Mackaroni and Cruz
1. Falling Knife
The firing squad was back in action at
It has been nearly a month since John Mack made his triumphant return to the big Wall Street firm, but on Thursday, the CEO -- long called "Mack the Knife" for his cost-cutting fervor -- made his mark. Morgan Stanley detailed plans to boost profits by firing a thousand brokers and cutting back on broker training.
A memo from acting president Zoe Cruz emphasizes that the moves will bolster the brokerage unit by ousting underperforming brokers. Cruz, of course, is a survivor of the failed Purcell administration who won Mack's admiration by turning down a huge pay package in the name of firm unity. She's sometimes called the "Cruz Missile" for reasons that have never been fully explained.
Anyway, the cuts come less than a month after Mack, meeting and greeting workers in his first full day, told retail brokers in New York's suburban Westchester County they were a "hidden asset."
"I am a big believer in retail," Mack told a jam-packed crowd at the July 1 meeting,
The Financial Times
reported. A person who attended that meeting told the paper, "The applause was huge."
We can only assume Thursday's news was greeted with similar enthusiasm.
Dumb-o-Meter score: 91. Well, when you get Mack the Knife together with the Cruz Missile, bloodshed is inevitable.
To view Colin Barr's humorous video take on the knife and missile tactics at Morgan, click here
Static Clings to Call
2. Hear Me Now
The buzz around
this week was hard to ignore.
The New York-based phone company posted an 18% profit jump as its Verizon Wireless unit turned in another blowout quarter. But what really bent some ears on Wall Street was the poor audio quality of Tuesday morning's earnings conference call.
The hold music was clear as a Bell as listeners tuned in around 8:30 for the company's take on things. But as soon as CEO Ivan Seidenberg started talking, the static roared. "Maybe he's calling in from Iraq," one participant quipped in an instant messaging exchange.
Given Seidenberg's reputation for dismissive responses, maybe the interference wasn't all bad. In any case, the connection didn't seem to clear up much. "Can you hear me?" Smith Barney Citigroup analyst Michael Rollins asked late in the call. "I can hear you now," Verizon's Doreen Toben replied in an apparent nod to a popular Verizon Wireless advertising campaign.
Verizon was apologetic afterward, offering to furnish a transcript for reporters' use. Asked to explain the poor connection, a Verizon rep points to an unnamed outside contractor, though he adds, "At the end of the day, it was probably our fault for not getting a good vendor."
Yes, maybe Verizon needs to get over some of its hangups there.
Dumb-o-Meter score: 88. There's plenty of blame to go around here, but at least Verizon isn't trying to outsource all of it.
Weill's Wings Clipped
3. The Plane, the Plane
We can all sleep easier knowing that
Chairman Sandy Weill is no longer a flight risk.
Last week the financial services wheeler-dealer was itching to branch out on his own to start a private equity fund. But the exit door suddenly closed when the Citigroup board enforced the 73-year-old executive's noncompete agreement. News reports indicate the spat centered on who would pick up the tab for perks like use of a company plane.
This week, Weill moved to put the whole matter to rest with a memo to Citi staffers. The note mentions that Weill was "hurt" to read "speculation" that his plans to leave wouldn't have benefited Citi.
"As a founder of this company, the success we have achieved together has been the highlight of my career," Weill writes. "I would never do anything that would hurt the company. In fact, it was my hope to establish a business whose activities would complement and benefit Citigroup."
Yes, that adds up. The board stepped in because Weill's actions would "complement and benefit" Citigroup. Makes sense to us.
Dumb-o-Meter score: 80. Boards always hate the stuff that's good for the company.
eBay's Model T
4. Rust Belt
You never know what you'll find on
Judging by last week's blowout quarterly earnings, you wouldn't think eBay needed much help in the strategy and leadership department. But Wednesday, the San Jose, Calif., online auction site set plans to expand its board to 11 directors from 10, by hiring Ford CEO Bill Ford Jr.
"We are extremely pleased that Bill is joining eBay's board," eBay chief Meg Whitman said in a Wednesday press release. "He leads one of the best-known and most respected global brands, and his management expertise will be a welcome addition to an unparalleled board of directors."
No one disputes that Ford is a respected global brand, or that Bill Ford -- great grandson of founder Henry Ford -- has significant management expertise.
But the timing does seem odd, considering the straits Ford finds itself in. The company is having trouble drawing in buyers without steep discounts, and Wall Street continues to cluck about its cost structure. Just last week, rating agency Fitch cut Ford's debt rating after second-quarter earnings slid 19% on dwindling market share in North America.
As a matter of fact, since Bill Ford took the reins at the Dearborn, Mich., company in late 2001, Ford shares have lost a third of their value, while eBay's have tripled. And while Ford certainly took over at a tough time for the automaker, he remains perhaps best known for overseeing a restructuring that included 21,000 job cuts and five plant closures.
That's not how eBay sees it, though. "What he's done at Ford Motor Company would benefit any board," eBay spokesman Hani Durzy told
The Associated Press
, pointing to Ford's leadership and business strategy skills. "We're really pleased to have him."
We could be wrong, but it sounds to us like eBay's looking for management expertise in all the wrong places.
Dumb-o-Meter score: 75. You'd think Bill Ford's plate would be full enough as it is.
5. Dead Letter Office
How to promote a new phone? If you're
, you start with an old name.
The Schaumburg, Ill., wireless technology company has been red hot. Last week Motorola posted a blowout second quarter on the back of blistering sales of its Razr phone. This week the company grabbed the spotlight again, introducing a keyboard-equipped phone aimed at loosening the stranglehold
Research In Motion's
Blackberry enjoys on the mobile email market.
Motorola's latest phone has been so widely anticipated that it already has been called RazrBerry and Franklin, among other things. But for the official rollout, Motorola took another tack: It dubbed the device Q phone, after the layout of its typewriter-style miniature keyboard.
That's not to say expectations are low. CEO Ed Zander told
the Q was one of many upcoming products that would help Motorola beat its rivals. "I don't think there's another company that can put together a product line like that," Zander said.
It's funny, though. Turns out there is another company that did put together a product line very much like that. The company was
, the year was 1997, and the product was called the Q-Phone. Interestingly enough, patents associated with that phone led to a long legal standoff between Motorola and Qualcomm. By the time the companies settled in 2000, seven claims and counterclaims had entered the courts, according to
The Wall Street Journal
This time the friction is gone. Qualcomm says the companies talked before Motorola rolled out the new Q phone, and a Qualcomm spokesman adds, "We're happy for them to use the name on such a cool product."
Maybe Motorola just wants to drive up its
Dumb-o-Meter score: 61. Isn't it sweet when big companies get along?
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