1. Salton the WoundsAnother week of earnings season has gone by. You know what that means, of course: another story about a company allegedly
2. A LeapFrog in Our ThroatLeave it to a learning technology company to teach us something new about communicating on Wall Street. We're talking about LeapFrog Enterprises ( LF), developer of the LeapPad -- which, depending on your point of view, is either a revolutionary educational toy or simply the latest fad in the history of gadgets marketed to parents seeking a stealthy way to make their kids smarter. Things got particularly gloomy at LeapFrog this week. Both a director and the company's chief operating officer resigned. The company announced layoffs of 180 employees. And it reported much-worse-than-expected fourth-quarter results. Shares in LeapFrog, which traded as high as $47.30 in late 2003 but has dropped like a stone in a pond since then, were trading at $10.76 Thursday, down 14 cents. But what cheered us up was the explanation that LeapFrog CEO Tom Kalinske gave for part of the disappointment. LeapFrog was hurt not only by operational issues and increased operating costs, he said, but also "by an industrywide lack of retailer reorders around the critical Thanksgiving period."
|More Like a Tadpole |
No princely sales for this LeapFrog
|Jimmy Dean ... Rock On |
Gives Sara Lee a frosty reception
3. Guarantee and SympathyAs if he were singing a ballad, singer and sausage-entrepreneur Jimmy Dean this week showed a major corporation just how darn angry you can get when your woman up and leaves you.
On Wednesday, Dean -- whose fame derives not only from hits like
So Sara Lee, which bought Dean's company in 1984, can forget about using the "Jimmy Dean Quality Guarantee" used in 1990s ads: "Every Jimmy Dean product meets my highest standards for taste and goodness. And I personally guarantee it."
A Sara Lee spokeswoman says the company had begun phasing out Dean's guarantee in 2003, though the company believes it still has a right to use it.As for why Jimmy Dean might no longer want to guarantee Jimmy Dean products, look to Sara Lee's 2003 decision to end Dean's longstanding consulting agreement with the company. If Dean is not associated with the company, says a spokeswoman for Dean, he doesn't want to be endorsing or guaranteeing its products. Dean says Sara Lee was going after a younger customer; denying that, the spokeswoman says that the company had shifted its marketing focus away from the person Jimmy Dean toward Jimmy Dean products, particularly "value-added products" that "our consumers were desiring." Whatever. All we know is that we'll never be able to listen to Sara Lee's
4. Mamma.com Told Me Not to ComeEvery now and then, we have to remind ourselves that the stocks that we write about aren't simply ticker symbols with prices attached to them. They're actually companies. At least we think they are. Case in point: Mamma.com ( MAMA), the Montreal-based search-engine company that said Wednesday it probably wouldn't file its year-end 2004 financial statements on time, owing to its parting of ways with auditor PricewaterhouseCoopers. Mamma.com, which bills itself as "The Mother of All Search Engines," says the PwC split arose from the Securities and Exchange Commission's informal investigation into the "intense trading activity" in Mamma.com stock last year -- intensity which returned this Tuesday, when the stock jumped 36% on nearly 20 times its usual trading volume. But for all the times we've mentioned Mamma.com, we realize that we've never actually used the darn thing. So we gave it a shot this week. Our verdict? Mixed. Mamma does a decent job of giving you a reasonable selection for general topic searches. Typing in "used books," for example, gives you a decent view of the used-book landscape on the Web. It's roughly the same top results you'd get with Google ( GOOG - Get Report). But if you're looking for exhaustive results, you'd better look elsewhere. If you search for something not so mainstream -- say, "dumbest things on Wall Street" -- Mamma.com delivers 36 examples in no discernible order. Type in the same phrase on Google, and you find 95 times as many entries. So Mamma may be the mother of all search engines, but she doesn't quite get around as much as the rest of them.
5. Lanny Davis BluesThough we at the research lab aren't permitted to invest in individualstocks, we have developed some guidelines about where in the stock marketpeople should not be putting their money. Rule No. 1, for example, is to never invest in technology companiesbased in Boca Raton. Rule No. 2: Avoid stocks with cutesy ticker symbols. Well, we just added a new commandment to our list:Think long and hard before investing in a companyrepresented by Lanny Davis. Davis, to refresh your memory, achieved his greatestfame as special counsel to Bill Clinton during theMonica Lewinsky scandal. But what's more relevant hereis the attorney's usual specialty -- serving as publicrelations adviser for companies in desperate needof some good public relations. Why, just last week Davis -- these days a partner at Orrick, Herrington& Sutcliffe -- was speaking to the Associated Press on behalf of InnovativeCommunication Corporation. The Virgin Islands-basedtelecom company apparently aroused the wrath of thegovernment of Belize by buying the country's biggesttelephone provider last year but neglecting to forkover the $57 million purchase price. But that's only the tip of Davis's iceberg. Over thepast few years, Davis has counseled all of theseeyebrow-raising companies:
- HealthSouth and its former CEO RichardScrushy, now on trial for fraud.
- Fog Cutter Capital, which, when its CEOwent to prison for two felonies, agreed to pay him notonly his full salary, but also a $2 millionbonus.
- NovaStar Financial (NFI), thesubprime lender last year accused by critics -- andthe state of Nevada -- of spotty compliance withlending laws. (Earlier this month, the company'sexecutives
were overheard congratulating themselves for avoiding painfulquestions on their earningscall -- except for one that got through from "oned--khead.")
- First Command Financial Services, afinancial services company ordered in December to pay$12 million in fines for its habit of sellinghigh-cost mutual funds, with the help of misleadingsales pitches, to captive audiences of militarypersonnel.
- Allied Capital (ALD), abusiness development company accused by short-sellersof inflating the value of its assets.
- The granddaddy of all high-tech stock frauds,Lernout & Hauspie -- the Belgian speechrecognition software developer that collapsed afterbooking millions in suspect revenue from suspectrelated-party companies.