|Don't You Know That ... |
you are an EchoStar...
1. Ergen Economically IncorrectEchoStar Communications ( DISH) CEO Charlie Ergen is a smart guy. So how could he be so dumb last Friday?
Yes, after years of watching his success, we have no doubt that the folksy, plain-spoken chief of the Dish Network satellite service has a lot on the ball.
But during the company's week-ago conference call to discuss 2003 financials, we believe Ergen fell off that ball. It all started when investor Leon Cooperman -- a 25-year Goldman Sachs veteran who now heads Omega Advisors -- asked what we at the research lab think was a simple question: What was the average price per share that EchoStar paid in its recent stock buyback? "We're not disclosing that," Ergen replied. "You can figure it out. ... You might figure out some range that you can be comfortable with." This shocked us because we've sat through many conference calls in which this question has been uneventfully asked and answered. It shocked Cooperman, too, apparently. "I don't know any company publicly traded that refuses to give that information," Cooperman said. "I never heard of this. I've been doing this for 38 years." "Now you've heard of it," responded Ergen, whose folksy plainspokenness suddenly wasn't endearing as usual. Things went from awkward to weird when EchoStar general counsel David Moskowitz chimed in. "We're not going to provide information on this call that we haven't provided in the 10-K," Moskowitz said. "And so it's not a question we could address to you individually. ... The data you want, to the extent it's required, is provided to you in the 10-K." Which made no sense at all. Cooperman wasn't asking for information that wasn't in the 10-K -- he was asking to be saved the burden of finding the relevant numbers from the 194-page document and doing the math. (By the way, the per-share buyback figure, according to our calculations, was $32.19, toward the lower end of the stock's 52-week range of $27.33 to $41.) Not only that, but earlier on the call, EchoStar execs had done exactly what they told Cooperman they wouldn't do: give out a number that wasn't in the 10-K, though it could be calculated from numbers provided therein. Yes, EchoStar gave out fourth-quarter numbers for the closely watched figure of average subscriber-acquisition cost. Given that EchoStar gave out three alternate numbers for SAC, it appears that SAC is more of a judgment call than the calculation necessary to figure out the buyback price. In our minds, that undercuts Ergen's and Moskowitz's righteous reticence to do the quick math for Cooperman.
2. Your Hard Thoughts About MicrosoftWe asked you last week how to fix the Microsoft ( MSFT) problem. It's time to open up the emailbox and find out who came up with a winning solution. Yes, we wrote that the European Union's proposed 497 million-euro fine embodies everything that's wrong with regulators' attempts to curb Microsoft's abuses of its monopoly power. We asked you to come up with something better. Or at least different.
3. International Paper LossesWhat crushes a company's corporate spirit more than being dumped from the prestigious Dow Jones Industrial Average? Why, being dumped from the Dow Jones Industrial Average twice. That questionable honor was enjoyed this week by both AT&T ( T) and International Paper ( IP), which along with Eastman Kodak ( EK) were dropped from the average. Taking their place will be American International Group ( AIG), Pfizer ( PFE) and AT&T corporate descendant Verizon ( VZ). As Dow Jones ( DJ) noted in its press release announcing the changes, AT&T first joined the index in 1916, but was dropped in 1928; it rejoined in 1939. But as a sign of how low International Paper is on the stock-index totem pole, Dow Jones neglected to mention that IP -- its preferred stock, actually -- was dumped once before as well. It was added to the average on April 1, 1901, only to be excised three months later. Some companies get no respect.
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Get the Taj Mahal of Visa cards
4. Trump CardFrom the Department of Harmonic Convergence: On Tuesday, the auditor of Trump Hotels & Casino Resorts ( DJT) announced there was substantial doubt about the company's ability "to continue as a going concern," if it can't complete a restructuring. On Wednesday, Bank One ( ONE) announced the Trump Rewards Visa credit card, one that lets the holder earn points redeemable at one of Trump's three Atlantic City casinos. The whole thing smells like a publicity stunt to us. We can't imagine that the market for credit card users who hop the bus to Atlantic City is all that huge. But at least there's an upside here: Now you and Donald Trump can go bankrupt together. Repeat after us: You're mired! In debt!
5. Go Intel It on the MountainWhen the going gets tough, Craig Barrett turns bizarre. That's the only explanation we have for the opinion piece that the Intel ( INTC) CEO wrote for Wednesday's Wall Street Journal. In his desperate attempt to prevent the Financial Accounting Standards Board from counting stock options as an expense on its financial statements -- a move that would have lopped $991 million from Intel's $5.6 billion profit last year -- Barrett came up with some of the oddest arguments we've ever heard in support of the fiction that stock options cost nothing to a company's shareholders.
|Blathering Barrett |