Eisner Not Crossed in Delaware
Judge writes Ovitzuary in Disney shareholder suit

1. Magical Moment

Michael Eisner seems easier to please lately.

For years the Disney (DIS) - Get Report chief has been tagged as an imperious, Machiavellian micromanager. He has been known to throw the occasional temper tantrum, and to fire off the odd memo branding a certain colleague a "psychopath."

But Eisner, who's due to leave the Burbank, Calif., media giant at the end of next month, had 140 million reasons to smile this week. A Tuesday afternoon ruling relieved Disney directors of any liability in the Michael Ovitz debacle of the mid-1990s.

Plaintiffs in a long-running shareholder class action had accused Eisner and his buddies of breaching their duty to investors. In 1995, Eisner lured longtime friend Ovitz to Disney for the president's job. Just 14 months later, Eisner fired him -- while handing Ovitz a $140 million check to keep his mouth shut. The suit had sought to make the directors repay Disney out of their own pockets.

The trial lasted 37 days and generated more than 9,000 pages worth of transcripts, many painting an ugly picture of Disney and Eisner. In addition to the memo in which Eisner called Ovitz a psycho, there was the time the Disney board met in a glass-walled room to discuss Ovitz's firing -- with Ovitz outside looking in.

But Delaware Chancery Court Judge William Chandler ruled Tuesday that despite their many missteps, the Disney brass didn't run afoul of their directorial duties.

"Despite all of the legitimate criticisms that may be leveled at Eisner, especially at having enthroned himself as the omnipotent and infallible monarch of his personal Magic Kingdom, I nonetheless conclude ... that Eisner's actions were taken in good faith," Chandler wrote in a 174-page ruling.

That may not strike you as a ringing endorsement, but the Eisner camp begs to differ. "This was a case where the evidence didn't support any claims, and the judge after hearing it agreed," Eisner lawyer Gary Naftalis told the

Associated Press

. "We're pretty happy."

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Dumb-o-Meter score: 85. Suffice to say Disney investors will be pretty happy Sept. 30, Eisner's last day.

To view Colin Barr's humorous video take on Eisner's fairy tale ending, click here

.

Fannie Packed With Consultants
1,500 good enough for government-sponsored enterprise work

2. Mudd Slinging

It's getting muddier by the minute at

Fannie Mae

(FNM)

.

Chief Daniel Mudd updated Wall Street this week on the fallen financial giant's accounting mess. There was some bad news: The mortgage firm's massive restatement will go on for at least another year, and in the meantime Fannie faces at least a hypothetical danger of delisting. Fannie shares fell 4% Wednesday.

But there's good news too, Mudd (inset in photo at right) seemed to indicate Tuesday. He says Fannie will throw every resource at nailing the restatement. That's no small task. "Altogether, we project devoting six to eight million labor hours to the restatement," Mudd says. "We are leaving no stone unturned."

We'll say. In addition to beefing up the accounting department, Mudd & Co. are doing some other hiring. And that's where we start to wonder how well spent those labor hours are going to be.

"As our normal business operations continue, we also are committing every available resource to the restatement," Mudd said Tuesday. "This year we expect that over 30% of our employees will spend over half their time on it, and many more are involved. In addition, we are bringing some 1,500 consultants on board by year's end to help with the restatement."

We can imagine the regulars at Fannie's offices in Washington are eager to meet the new arrivals. After all, there's no shortage of consultant jokes making their way around the nation's cubicle farms, featuring punchlines like "a consultant is someone who comes in to solve a problem and stays around long enough to become part of it."

That won't be the case here, we're sure. And anyway, now we know the answer to the one that goes, How many consultants does it take to turn over stones?

Why, 1,500 seems about right.

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Dumb-o-Meter score: 82. Maybe Fannie can get Frank Raines to lend a hand.

Whirlwind Courtship
Whirlpool really likes Maytag

3. Spin Move

If

Whirlpool

(WHR) - Get Report

loses out on

Maytag

(MYG)

, it won't be for lack of trying.

A few months back it seemed like no one wanted Maytag, the foundering Newton, Iowa, washing machine maker. Its shares hit lows not seen in a decade after a series of earnings setbacks. A private-equity buyer called Ripplewood Holdings arrived in May to take Maytag out of its public-market misery at $14 a share. A group led by a Chinese company briefly flirted with a competing bid but soon backed out.

