Summa Cum Sloppy
1. Bachelor's Pad
They know a thing or two about leadership at
The struggling electronics retailer hired some lawyers this week to investigate errors on CEO David Edmondson's resume. Edmondson (pictured at right)claimed two bachelor's degrees from a small Baptist college, but the college told The Fort Worth Star-Telegram that he hadn't graduated at all.
Edmondson even told the newspaper last week that one degree certificate was lost in a garage fire, though he has since backed away from those claims. "The contents of my resume and the company's Web site were clearly incorrect," Edmondson said this week in a company-issued statement, The Associated Press reported. "I clearly misstated my academic record, and the responsibility for these misstatements is mine alone."
The responsibility for putting Edmondson in the Fort Worth, Texas, company's executive suite lies elsewhere, however. It was former chief Leonard Roberts who pointed to Edmondson's sterling character in twice promoting him, first to president and then last year to CEO.
"Dave's extraordinary leadership qualities and his significant career accomplishments have clearly earned him the title of president of the corporation," Roberts said at Edmondson's December 2000 elevation to president and operating chief.
Apparently Edmondson thought those qualities earned him other titles too.
Dumb-o-Meter score: 90. "I have four simple priorities in my new role as CEO," Edmondson said last May. Getting his resume right wasn't listed.
To view Colin Barr's video take on RadioShack's entry in Five Dumbest this week, click here
Where There's Coke...
Changes are bubbling up all over at
First Warren Buffett said he'd leave the Coke board to devote more time to his duties at big shareholder Berkshire Hathaway (BRKA) . Then another director, Dow Chemical (DOW) - Get Report exec J. Pedro Reinhard, said he'd leave Atlanta too.
Two suits filed in federal court "contend that an agreement negotiated in 1994 between the bottlers and the company specifically prohibits warehouse delivery of PowerAde to retailers like Wal-Mart," the Coca-Cola Bottlers Association says.
Getting served with the suits can't be too refreshing for Coke. As sales of sugary sodas go flat, PowerAde has emerged as one of Coke's sweet spots -- even though
Gatorade continues to dominate the sports-drink market.
The bottlers say they sued as a last resort after months of talks failed to produce an acceptable resolution. They say the suits defend "the principles that underlie the bottlers' perpetual contracts" with Coke.
Coke calls the suits "unfounded" and accuses the bottlers of trying to "hijack" legitimate business discussions. After all, Coke has the greater good to consider.
"We want to work with all our bottlers to create growth in all channels and with all customers," Coca-Cola North America President Don Knauss says. Promising to respond to the bottlers in more detail by next Wednesday, he adds, "We are currently reviewing a complex and unrealistic proposal from the Coca-Cola Bottlers Association."
Well, at least Coke's keeping an open mind.
Dumb-o-Meter score: 88. It must be tough to keep stuff like this bottled up.
XM's Serious Spending
XM Satellite Radio
fans were in for a shocker this week.
The Washington, D.C., pay-radio broadcaster said Thursday it lost $268 million for the fourth quarter. While CEO Hugh Panero was predictably upbeat -- "2005 was a significant growth year for XM," he insisted gamely -- the report gave investors plenty to chew on.
The loss was much wider than expected, as XM poured cash down the drain in a bid to drown out the Howard Stern-powered gains of rival Sirius (SIRI) - Get Report. But despite the spending blitz, the fourth quarter marked the first time that XM gained fewer users than Sirius.
XM has been losing money hand over fist for years, in part by throwing money at the likes of Bob Dylan and Oprah Winfrey. But suddenly its profligate plan isn't flying with director Jack Roberts, who bailed out Monday.
"Given current course and speed there is, in my view, a significant chance of a crisis on the horizon," Roberts wrote in a heartfelt resignation email. "Even absent a crisis, I believe that XM will inevitably serve its shareholders poorly without major changes now."
Amplifying Roberts' comments, XM adds in a regulatory filing that it "believes the disagreement with Director Roberts primarily involves the strategic balance of growth versus cash flow."
