The Five Dumbest Things on Wall Street This Week

1. What's Job One for Mary Meeker?

Once upon a time, we thought the prime responsibility for a stock analyst was, well, to be a stock analyst.

How could we have been so stupid?

We were reminded of our naivete once again this week, when the Securities and Exchange Commission announced its global settlement with Wall Street's Ten Most Wanted brokerages.

Actually, it wasn't the settlement itself that we found most enlightening. Rather, it was evidence gathered from one particular participant in the drama: Mary Meeker, Morgan Stanley's ( MWD) famed Internet analyst.

You remember Meeker, of course. The Queen of the Net. The subject of that huge Barron's profile in December 1998. The subject of that laudatory piece in The New Yorker in 1999, back when people wrote laudatory pieces about stock analysts.

She's the highest-profile New Economy analyst not to get sent through the wringer that's wrung Henry Blodget and Jack Grubman right out of the securities business.

But lest you think Ms. Meeker is above reproach, you'd best read two fascinating documents that surfaced this week.

Meek and You Shall Find
'Offering' Analysis

They are Meeker's self-evaluations, written in late 1999 and 2000, as part of Morgan Stanley's annual employee review process. (The material, released by New York Attorney General Eliot Spitzer, is available on the New York AG's Web site. You'll find the good stuff here. Scroll down a bit.)

These "annual reports" -- Meeker's term for her exhaustive reflections on the year -- paint a positive picture of the analyst, for the most part. She's energetic and competitive. She's laser-focused on making money for her employer, Morgan Stanley Dean Witter. She's loyal to her staff and happy to groom people for greater responsibility. She gives credit to others where it's due. And she's brimming with big-picture thoughts about how to allot her and others' resources to maximize Morgan Stanley's profits. She tries to act modest about her mystique -- she calls it "my 'whatever'" -- though it's tough, given all those magazine covers people put her on.

In sum, she's a model employee.

Yet we at the research lab were troubled by one section of both annual reports -- the part where Meeker talks about what her top priorities are.

"My number one focus is to ensure that we take the best Internet companies public and help build the leading Internet companies of the future," Meeker wrote in 1999 (emphasis hers). "My highest and best use is to help MSDW win the best Internet IPO mandates."

Uh, isn't she supposed to be a research analyst?

She hammers in the same point a year later. "I believe my areas of highest/best use to MSDW revolve around: 1) ...using my 'whatever' to help the firm take the best companies public and help build the leading companies of the future; 2) renewing focus on making money for investors and the depth of our research product."

In other words, that stock analysis thing is job two.

OK, OK. We know what you're thinking: This is not a shocking revelation.

And yet it is. None of those profiles we read of Meeker back in the olden days let on that her top job was to be a rainmaker for Morgan Stanley's investment banking business. No, they all focused on her mystical abilities as an Internet seer -- as a stock-picker (a talent which, she acknowledges in her 2000 evaluation, saw better days).

"Her main responsibility is recommending technology stocks to investors, but she also works closely with Morgan's corporate-finance department," read that epic profile in the famously fact-checked New Yorker.

"For big institutional investors, an Internet stock hasn't arrived until it has Meeker's stamp of approval," crowed Barron's in 1998.

"The trends Meeker is spotting now could very well become tomorrow's gold standards," wrote Business Week in 1999, mentioning her "high expectations" for business-to-business markets such as Chemdex. (Remember them?)

"She's still excited by trying to figure out where the Internet is headed next," wrote The Wall Street Journal in 2000.

In other words, if her top priority was to help Morgan Stanley get IPO business, she forgot to tell The New Yorker, Barron's, Business Week and The Wall Street Journal. Or they forgot to ask.

Relevantly, Morgan Stanley CEO Philip Purcell got into trouble this week when he said, according to The New York Times, "I don't see anything in the settlement that will concern the retail investor about Morgan Stanley."

Well, maybe he should have looked harder.

2. Raiders of the Lost Archive

If listening to a company's conference call is good for the retail investor, listening to a replay of the same call would be good, too, wouldn't it?

Well, maybe not, according to somebody at USA Interactive ( USAI).

We discovered this odd conclusion prior to USA's Thursday conference call with analysts covering the company's financial results for the first quarter.

See, in a press release announcing the call, USA -- which is in the process of buying in its majority-owned subsidiaries Expedia ( EXPE) and Hotels.com ( ROOM) -- made this disclosure:

    The live audiocast is open to the public at www.usainteractive.com/investor_relations. Replays of the conference will not be available due to securities laws restrictions as a result of recent merger announcements by the companies.

That's strange, we thought. The whole point behind the praiseworthy trend of Webcasting conference calls -- and making them available for later retrieval -- is to make companies more available to the little guy. It would be one thing to not have any conference call at all because of the pending deals. But conducting the call while not archiving it -- in other words, making it available to the public, but less so than usual -- doesn't make any sense. What kind of "securities laws restrictions" are at work here, anyway?

Diller's Time

USA Interactive declined to comment. So did the SEC, though someone there directed us to a new rule, published Jan. 22, that, if anything, seemed to support archiving the call, not letting it disappear into the ether.

A law professor, speaking to us on condition of anonymity, managed a tortured explanation of how a lawyer might possibly justify not archiving the call, given the deal registrations the companies are soon to file. We weren't convinced, though. He didn't seem so sure of himself, either. And the whole thing got even weirder a few hours after the call Thursday when, we discovered, it indeed was archived online.

Oh, well. As the professor explained, "The closer you get to a registration situation, the more the lawyers will lawyer it."

Ah. That's an explanation anyone can understand.

3. If Only We All Enjoyed Their Outstanding Financial Return

The competition was tough at this year's Storage Networking World Spring 2003 convention, we learned from a press release this week.

But a winner of the "Best Practices in Storage" award was none other than Conseco Finance Corporation, which won for "the outstanding financial return the company achieved by implementing DataCore's SANsymphony(TM) storage management platform."

Very cool. Especially because Conseco -- which filed for bankruptcy protection last December -- isn't exactly known as a hotbed of outstanding financial returns.

As some guy commented in the press release, "Like just about every enterprise weathering today's economy, Conseco Finance needed to do more with less."

Can't argue with that one.

4. Putting the Carty Before the Hoarse

It's not exactly charitable to kick the mighty once they're down. But it occasionally has fringe benefits.

We decided that this week after we learned, via media news chronicler Jim Romenesko, about a graduation address scheduled to be delivered by Don Carty, former CEO of American Airlines parent AMR ( AMR).

As you may recall, Carty stepped down last week over his shoddy handling of benefits granted AMR executives amid fearsome cost-cutting among unionized employees. His conduct was so jaw-droppingly Dumb, you may recall, that we at the Five Dumbest Things Research Lab were forced to call it a Flying Nun.

Carty's behavior, meanwhile, prompted St. Louis Post-Dispatch columnist Bill McClellan to make fun of St. Louis University for inviting Carty to be its commencement speaker this year. "Kenny Lay couldn't make it?" he mused.

Well, now it turns out Carty won't be speaking at St. Louis University this year. Taking his place will be Bill McClellan.

We'll just leave it at that. Except to point out that St. Louis U. is a Catholic institution. Sister Bertrille, hold onto your hat!

5. Back to Normal

To its credit, the New York Stock Exchange has restored live broadcasting privileges to al-Jazeera, the Arabic-language news operation based in Qatar -- a development first reported this week by Bloomberg.

The NYSE had revoked those press credentials in late March, in apparent retaliation for al-Jazeera's failure to cover the war in as fair and balanced a manner as Fox News.

We all do Dumb things. And every now and then, we correct our mistakes.

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