Skip to main content

Editor's Note: Herb Greenberg's column runs exclusively on; this is a special free look at his column. For a free trial subscription to, click here. This article was published April 5 on RealMoney.

Points of order:

EDS edification:

As I noted

earlier in the Columnist Conversation,



continues to sink as if somebody knows something. The stock has fallen 14% since March 26, when this column

first noted that analysts were starting to talk down the quarter's bookings and cash flow figures.

Then came this morning's strange announcement about a "strategic realignment of its largest business units." The company says the change "will improve sales and operating synergies."

Why, a skeptic might ask, would it have to do that if everything was good?

PacifiCare pontification -- the saga continues:



, which has been under fire from the state of Texas for billing practices, is not winning friends with the state's attorney general, John Cronyn. On March 19, Cronyn sent a letter (which is just now making the rounds) to the company saying that he is "extremely concerned about untrue and misleading statements" PacifiCare has made regarding lawsuits filed by the state.

Cronyn was especially miffed by PacifiCare's comments to health care providers, in which the company said, "Our goal has always been to seek a fast, clear and fair resolution to any outstanding issues with the Insurance Commissioner, and we feel strongly we have fully cooperated with the Texas Department of Insurance and Attorney General."

"This statement," Cronyn wrote, "is a flagrant misrepresentation of PacifiCare's conduct with respect to both the attorney general and the Texas Department of Insurance."

He explains that his office started raising questions on Sept. 21. PacifiCare responded less than a month later by filing suit against the attorney general, challenging the state's issuance of what are known as civil investigative demands.

"Despite numerous attempts by my staff to work with PacifiCare to arrange for the production of documents responsive to the CIDS, we never received a response," Cronyn wrote. "Moreover, when we asked to review documents to evaluate the reasonableness of PacifiCare's proposed settlement ... PacifiCare provided our attorneys with only a one-page document containing summary information, which my attorneys were required to return at the conclusion of the meeting.

"This conduct by PacifiCare," he added, "hardly qualifies as 'full cooperation' with the attorney general."

Texas death match, anyone?

Contact capers:

An item

here yesterday noted how the stock of

1-800 Contacts


was being boosted by chatter on investment message boards suggesting that the Federal Trade Commission, in comments to the state of Connecticut, has issued a positive ruling regarding the company. Never mind the message boards: Today, McDonald Investments analyst Jeffrey Stein says pretty much the same thing in a report headlined, "Favorable Developments on Regulatory Front Push Shares Higher." He goes on to say that the FTC "supports the sale of contact lenses from sellers outside the state of Connecticut."

Hello! This is the FTC staff, not the commission, making statements that, if anything, could be interpreted to be


in favor of the company.

Interestingly, his report skirts the most important issue of all: whether contact-lens biggie

Johnson & Johnson


, which has been in a long-running dispute with Contacts, will ever ship lenses directly to Contacts. The two are embroiled in what seems to be a never-ending legal tangle.

Of course, McDonald, which ranks the stock a buy, is Contact's underwriter and the only brokerage firm to provide formal research on the company.


Getty Images


is on the fly after guiding investors toward better-than-expected first-quarter financial results. The news is quite impressive.

But hold your horses: While the company, for the first time, will make money -- it trades at 45 times next year's earnings -- sales for the quarter will be lower than they were a year earlier. Second-quarter sales should be flat to slightly better than expected, while year-end sales will be flat to slightly better. And profits will zoom. Anything is possible, of course, when you cut costs to the bone.

Meet and greet:

Join me, Cramer, Kass and a bunch of other fine folk on May 2-4 at's

"Advanced Disciplines & Strategies for Running Hedge Funds"

conference at the Doral Golf Resort and Spa in Miami. I'll be giving my spin on the world, but when I'm not doing that, I'll just be hangin' for two days in my native haunt with not much else to do but get to know you. Seriously, I will have a lot of time on my hands to, hopefully, make some new sources! I look forward to seeing you there.

Herb Greenberg writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback and invites you to send any to

Herb Greenberg. Greenberg also writes a monthly column for Fortune.

Brian Harris and Mark Martinez assisted with the reporting of this column.