Oh Boy, Oh Bio!
1. A Pound of Prevention Is Worth an Ounce of Cure, or Something Like That
And the Press Release Correction of the Week Award goes to ... medical diagnostics developer
Last Friday, Biosite issued a press release announcing it had received approval to market and sell a finger-prick blood test used to diagnose heart failure and judge its severity.
All you need for Biosite's test, we learned from a corrected press release, is 250 microliters of blood -- one-fourth of a cubic centimeter.
Except that's not how Biosite put it in the original version of its announcement. Instead of 250 microliters, someone unfamiliar with the metric system wrote that the blood test required "250mL" of blood.
"250 mL" happens to be an abbreviation for "250 milliliters." Which translates into about one cup of blood, or about half the amount of blood a person donates in a blood drive.
Which is a heck of a lot of blood to be donating in a finger-prick test -- especially when you may be suffering from heart failure.
Oh well. We assume the U.S. will get the hang of this new-fangled metric system some day. Let's hope it's before your next blood test.
2. Father Knows Best
Just when we thought we had run out of reasons to make fun of
American Technology Corp.
, here comes another one.
To refresh your memory, ATC is run by legendary inventor Elwood G. "Woody" Norris -- a man who's great at issuing press releases but less so at generating profits for publicly traded companies with which he's associated.
Over the past year,
ATC has gotten plenty of attention for a gadget it has developed that shoots audio like a laser beam. One day, perhaps, it will be able to commercialize that technology on a mass-market basis.
In the meantime, ATC has produced ever-growing losses for common shareholders. Over the past five years, as the company has recorded a total of $5.4 million in sales, it has lost a total of $36 million.
But as we learned late last month, however, at least one shareholder has done pretty well for himself. And wouldn't you know it? He just happens to be related to Woody Norris!
Yes, as ATC disclosed in its amended annual report, Norris' son Mark, a mechanical engineer at ATC, had a pretty nice run at ATC this past fiscal year.
Mark, whose annual salary amounted to $80,000, was granted 19,000 common shares valued at $78,280, the company says, "as a bonus in recognition of his key role in the invention and development of our vacuum-less HSS emitter."
But wait -- there's more. He also received a stock option grant for 15,000 -- vesting quarterly over two years -- at a strike price of $3.30 per share. The stock, which ranged between $3 and $7.85 over the past 52 weeks, is now trading at $4.78.
But wait -- there's even more. During fiscal 2003, Mark exercised "previously granted options," ATC says, of 17,500 shares, realizing a value of $42,000.
Wow. We can only imagine the conversation that must have once taken place.
"Dad, I know there's a tech downturn and all, but do you know of any companies where I could not only earn a salary but receive a generous amount of stock and options? I mean, a place where a mechanical engineer could get a bonus nearly equal to his annual salary?"
"Hmm, son. Maybe I can help you. It seems to me that if we perform an exhaustive search, we ought to be able to find at least one publicly traded company in the U.S. that would offer you such a deal."
"Yes, Dad. But which one? Which one?"
"I don't know, son. But if we try hard enough, I know we can find it."
Well, it turns out that our imaginary conversation must have taken place a long time ago. Because, as we learned from an ATC spokesman, Mark Norris has been working for ATC full-time since September 1997. As in six years ago! Six years!
Um, was there any particular reason this wasn't disclosed to stockholders before now?
Accounting principles have changed as far as disclosure rules go, says the spokesman. BDO Seidman, ATC's auditor, "knew about this relationship all along," he says. "I guess this was the time they wanted to disclose it."
The "previously granted options" that Mark Norris received were options like those that other employees received, says the spokesman. "There was nothing out of the ordinary," he says.
However, that $78,000 bonus was indeed an acknowledgment of the "key breakthrough" Mark Norris made on the emitter.
In response to which, we can only imagine another particular conversation -- one that starts out, "Thanks, Dad!"
3. The Phone Company Hands Employees a Line
If your local
salesperson seems a little grumpy of late, we at the Five Dumbest Things Research Lab think we know why.
Though the telephone company formerly known as
hopes to emerge from bankruptcy any day now -- and get relisted on the
-- not all employees are sharing in the resurgence to the degree they expected.
See, MCI employees who get commissions were waiting for their annual merit raises to go into effect on March 1. But, as CEO Michael Capellas explained in a companywide email late last month, that isn't going to happen.
Capellas launches his letter by declaring 2003 was an "incredible" year for MCI, and 2004 will be "truly historic."
But that outlook is likely of little comfort to the sales folks -- plus a lot of executives, we suppose -- once they read a little further down in the letter, a copy of which was forwarded to the research lab.
"This year, merit increases will only be considered for employees who are not eligible for a bonus or commission," says Capellas. It's part of an effort to control costs, he says.
