|No Fries With That |
Icahn wants to trim costs
1. Lunchpail GuyThe Time Warner ( TWX) mess is giving Carl Icahn heartburn.
Icahn has lined up some hedge fund pals to rouse the
So this week Icahn turned up the heat. His
This last issue seems closest to the corporate-raider-turned-shareholder-activist's heart. Take the recently constructed Time Warner Center in midtown Manhattan, "which cost the company $800 million to construct and offers such lavish features as a grand employee cafeteria with two-story windows overlooking Central Park," Icahn thundered. "We question how such an extravagant building, which houses only a small fraction of Time Warner's employees, enhances shareholder value (and cannot help but wonder where the shareholders get to eat lunch)."Yes, we ache to know where down-and-outers like Icahn take their midday sustenance. Luckily, a July 1996 profile of Robin Leach -- the man behind Lifestyles of the Rich and Famous -- sheds more light on Icahn's power-lunching ways. Leach "says he was once invited to lunch in New York by two Wall Street heavies, Carl Icahn and Ivan Boesky," London's Daily Telegraph reports. "He not only ended up paying the tab but gave Icahn $20 for a cab." Beyond sticking someone else with the check, Icahn seeks a more sweeping answer to lunchroom profligacy. "Given this extravagance and the failure to cut costs at businesses like Warner Music described above," Icahn wrote Tuesday, "we intend to hire, in the next few weeks, an industry consultant to analyze and compare Time Warner's costs to its peers on a number of different levels." Sounds enlightening. With any luck the consultants will agree to brown-bag it. Dumb-o-Meter score: 91. Everyone knows the best way to cut costs is to hire lots of consultants.
|Sending a Message |
But who will receive it?
2. Shooting the MessengerThe giants of the tech world have been sending out some mixed messages lately.
Yahoo! (YHOO) and Microsoft (MSFT) had Wall Street chattering Wednesday with their
The moment was so meaningful that, like Google and Sun before them, Yahoo! and Microsoft held a press conference to explain. "Being able to instant message between IM communities is one of the features most requested by MSN Messenger and Yahoo! Messenger users," the companies said in an accompanying press release. "In addition to exchanging instant messages, consumers from both communities will be able to see their friends' online presence, share select emoticons, and easily add new contacts from either service to their friends' list."
Of course, there's a reason that MSN Messenger and Yahoo! Messenger users are so busy requesting interoperability. Though the companies claim to have a staggering 275 million users between them, it's clear that their services remain distant also-rans to AOL's Instant Messenger, which has long resisted interconnection. So even as Yahoo! and Microsoft were rolling out their big plans, skeptics were emerging."Now if indeed anybody actually used Microsoft and Yahoo!'s Instant Message service, this might be big news," hedge fund manager and former Street Insight columnist Jeff Matthews wrote on his
3. Zeal ParmesanFormer Refco ( RFX) chief Phil Bennett may not have much going for him right now, but he can certainly count on his lawyer to zealously represent him. Bennett was arrested this week and charged with
|Parts and Labor |
Delphi's carefully selected cuts
4. Vision ThingIt's easy to see Delphi chief Steve Miller's competitive fire.
Delphi, the Troy, Mich., auto parts maker, filed Saturday for Chapter 11 bankruptcy protection in a bid to slash costs. The company has said it wants to cut rank-and-file workers' pay and benefits by more than half. Miller, a longtime turnaround CEO with experience in Detroit as well as at the airlines, has been outspoken on the subject of how Ford (F) and GM (GM) need to follow Delphi's lead in bringing compensation down to market levels.
Miller is correct, of course, that Delphi can't go on forking over $65 an hour in pay and benefits when the market rate is more like $25. But it's harder to explain Miller's decision to bolster management severance packages just ahead of the bankruptcy filing.
Delphi beefed up the severance agreements for 21 of its top executives on Friday, the day before it filed for bankruptcy, The Washington Post reported. Executives will be eligible for 18 months of pay and at least part of their bonuses if Delphi lays them off or they leave voluntarily. Previously severance packages were capped at 12 months. In exchange, the executives signed 18-month noncompete agreements.United Auto Workers chief Ronald A. Gettelfinger spoke Saturday of a "disgusting spectacle" in which management got raises while workers were getting hammered. Miller defends the agreement as keeping the struggling company from losing qualified execs. "They can't quit," Miller emphasized. "We blocked the exit doors." Given that these are the same brilliant strategists who led Delphi to a $4.87 billion 2004 loss, Delphi might have been better off chaining the doors after they left. Dumb-o-Meter score: 80. This week Miller also enjoyed 20 minutes on the phone with Sen. Hillary Clinton (D., N.Y.) discussing, of all things, health care reform. That sounds like time well spent.