1. Making Allowances at DisneyWe at the Five Dumbest Things Research Lab guess that we're supposed to be outraged by Disney's ( DIS) disclosures to the Securities and Exchange Commission last Friday. But the whole affair seems pretty Mickey Mouse to us. We're talking about the Friday afternoon amendment to Disney's annual report for the fiscal year ended Sept. 30, 2001. It turns out that three of the company's ostensibly independent directors had closer ties to Disney than previously let on -- namely, a child on Disney's payroll for at least part of the year. Specifically, board member Reveta Bowers' son worked on Disney's Internet operations, Stanley Gold's daughter worked in consumer products, and Raymond Watson's son worked for the Disney Channel. The kids' compensation ranged from $82,000 to $153,000 for the year. Well aware of where the wind is blowing, corporate image-wise, Disney is shocked and ashamed by the disclosures. "As a consequence of these relationships," says Disney, "the Board of Directors is currently reviewing appropriate steps to ensure ongoing compliance with applicable rules and corporate 'best practices' generally."
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Disney directors give kids jobs
2. Layoffs? What Layoffs? Oh, Those Layoffs.
Over the past few months, everybody has known that IBM ( IBM) was cutting back. This week, we found out how much. After playing it coy during second-quarter earnings season, Big Blue finally let it slip in its quarterly filing with the Securities and Exchange Commission. Turns out the company is cutting 14,213 positions from its services business. Add that to previously disclosed job cuts in the company's microelectronics business, and you get IBM laying off about 5% of its workforce. Which reminds us of a joke: When an economist says that the level of employment in the economy is "acceptable," that means the economist still has his job.
3. Protesting Too MuchYou would have thought AOL Time Warner ( AOL) had learned its lesson. Here's the company that spent way too much time last year telling the world that it would generate $11 billion in earnings before interest, taxes, depreciation and amortization. Executives shrilly repeated that vow long after the investment community had given up the goal as a lost cause. Despite mounting evidence to the contrary, they hung onto that promise by their fingernails. And then they said, "You know? We're not gonna make it." Surprise, surprise. So what happens after The Washington Post runs a story last month saying that some revenue recognized by America Online is a little hinky? AOL Time Warner goes on full-court press with a denial, of course. All our accounting is appropriate and in accordance with generally accepted accounting principles, says the company. We've re-examined the revenue in question and everything is A-OK, says Dick Parsons the next week. And that's where it lies until Wednesday, when AOL Time Warner says, "You know, we may have a little problem here with some drops in the revenue bucket. About $49 million worth." Of course, AOL Time Warner isn't saying it was wrong before. Instead, it says Wednesday's disclosure is based on information that came to light within the past 10 days. Somewhere in there, we're sure, AOL Time Warner is indulging in the fantasy that the good guys would have uncovered this questionable revenue even if The Washington Post hadn't published what AOL Time Warner had been implying was a piece of yellow journalism. Yes, of course. And Kelly Osbourne would star in a rock video even if her dad were an accountant in Ohio.
4. French VanillaLooking for some last-minute summer reading togive you some insight into the world of business?Here's our advice: Dump that Jack Welch hagiographyyour kids bought you for Father's Day and read a fewvolumes of
One of the other themes of the series is that whatseparates a kid (in this case, C.G.) from an adult(T.M.W.T.Y.H.) is that kids have short attentionspans. In a book about C.G.'s job, he goes fromspaghetti-stealing to dishwashing to window-cleaningto furniture painting within a few pages. Of course,adults stay the course: The firemen in the booksremain firemen, and T.M.W.T.Y.H. never wavers in hischoice of headgear. No, adults make reasoned, thoughtful decisions andstick to them. Especially in the business world. Likewhen Vivendi Universal ( V)last year bought Houghton Mifflin, the publisher ofthe Curious George books. Buying Houghton Mifflin waspart of a grand, strategic plan. Until, that is, Vivendi Universal earlier thisweek decided to sell Houghton Mifflin. Yes, that's what separates man from beast: A longattention span.