GM's Brass Punches Out
So much for the captains of the auto industry going down with the ship.
General Motors (GM) (Stock Quote: GM) shares traded to their lowest levels since the Great Depression this week as investors feared bankruptcy in advance of a government imposed June 1 restructuring deadline. Leading the rush to the exits was a gang of six top GM executives who unloaded more than 200,000 shares totaling around $315,000, according to a regulatory filing Monday.
A GM spokeswoman said the bigwigs waved goodbye to their holdings after the company warned that shareholders could see significant dilution if the stock swap GM announced last week was successful. GM's plan would essentially wipe out the holdings of remaining shareholders by issuing up to 60 billion new shares in a bid to pay off creditors, including a $15.4 billion loan from the U.S. government.
Oh sure, like these guys really needed the memo from GM's investor relations department that their shares were stuck in a death spiral.
The members of GM brass unloading shares at prices ranging from $1.45 to $1.61 included Vice Chairman Thomas Stephens and group vice presidents Carl-Peter Forster, Ralph Szygenda, Gary Cowger and Troy Clarke. The highest-profile executive to hit the proverbial bid was retiring Vice Chairman Bob Lutz, who disposed of 81,360 shares at $1.61 each for a total of $130,990.
Considering Lutz's full compensation in 2008 was close to $6.9 million, we were left wondering why he bothered to sell his shares at all. He could have used them as wallpaper, or even toilet paper, and never realize they were gone.
Then again, perhaps Lutz was being practical and not just plain cheap. Let's face it, the whole stock-swap idea was ludicrous in the first place, so much so that even GM CEO Fritz Henderson said on Monday that bankruptcy is the more likely option.
Either way, the change in tune from GM's board room is quite stunning. Only a few months ago the battle cry from the very same execs was that they simply needed a little cash from Uncle Sam to tide them over.
Now they are just crying uncle and cashing out.
Dumb-o-meter score: 95 -- GM's brass gets tarnished again.
EU's Intel Abuse
For an arbiter of antitrust laws, the European Union proved itself to be anything but trustworthy.
The European Commission, the EU's executive arm, whacked
Intel (INTC) (Stock Quote: INTC) with a record fine of 1.06 billion euros ($1.45 billion) on Wednesday, saying that the chipmaker broke European antitrust laws. The European Commission said the world's largest chipmaker blocked smaller competitor Advanced Micro Devices (AMD) (Stock Quote: AMD) from selling computer chips.
The commission said Intel offered price discounts to computer manufacturers including Acer, Dell (DELL) (Stock Quote: DELL), Hewlett-Packard (HPQ) (Stock Quote: HPQ), Lenovo and NEC if they bought all or almost all their chips from Intel. The EU also found Intel guilty of paying the PC makers to stop the launch of computers featuring AMD chips.
Too bad AMD won't be seeing any of that money. Intel's millions in fines are going straight into -- yep, you guessed it -- the EU's coffers.
Also not benefitting from the record fine are the "millions of European consumers" the EU says Intel harmed by "deliberately acting to keep competitors out of the market for computer chips."
How European consumers have been injured when chip prices are multiples cheaper -- and faster -- than when the probe started eight years ago, well, we just can't figure that one out at all. And considering shares of Intel and AMD barely budged on Wednesday, we can't see how the EU's actions will have any real impact other than funding their bureaucracy.
Then again, we're just ignorant Americans with world beating tech companies. What do we know?
Dumb-o-meter score: 90 -- The Europeans may know chocolate, but we know chips.
Clueless at Cablevision
You gotta hand it to the Dolan family. They may be dysfunctional, but they are rarely dull.
Cablevision (CVC) (Stock Quote: CVC), the cable and entertainment company controlled by the father-and-son team of Charles and James Dolan, said in a statement Monday that it wanted to "make clear" it wasn't considering the sale of Madison Square Garden or any Cablevision business at this time. In addition to the Knicks, the NHL's New York Rangers play at the Garden.
