Chit Chat

Chit Chat

Chit Chat

Moneybox
Commentary about business and finance.
June 26 1998 9:07 AM

Chit Chat

Another Friday, another chance to impress relatives, friends, and enemies (doesn't it seem like an odd idea to actually have enemies, as opposed to people you just don't like) with your business savvy. Herewith, then, seven pithy comments gleaned from the week's business headlines. Even if you aren't heading out to myriad cocktail parties or backyard barbecues, these all- purpose bon mots can even be dropped on children who come up with reasons why they aren't mowing the lawn. Edified and slothful. That actually sounds like a not-bad way to go through life.

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1. "So Saks Fifth Avenue is on the block, and Harcourt Brace--which owns Neiman Marcus--is rumored to be circling. But if Neiman Marcus and Saks are part of the same company, then there will only be one real retailer for Armani and Jill Sander in the whole United States. Wouldn't you say that's a helluva lot more worthy of an antitrust complaint than whatever Intel is supposed to be doing?"

2. "General Motors is in the process of shutting down all of its operations in reaction to the UAW's strike at two plants in Flint. (I hate to think how many times the phrase "hunkering down" has already been used to describe GM's stance.) The company is now losing $75 million a day. On the one hand, this means it's hard to see how the strike is cost-effective from GM's perspective. On the other hand, I'm not sure GM can invest this much money and then back down without getting the productivity improvements it wants."

3. "3Com beat estimates by one penny and watched its stock jump 16 percent. Of course, those estimates had been revised downward just a couple of months ago, so the company actually fell far short of what people had been expecting when the quarter began. From now on, 3Com should just say: 'We're not sure we'll be able to make any money.' The stock will be at $100 in just a few months."

4. "Interesting thing about this week's short-lived rally is that it was not sparked by the AT&T-TCI deal. If anything, the deal seems have to been a bit of a drag on the market. Has to be depressing to come up with a deal of this magnitude and have investors tell you your company is now worth $9 billion less than it was two days ago."

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5. "Actually, for all the perpetual M&A activity, very few companies involved in large-scale deals have seen their stock prices rise. It's an odd situation: Wall Street is orchestrating these deals, but actual investors are reacting with yawns at best."

6. "Whatever happened to Godzilla? Has anyone at Sony been executed?"

7. "So Tuesday and Wednesday the financial press is saying the summer rally has arrived early, that we're heading into a new phase of bullishness, and blah blah blah. But then Thursday the market turns around. How do they explain this? 'Intel announced that it discovered a flaw in its new chip.' Wouldn't: 'We have no idea what's going on' been more honest?"

Fin. One note: I promised something about the Microsoft court case, but the AT&T news tossed me off schedule. Monday for sure. And if that doesn't keep you on the edge of your seat all weekend long, well, that's probably for the best.