victims of an undiagnosed case of attention deficit disorder.
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