1. Third-Degree Byrne
chief Patrick Byrne is building himself quite a case.
The founder of the Salt Lake City-based online retailer claims short-sellers and many, many others are conspiring to drive down the price of Overstock shares. This despite the fact that Overstock shares traded this week at 170 times 2006 earnings estimates.
On last Friday's conference call describing his pending lawsuit against short-sellers, Byrne warned listeners that he wanted to "get something off my chest." He went on to describe a wide-ranging plot involving hedge fund Rocker Partners. Rocker -- which owns 8% of TheStreet.com (TSCM) , the publisher of this Web site -- denies Overstock's claims and vows to countersue. Others named in Byrne's massive scheme range from TheStreet.com and The Wall Street Journal to Eliot Spitzer and private equity investor Leon Black.
The conspiracy evidently reaches even into Washington, where certain unnamed people apparently are trying to get Byrne jailed. As Byrne said in a particularly lucid moment last Friday:
DOJ, my understanding is, and I don't know this for a fact, my understanding is that was tried in May about me and that some people tried -- it turned out that I do travel to strange parts of the world, Saudi Arabia and Iran and places like that.And somebody just, you know, it's very easy to get people's credit card records.And I'm open about it anyway. And they turned that into a white paper that saidByrne is tied up Al-Qaeda and terrorism and money laundering and you ought to look at this guy. And it was essentially laughed, to my understanding, that thatwas just laughed out of the office at the Department of Justice. So ... and I thinkthere are a much more independent command than I think for example the SEC --is much more independent and immune from political pressure. So I don't meanto criticize anyone there.
No offense taken. When you've got this many enemies, no one can blame you for getting a little worked up. Take another Byrne comment Friday:
As this went on I started realizing that there wasactually some more orchestration here being provided, by what I'm calling here isthe Sith Lord or the mastermind. Now, can I tell you who that designated bottomfeeder was who was supposed to end up with our company? Can I tell you? I can.But I'm not going to today. The Sith Lord is, can I tell you who that is? Well, Icould tell you it's a name that everybody on the phone, every single person on thephone would recognize this person's name. He's one of the master criminals fromthe 1980s, and he's back in business. But I'm not going to. I'll just call him themaster mind today.
If you didn't know any better you might think Byrne himself had "lined his hat with tinfoil," as he said of an ally in his fight against
so-called naked shorts. But despite the endless tirades and the lawsuit, Byrne fashions himself a "value guy."
I also want to say I'm a value guy to my toes and I could not be more indifferent to my stock price. I agree that CEOs who spend time worrying about shorts or obsessing about shorts are fools. And that most of the CEOs who tangle withshorts are crooks. I think shorting plays a healthy role in a normal market. But I'm going to describe a set of events and I think that the reasonable listener is going to say, "You know, if that's really what's going on, you're right to do something about it."
Yes, the more we hear of Patrick Byrne, the more we're reminded of Warren Buffett.
Dumb-o-Meter score: 95. Overstock.com: Our prices aren't the only thing that's insane!
Grasso Miscarriage of Justice
2. Charity Case
It may be better to give than to receive, but don't tell Dick Grasso.
The former New York Stock Exchange chief this week scoffed at a press report claiming he could stop his Eliot Spitzer-size legal headaches for a measly $25 million.
Newsweek reported that current NYSE chief John Thain would be willing to settle if Grasso returned that much money to the exchange. New York Attorney General Spitzer sued Grasso last year, alleging he acted improperly in taking a mammoth $188 million paycheck. Disclosure of the package drove Grasso's September 2003 departure from the NYSE.
The size of any possible settlement aside, what piques Grasso about is the notion that he'd be the one coming up with the cash. Why, Grasso told Bloomberg, "I have no interest in any settlement where I would give any money back to the exchange." He went on to add that "a nickel is an admission on my part that I did something wrong. I will never do that."
What Grasso will do, apparently, is assume his adversaries would be content to pay him off. Why, Grasso has even made plans for the money. He told
that it will go to set up a college scholarship fund for children of New York City policemen and firemen.
