1. Jobs Report
The magic is back at
Ending weeks of speculation, the media giant forked over $7.4 billion in stock late Tuesday to buy animation powerhouse Pixar (PIXR) . The deal lines Steve Jobs' pockets and infuses Disney's flagging cartoon division with much-needed creative talent, led by Pixar's John Lasseter.
"Disney and Pixar can now collaborate without the barriers that come from two different companies with two different sets of shareholders," said Jobs. "Now, everyone can focus on what is most important, creating innovative stories, characters and films that delight millions of people around the world."
The deal also lets Disney chief Bob Iger break decisively with Michael Eisner, whose arrogance, micromanaging and self-absorption failed to delight Disney investors toward the end of his reign.
It was on Eisner's watch that the Pixar-Disney partnership deteriorated in the first place. Two years ago, Pixar chief Jobs broke off talks on extending the lucrative distribution contract, citing Eisner's intransigence. Eisner later insisted in an interview with the
that the economics of the Pixar contract meant that "The Disney Company could not make that deal."
No one's saying that now, of course. Still, it remains to be seen how Disney's board will handle the hard-charging Jobs, who has been called a prima donna himself once or twice. His narcissistic streak figured in a 2000
Harvard Business Review
study of the executive ego.
In some ways, Jobs' foibles recall Eisner's own. Where Eisner once held a meeting about firing Michael Ovitz with Ovitz standing outside the room looking in, Jobs has shown his own penchant for humiliating lesser beings. A
reporter lobbing softball questions at Jobs in a 1999 sitdown found himself under merciless attack, as Alan Deutschman recounts in
The Second Coming of Steve Jobs
. The episode moved the
reporter to conclude of Jobs, "Imagine what he'd be like if he hadn't studied Zen."
Yes, this should be one delightful collaboration.
Dumb-o-Meter score: 93. Well, maybe keeping everyone happy isn't Jobs' job.
To view Colin Barr's video take of this column, click here
Take a Nike
2. Shining Armor
William Perez's brief run atop
came to an abrupt end this week.
The Beaverton, Ore., athletic-shoe giant replaced Perez as CEO just over a year after he came aboard. Citing leadership differences with Chairman Phil Knight, Perez agreed to step down and hand the reins to Nike veteran Mark Parker.
"Succession at any company is challenging, and unfortunately the expectations that Bill and I and others had when he joined the company a year ago didn't play out as we had hoped," Knight said. "I want to personally thank Bill for his dedication and commitment over the past year."
The turnabout was all the more surprising because few observers had seen Perez's appointment coming in the first place. Knight had lured Perez out of the relative obscurity of S.C. Johnson, the Racine, Wis., maker of Saran wrap, Scrubbing Bubbles and Drano. Considering S.C. Johnson's humdrum business, Perez's qualifications for running a high-profile global branding machine like Nike weren't immediately apparent to everyone -- even given Knight's claim that he was ready to step back and "maintain my status as the world's No. 1 sports fan."
On the other hand, Knight famously values loyalty, and Nike's Nov. 18, 2004, press release offers some hints on that score. "An avid runner, he has participated in 11 marathons," Nike said of Perez. "For the last 27 years he has only worn Nikes."
No word on what he's wearing now.
Dumb-o-Meter score: 90. Taking a cue from the S.C. Johnson product lineup, Perez saw that things weren't working out and decided to Vanish.
Rumblin', Bumblin', Stumblin'
3. Panic in Detroit
The blitz is on in the Motor City.
Detroit is preparing to host the Super Bowl next Sunday, but Wall Street has been riveted by the slugfest among the big U.S. carmakers.
Ford (F) - Get Ford Motor Company Report opened the week by rolling out a stronger-than-expected profit, along with a plan to cut as many as 30,000 jobs. DaimlerChrysler (DCX) followed up Tuesday by saying it would pare its administrative staff by 20% in a cost-cutting move. And General Motors (GM) - Get General Motors Company Report got a vote of confidence Wednesday from billionaire investor Kirk Kerkorian -- which it promptly repaid by unveiling another multibillion-dollar quarterly loss Thursday.
At GM, CEO Rick Wagoner promised for the umpteenth time to oversee a meaningful turnaround at the company, which
lost $8.6 billion in 2005 alone. "GM's top priority is to restore our North American operations to profitability and positive cash flow as quickly as possible," Wagoner said. "In 2005, we laid out a comprehensive and integrated strategy to address the structural issues that impede our competitiveness and profitability, and we are focused on rapidly executing all aspects of the turnaround plan."