Nothing new there. But Roberts' background gives his take on cash-burning another twist,
Scott Moritz notes. Roberts was at Bear Stearns when the bank was arranging financing for XM, Sirius and Globalstar, a failed satellite phone venture. All three companies were created under the explicit tradeoff of heavy losses for expanded growth opportunities.
Roberts doesn't say exactly how he would steer clear of the crisis. But, he concludes, "It is clear to me that I cannot be part of the solution, and I will not be part of the problem."
Not anymore, at least.
Dumb-o-Meter score: 85. Perish the thought that XM was just tuning Roberts out.
4. Khaki and Tacky
has its heart set on branching out.
The Seattle-based banking giant said Wednesday it would cut 2,500 jobs as it pares back its mortgage lending business, amid evidence that the nation's housing boom has peaked.
Little fanfare accompanied the decision to close 10 of 26 U.S. mortgage processing centers. The company said flatly that the move "reflects the company's ongoing focus on adjusting the cost structure of its home-loans business and effectively managing capacity to better match current and anticipated mortgage market conditions."
WaMu's laconic turn came just a week after it gushed about a planned retail-banking expansion. Saying it would
open 150 to 200 branches in the next year, WaMu took the opportunity to point out the unparalleled loveliness of its bank branches.
"Washington Mutual's patented branch concept called Occasio (Latin for 'favorable opportunity') takes a page from some of America's top retailers," WaMu explains. For starters, "a Khaki-clad concierge greets customers and guides them to the appropriate service area," the company says. Moreover, "circular layouts eliminate the high counters and button-down clerks so often associated with the banking industry and encourage more personal service."
Judging by this week, WaMu has found other ways to eliminate button-down clerks.
Dumb-o-Meter score: 80. Sounds like the WaMu opportunity hasn't been favorable for everyone.
5. Promises, Promises
message didn't travel well this week.
Barry Diller's online travel company rolled out its year-end numbers late Wednesday, giving Diller and CEO Dara Khosrowshahi a chance to rattle off their many accomplishments.
"Despite a fiercely competitive environment, headwinds in the hotel and airline industries and a midyear spin-off, Expedia delivered meaningful bookings, earnings and free cash flow for its stockholders in 2005," says Diller, chairman of
and senior executive at Expedia. "The company approaches its second decade of operations with a solid foundation -- a complementary portfolio of industry-leading brands, a broad and growing geographic footprint and an experienced, energized and focused management team."
Compelling as that may be, investors focused instead on Expedia's
43% decline in fourth-quarter profit, compared with a year ago. The company missed Wall Street's profit and revenue targets and warned that operating income would drop in the first half of 2006. The stock
plunged 16% in hefty volume Thursday.
The fourth quarter "wasn't as strong as we hoped it would be," Khosrowshahi allows. But he hastens to add that "the Expedia Promise, Best Price Guarantee and Expedia Trip Guides are fitting additions to what was a solid operational and financial year."
"These innovations are just the latest signposts marking Expedia's multiyear evolution from efficient transaction engine to world-class retailer of travel products and services," Khosrowshahi concludes.
Talk like that is usually a pretty good sign that a company is heading downhill.
Dumb-o-Meter score: 73. We've heard enough flights of fancy from these guys.
In our ongoing effort to enrich the reader experience, the Five Dumbest Things Lab now scores each item using our proprietary Dumb-o-Meter. This cutting-edge technology employs a finely calibrated, 100-point scale measuring sheer Dumbness, as calculated via a closely guarded secret formula.
Got your own idea for the dumbest thing of the week?
Want to get your Five Dumbest in the mail? It's easy. Just become a TSC member -- it's free -- and you'll receive the Five Dumbest in our Before the Bell email newsletter every Friday. The rest of the week, before each trading day, Before the Bell gives you a comprehensive look at the stocks expected to move the market, plus access to a sampling of our premium content from RealMoney. Click here to sign up for Before the Bell!