Thanks for clearing that up guys. Lord knows what those hapless Knicks would do without your stable leadership guiding them.
But if you'll pardon us for asking, why would there be any murkiness over the status of Madison Square Garden anyway? Where would anybody get the preposterous notion that Cablevision was interested in unloading the Garden?
Oh, that's right. We got it from you brainiacs.
Just last week Cablevision Systems floated a plan to spin off its Madison Square Garden business after posting a weaker-than-expected profit of 7 cents a share in the first quarter. Shares jumped as much as 18% on the prospect that the Dolans would finally shed some assets in order to better concentrate on the core cable business.
Alas, only a few days later we learned it was not to be -- kind of like in 2005 when the Dolans proposed a $3 billion special dividend as part of a move to take the company private only to kill the deal months later over a so-called "technical error." And then there was the time they killed Cablevision's Voom high-definition satellite TV effort because father and son failed to see eye-to-eye on the business.
Yep, those daffy Dolans sure do a fine job of keeping us on our toes. Now if they could only do the same for those last-place Knicks.
Dumb-o-meter score: 85 -- Cablevision's Dolan Dilemma: Plenty of cable. Not enough vision.
Yahoo!'s Legal Challenge
An Oregon court decided Monday to reinstate a woman's claim against Yahoo! for breach of contract for failing to immediately take down sexually explicit fake profiles of her created by her ex-boyfriend. The court found that Yahoo! was not liable for materials published or posted on their sites by outside parties. However, a federal court ruled that Cecilia Barnes could sue Yahoo! for promising to remove the "dangerous, cruel, and highly indecent" material, then failing to do so.
Barnes filed the lawsuit in 2005 claiming her former boyfriend not only posted nude photos taken without her consent, but also created a phony profile and posed as her in an online chat room to solicit sex. The fraudulent profile contained Barnes' work phone number, email address and her physical address.
Once strange men began approaching her for sex, Barnes alleges she repeatedly contacted Yahoo!, demanding the company get rid of the profiles. Nevertheless, Yahoo! barely budged, taking three months to finally return her calls. And even after promising Barnes they would yank the offensive material, the company did nothing, according to Barnes.
That is, until Barnes unleashed the local media and a team of lawyers on the slow-acting Web site. But by that time, the wheels of justice were already in motion, and Yahoo!'s executives were left kicking themselves over an easily avoidable problem.
So if you want to find the real boobs in this silly affair, look no further.
Dumb-o-meter score: 75 -- Justice may be blind. But we know a dumb Yahoo! move when we see it.
Sun's Dark Secrets
Sun Microsystems revealed in a regulatory filing last Friday that it may have broken antibribery laws with its actions in an unspecified location outside the U.S. Sun said in a regulatory filing that it found "potential violations" of the Foreign Corrupt Practices Act, a law that prohibits U.S. companies from bribing foreign government officials to drum up business.
Sun refused to disclose the details of what happened, only that it "took remedial action" and alerted the Justice Department and the
Securities and Exchange Commission, both of which are investigating.
It's unclear what Sun's admission will mean for the company, but these public revelations are unlikely to derail Sun's would-be acquirer
Oracle (ORCL) (Stock Quote: ORCL) from completing its $7.4 billion takeover deal.
Why not? Because Oracle said in its own filing that it knew about Sun's troubles with the law before inking its agreement last month. Oracle wants Sun because it's trying to assemble its own one-stop technology shop, similar to
IBM (IBM) (Stock Quote: IBM) and HP (HPQ) , to sell services, software and hardware.
So if Oracle is cool with Sun's scandalous past, why should anybody else be concerned?
Well, maybe because if a violation is found, the penalty can range from a fine to criminal charges, or even a ban on working with the U.S. government, a major source of Sun's revenue.
Once Sun's sins are revealed, we can comment on whether the punishment fits the crime. Right now, all we can say is that we look forward to Sun shining some light on this intriguing and undoubtedly ridiculous affair.
Dumb-o-meter score: 70 -- Sun is setting ... a new bar for stupidity.