At Daimler, where the parent company is now based in Stuttgart, Germany, the talk was on
cutting red tape. "We want our divisions to concentrate on the automotive core processes -- development, production and sales," said Chairman Dieter Zetsche. But not to the extent of overlooking important details. Accordingly, "the financial and operating results of Bus and Van operations will be reported in a new segment called Van, Bus, Others," the company explains. "The address on the corporate letterhead will also change."
But perhaps the strongest words came from Ford, which at last
laid out its plans for the long-awaited Way Forward restructuring. In addition to cutting jobs and
streamlining management ranks, Ford is talking about history -- and, of course, football.
"This next chapter in Ford's history will be remembered for our renewed commitment to innovation and as the time we moved boldly to prepare Ford's North American business to face global competition," said CEO Bill Ford. "We know how to play offense and play to win," Americas President Mark Fields added.
Sorry, we wouldn't want to bet on that one.
Dumb-o-Meter score: 85. Some new Mercury models "are attracting younger customers to the brand and more women than Ford-brand products in the same segments," Ford's press release says. "In addition, they are bringing new customers to Ford Motor Company -- at conquest rates as high as 50%." Um, conquest rates?
4. Heaven Hath No Fury
There's no life after heaven. Or, at least, after "7th Heaven."
Warner Bros. this week folded their little-watched UPN and WB networks. The companies said they will combine the remnants into a new, equally owned network called the CW.
Neither the WB nor the UPN ever succeeded in establishing itself as a consistent winner, the way Rupert Murdoch's
did a decade ago. Wall Street types said high TV production and marketing costs, together with declining audiences for television, made the fledgling networks' failure inevitable.
But there's another factor at work here. For 10 long years the WB soldiered on with a mostly lamentable schedule featuring the likes of "Hyperion Bay" and "Smallville." The bright spot was "7th Heaven," the tale of a minister's family in California that strangely enough emerged as a ratings leader.
"Storylines have touched on such topics as the Holocaust, hate crimes, prejudice against Muslims, drug use, vandalism, the right to vote, drinking and driving, teen pregnancy and homelessness," the WB said in a November release recounting the show's achievements.
Somehow, "7th Heaven" managed to outlast 92 competing shows in its time slot. But when the WB yanked it last November, the network had little left. And so came the merger with the UPN, the outfit that next month is due to bring you the important reality show "Get This Party Started."
"This new network will serve the public with high-quality programming and maintain our ongoing commitment to our diverse audience," said CBS chief Les Moonves. "It will clearly be greater than the sum of its parts."
Well, it's always good to set the bar low at first.
Dumb-o-Meter score: 78. The premise of Get This Party Started? "An elite party planning team works with one special individual's family and friends to give their loved one the surprise of a lifetime," UPN says. Get that TiVo started.
5. Footing the Bill
will be viewing the glass as half-full, thanks very much.
The Fort Worth, Texas, subprime lender rolled out a
strong second-quarter performance after the close Monday. The company said earnings surged 34% from a year ago, while credit performance as measured by loan charge-offs improved. AmeriCredit also boosted its profit guidance for the rest of 2006.
"Historically, the December quarter is our most challenging quarter due to seasonal pressures in terms of credit performance and loan origination volume," said CEO Dan Berce. "We did see some seasonal impact, but overall our performance was very good."
The quarter was so good that AmeriCredit failed to mention -- except in a footnote to a table below the text -- its plan to restate its financials going back more than three years. The problem, disclosed in a
Securities and Exchange Commission
filing, stemmed from a cash-flow classification issue.
"As a result of the restatement, operating cash flow decreased and investing cash flow increased by $508.1 million, $307.6 million and $128.1 million for the years ended June 30, 2005, 2004 and 2003, respectively," AmeriCredit said in the 8-K filing, made late Monday. "For the three months ended Sept. 30, 2005, operating cash flow decreased and investing cash flow increased by $143.0 million."
As good as the second quarter was, it seems odd that the restatement warranted no more than a footnote. But AmeriCredit flack John Hoffmann says the company took that approach because "it was a reclassification of the cash flow statement from one line to another." He points out that the restatement "doesn't change the bottom line numbers," which are of course the ones Wall Street watches like a hawk.
A billion-dollar accounting error? Sure, that's just a footnote to history.
Dumb-o-Meter score: 75. "Investors should look to the revised financial statements when they become available," AmeriCredit declares in the SEC filing. We can't wait.
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