"It's not about the money," Grasso said. "When sanity and justice prevails, they are going to have to write me a check."
Judging by that interview, sanity isn't prevailing at the moment.
Dumb-o-Meter score: 88. Maybe Grasso could get former Morgan Stanley chief Phil Purcell some well-deserved extra retirement money while he's at it.
They're on Time's Side
3. Light and Lively
chief Dick Parsons and restive shareholder Carl Icahn found something they can agree on: They like it when Time Warner stock goes up.
This week activist Icahn turned his sights on the New York media giant, calling for it to split up its far-flung operations and spend more money buying back stock. Time Warner shot back that it has already made plans and that it intends to honor them, but added that it would be willing to talk.
So Parsons and Icahn met Wednesday in a set-to that had Wall Street frothing with anticipation. Would there be a showdown? Which hard-hitter would take the offensive? Would someone blink?
Blink, no. Nod off, maybe.
Time Warner issued a release claiming the two had "had a frank and open exchange of views." Icahn's statement spoke of a "lively exchange of ideas." And the two agreed without question that "we both believed Time Warner was meaningfully undervalued and that we both wanted very much to rectify this situation," Icahn said.
So there you have it. These guys needed to meet to agree that they want Time Warner stock to rise?
"We agreed to communicate again shortly," Icahn said. Can't wait to see what comes out of that.
Dumb-o-Meter score: 82. It's clear that what Time Warner needs is more meetings.
Employee Dis Program
4. Ford Escort
is just killing its workers with kindness.
For years the Dearborn, Mich., automaker has struggled to cut costs amid an onslaught of foreign competition. Under CEO Bill Ford, who took over four years ago, the company has slashed thousands of jobs through plant closings, buyout offers and early retirement.
Lately, though, Ford's belt-tightening has grown more urgent. For the first time in generations, Ford has resorted to firing employees and immediately escorting them from corporate buildings. An ensuing uproar prodded CEO Ford to explain the decisions behind the firings.
"Some have asked me why we have had to ask employees to depart immediately," he wrote in an email to staff,
The Detroit Free Press
reports. "Well, the management team has discussed this and concluded that it's kinder to make our separations in this fashion, rather than have the employee remain in a difficult situation. Frankly, there's no easy way to do this."
True enough, but it might be less annoying if Ford would just swing the ax in silence.
Dumb-o-Meter score: 75. No sign Ford has any idea of how to extricate itself from this difficult situation.
5. Burke Avenue Exit
A management flap had
aflutter this week.
Wall Street erupted in cheers Thursday when a big investor said he'd try to oust the amusement park operator's top brass,
led by CEO Kieran Burke.
Investor Daniel Snyder's Red Zone LLC outlined a plan to grab three board seats and to install himself as chairman and
executive Mark Shapiro as CEO. Red Zone also said it might offer to buy up to 23% of the stock at $6.50 a share.
Six Flags stock, which has lost three-quarters of its value since early 2002, jumped 19% as investors got in line for a fresh start. In its filings, Snyder's group -- which already owns almost 12% of Six Flags -- said it has proposed ways to increase revenue, cut expenses and capitalize on real estate holdings. In response, "the current board and management have not only ignored what we believe are constructive suggestions, but have also failed, in our view, to implement any alternative strategy that has delivered acceptable results," Snyder's group said.
Fair enough -- except that Snyder's recent results hardly seem more acceptable.
Since Snyder bought football's Washington Redskins in mid-1999, the team has posted an unimpressive 44-52 record. Despite throwing millions at a pricey roster, the Skins are one of just five NFL teams to have missed the playoffs in each of the last five years. And displaying admirable patience, Snyder has managed to have five different coaches leading the team in a space of just six years. Snyder's hiring of big-name coach Steve Spurrier foundered a few years back when, among other things, Spurrier said Snyder insisted on choosing the starting quarterback himself.
The Six Flags board said late Wednesday it would evaluate the Snyder filings and concluded that "Six Flags shareholders need take no action at this time."
But given Snyder's history, that sounds like wishful thinking.
Dumb-o-Meter score: 70.Seems like Six Flags has spent enough time already taking no action.
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