Yeah, yeah, yeah. We know the routine. Times are tough, we're short on money, unpleasant decisions must be made. "We decided this was the most equitable way and it provides financial upside for all employees while reducing our costs and protecting jobs," writes Capellas. On the bright side, he writes, the company made its domestic compensation program more competitive, standardized benefits, and provided merit increases and bonuses last year. Plus, as Capellas doesn't point out, it could be worse: You could be one of the 1,700 people the company has said it is laying off.
But try telling that to everyone who's still around. "Jeez, I guess that 1 or 2 percent in merit raises would really hurt the company -- which, by the way, has several BILLION in cash sitting around," writes a second anonymous source. (The company reported a November cash balance of $5.7 billion.)
"The sales and service division, which has witnessed a decline in revenue and yet has managed to hold it together for the company, has reached new lows in terms of morale today," continues this source. "You would think the 'new' MCI would throw its wretched employees a bone."
The company stands by the memo. "We want to communicate openly and honestly with employees," says a spokeswoman. "It was decided that employees who do not qualify for a bonus or commission would still qualify for a merit increase. At the same time, the company is trying to absorb a greater portion of employees' health care costs."
Here's what we think: Maybe MCI did throw its wretched employees a bone. It just happened to bonk some of them on the head.
4. But Mr. Ness, Are You Sure You Want to Endanger Your Relationship with Mr. Capone?
Speaking of the MCI formerly known as WorldCom, we couldn't resist sharing one tiny insight from the final report of Bankruptcy Court Examiner Dick Thornburgh, which was released last week.
You've no doubt already read about one of the more amusing discussions of the report into What Went Wrong at WorldCom. That juicy tidbit was that, as part of a creative tax-avoidance strategy, WorldCom licensed its "management foresight" to various subsidiaries. Some foresight, as numerous folks have already pointed out: Did management have any clue that the company would collapse into bankruptcy on its watch?
But what really caught our attention was the discussion, starting on page 345 of the 542-page report, of why WorldCom's auditor, the now-defunct Arthur Andersen, didn't follow up on various risk assessments and red flags to conduct more vigorous audits than it did. If only it had, perhaps Andersen would have discovered WorldCom's accounting fraud back when it was supposed to.
Thornburgh admits he reached no firm conclusion as to why Andersen was sluggish. But he has an idea. Perhaps it was because Andersen wanted to drum up nonaudit business with WorldCom, he supposes. "Consistent with such a desire," writes Thornburgh, "it would be natural for Arthur Andersen to wish to trust the representations of former Management rather than press for an increase in corroborating documentation, which could strain the business relationship by increasing the amount of time and fees that may need to be incurred for the audit."
Yes. Maybe Andersen knew that if you keep hassling a client about the accuracy of his books, that client won't be in a generous mood when you hold your hand out for more business.
Thornburgh writes that much of the available email correspondence between Andersen engagement partner Mark Schoppet and former WorldCom CFO Scott Sullivan "appears to relate to potential opportunities for Arthur Andersen to provide consulting services to WorldCom and its subsidiaries."
"While this was not an unusual industry occurrence, it is possible that the heavy emphasis on increasing the level of services Arthur Andersen could provide ... may have served to minimize the importance of some of these incidents as 'red flags.'"
Hmm. It sort of makes you think that all the restrictions on nonaudit work imposed by the Sarbanes-Oxley act make sense. Of course, at least three of the then-major accounting firms, including Andersen, viciously fought those types of restrictions when the
tried to introduce them in 2000.
But hey: As we learned from ATC, accounting principles have changed.
5. Don't Ask Me, Viacom
Finally, if you're waiting for swift, cathartic justice relative to Janet Jackson's Super Bowl "wardrobe malfunction" -- well, don't hold your breath.
Federal Communications Commission Chairman Michael Powell has promised an investigation of Jackson's breast-baring incident, raising the possibility that Super Bowl broadcaster CBS will have to pay a fine as a penalty for its possibly indecent exposure.
But we expect that Janet's brother Michael will be walking on the moon -- literally -- before anyone has to pay up.
Case in point: Back in August 2002, 13 radio stations operated by CBS parent company
broadcast a one-hour on-air contest in which five different couples engaged in real or simulated sex acts in public places around New York City while on-the-scene commentators gave play-by-play commentary.
Yes, it was words, not pictures. But boy, it lasted a lot longer than a one-second shot of a nipple ornament. And one of the couples even went at it in St. Patrick's Cathedral.
As far as the people involved, most matters have already been tied up. One of the contestants in St. Patrick's Cathedral, for example, pleaded guilty to disorderly conduct, and was sentenced to five days of community service last November.
It was last September that the FCC decided to fine Viacom $357,500 for broadcasting indecent material. It was last November that Viacom appealed that ruling.
Viacom says the broadcast, though it included "oblique references and innuendo," wasn't indecent.
The outcome of the case remains unknown, and already a new case appears to be starting. As Viacom is already proving, the wheels of justice grind slowly.
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