Many Unhappy Returns
1. Red Monster
Shrek may be an ogre, but he was far from the ugliest sight this week at
The Glendale, Calif., animation studio floored Wall Street by posting first-quarter earnings that missed estimates by 14 cents a share. DreamWorks blamed Shrek 2, whose sales "did not meet the company's retail sales expectations for the first quarter."
Turns out that's a bit of an understatement. Sure, expectations were high: The movie set records when it went on sale in DVD form last November, and DreamWorks says it remains on track to rank among the biggest home video releases ever.
But because of heavy returns by retailers, DreamWorks admitted, the company "recorded no revenue from
in the quarter other than from licensing and merchandising."
That's right, first-quarter net DVD sales of
were zero. It doesn't get much more hideous than that.
2. Our Condolences
showed this week that it isn't just America's most convenient bank. It's the most caring, too.
What provoked the bank's latest bout of solicitude? Oddly enough, it was the
conviction of two Commerce Bank Pennsylvania officers in a Philadelphia municipal corruption scandal. Glenn Holck and Stephen Umbrell were convicted Monday of conspiracy to commit wire fraud and two counts of aiding and abetting wire fraud.
News of the convictions sent Commerce stock down 6%, as investors worried about the fast-growing company's reputation and its exposure to outstanding federal probes.
But noting that the execs plan to appeal, Commerce emphasized the positive Wednesday morning.
"The jury reached no verdict on three charges concerning mortgage loans to the former Philadelphia Treasurer," the company said. "It reached a not guilty verdict on three other charges, but reached a guilty verdict on the remaining three charges.
"We are saddened about the result, and our thoughts are with our colleagues," Commerce added.
We are saddened? Our thoughts are with our colleagues? Hold on. These guys weren't just diagnosed with cancer or injured in a car accident. They were convicted of taking part in a criminal conspiracy.
A spokesman didn't immediately return a call seeking comment Thursday, but the long face is doubly odd considering the effort Commerce has made to tidy up its image. The company has repeatedly denied any further involvement in the influence-peddling scandal. Indeed, after Holck and Umbrell were indicted last summer, Commerce said its capital markets division would stop doing municipal bond underwriting. And on Wednesday, Commerce trumpeted its "industry-leading 'gold standard' policy on dealing with government officials."
Gold standard indeed. We can't wait to see Commerce's comments if Holck and Umbrell lose on appeal.
critics have been hankering to see a fresh face atop the investment bank. This week they got their wish, sort of.
Eight former execs have been jeering chief Phil Purcell for weeks, claiming that only his ouster can plug a damaging talent drain. Morgan Stanley hasn't been debating the dissidents, and in a meeting Tuesday with institutional investors Purcell said why.
"With investment banking, you want to be out of the paper every day," Purcell said in his first major public appearance since the controversy broke. "We are the first to admit that the media frenzy over recent events has been disruptive. The sooner we can move on and return our entire focus to the business, the better."
You can tell Morgan hasn't gotten a chance to move on just yet, though. In fact, it looks like at least part of the bank's focus has been on showing a more flattering side of Purcell.
On Monday, an article in
The Wall Street Journal
about the fight with the dissidents featured a new and more dynamic-looking Purcell portrait. Morgan Stanley asked
editors to use a new "hedcut," as the drawings are called, because the bank believed "the one they were using didn't look like him,"
spokesman Bob Christie says.
He adds that he "would assume" Morgan supplied the
photo the new sketch is based on. A Morgan Stanley rep didn't return a call seeking comment.
Yes, you can just tell that Morgan Stanley wants nothing to do with this media frenzy.
4. I'm a Believer
divide-and-conquer act didn't win many rave reviews this week.
Big shareholder Carl Icahn has been pummeling the video rental-store chain over its lavish spending. Icahn has said Blockbuster should put itself on the block or perhaps give shareholders a big dividend. After failing to win concessions from the Dallas company, Icahn launched a proxy fight to put himself and two associates on the board.
Blockbuster responded with a muddle-headed attempt to encourage investors to oppose Icahn -- while supporting his associates, Edward Bleier and Strauss Zelnick.
On Wednesday, it became evident that investors had gone ahead and ignored Blockbuster's bizarre scheme. Icahn said his slate won more than 75% of votes. Then Icahn extended an olive branch to CEO John Antioco, whom he has previously castigated as strategically nearsighted and vastly overpaid. Perhaps in an effort to keep Antioco from yanking the cord on his Texas-size golden parachute, Icahn even put Antioco back on the board. Icahn pledged to keep an open mind and to maintain management continuity.
"I would be lying if I told you this is a happy day, because it is not," Antioco said after the vote, according to
The Associated Press
. "But we'll roll with the punches."
No sign that those will be in short supply.
Carp or Cut Bait
5. Flash in the Pan
After five years of swimming upstream,
chief Daniel Carp called it quits this week.
Carp set plans to hand the sinking photo company over to his handpicked successor, operating chief Antonio Perez, next month. Carp, whose tenure saw Kodak struggle first with a film price war and then with the widespread adoption of digital photography, will retire as chairman Jan. 1.
Some wags might say the change is overdue. Kodak shares have dropped 15% in three weeks since the company posted a stunning first-quarter sales drop -- a plunge Carp dismissed by saying, "such short-term volatility is to be expected as we transform Kodak into a digital company." The stock has lost more than half its value since Carp took over for George Fisher on Jan. 1, 2000.
In spite of that, Kodak's board voted this week to let Carp keep his stock options, restricted stock and restricted stock units.
"The timing was the best one," Carp said Wednesday at the company's annual shareholder meeting,
reported. "I couldn't and wouldn't leave after 35 years if we hadn't laid the foundation that we did for Kodak's promising digital media business."
We're not sure how sound that foundation really is, but losing Carp can't make Kodak any shakier.
To watch Colin's humorous take on DreamWorks' orge-like
sales, click here.
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