For a while it looked like that was that. But then last month Benton Harbor, Mich.-based Whirlpool was overcome with a corporate crush we haven't seen since Qwest's (Q) fruitless pursuit of MCI (MCIP) .

Whirlpool didn't just roll out a merger proposal for Maytag that was financially superior to the existing Ripplewood deal. No, it managed to increase its offer, in the absence of any counterbidding, three separate times.

"This transaction will provide Maytag shareholders with superior value compared to the current offer," Whirlpool chief Jeff Fettig (pictured at right) said July 17, as the company unveiled a $17-a-share offer. "Equally important, the combination fits Whirlpool's strategy and capabilities, will create strong value for our shareholders and provide direct benefits to consumers and trade customers."

Sounded good to us. But Whirlpool had only just begun. Five days later, the company upped its bid to $18 a share, saying, "This amended proposal includes additional terms that we believe should fully address any concerns of the Maytag Directors."

That's not all, though. This Monday, with Maytag still reserving judgment and Ripplewood still keeping to itself, Whirlpool bid $20 a share -- and threw in a $120 million breakup fee on top of it. "Our binding offer reflects both the value we see in the combination of Whirlpool and Maytag and the confidence we have in the ultimate receipt of regulatory approval for the transaction," Fettig said.

Sounds pretty confident. But after sleeping on it for two more days, Fettig decided to sweeten the pot yet again anyway, boosting the bid to $21 a share, or some $1.7 billion. By now, he was out of things to say about the superior value of his proposal, judging by the laconic Wednesday morning press release.

Maytag's directors and investors will have their say soon enough, we suppose. We can only hope they don't feel like Whirlpool's been stalking them.

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Dumb-o-Meter score: 75. We fear the long wait for closing won't wash with the Maytag camp.

4. Copper Panned

The penny just got a little more tarnished.

This week the nation's least valuable coin was implicated in that nasty business at

Krispy Kreme

(KKD)

. The stock has lost more than $2 billion worth of market value since the company's sales plunged last year, sparking a management purge and a series of government probes.

The latest word on Krispy Kreme comes from two independent directors conducting an internal accounting investigation. On Wednesday. they

released excerpts of a report taking former management at the Winston Salem, N.C., doughnut giant to task.

"In our view," the report indicates, former CEO Scott Livengood and onetime operating chief John Tate "bear primary responsibility for the failure to establish the management tone, environment and controls essential for meeting the Company's responsibilities as a public company."

And how did Tate and Livengood wreak their havoc on the humble doughnut firm? Why, the panel concluded that Krispy's books were cooked as a result of "a corporate culture driven by a narrowly focused goal of exceeding projected earnings by a penny each quarter."

Add Krispy Kreme investors to the chorus calling for the penny to be phased out.

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Dumb-o-Meter score: 70. Even a far cleaner and healthier company, Cisco (CSCO) - Get Report, wants to clear out the change drawer. After who knows how many quarters of beating by a penny itself, the networker told investors Tuesday evening to focus on order trends instead. Yeah, right.

Satellite Campuses
Sirius about the Ivy League

5. Poison Ivy

Over the last year or two,

Sirius

(SIRI) - Get Report

has bagged some serious big game in its hunt for popular programming. The New York satellite broadcaster hosts the National Football League, Howard Stern and Martha Stewart, among many others.

Now, though, the company has moved on to plant life. Sirius reached a multiyear deal this week to broadcast Ivy League football and basketball games of the week, along with "a select number of men's hockey and other games from across the Ivy League sports landscape."

The company says it has history on its side. "We're thrilled to add the Ivy League to our roster of sports offerings on Sirius," said Steve Cohen, vice president of sports programming. "Not only can alumni and fans of the Ivies follow their teams from anywhere in the country, but fans everywhere will be able to experience some of the most historic rivalries in sports."

Yes, we're sure listeners everywhere are dying for access to the next Cornell-Dartmouth basketball game.

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Dumb-o-Meter score: 54. Sign us up for whatever Penn lacrosse matches are on offer too.

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