I watched the Cary Grant-Katherine Hepburn comedy Holiday for the first time this week, and I now find it amazing that nothing I've ever read about this movie mentions the fact that Cary Grant's character makes his fortune--thus allowing him to take his endless "holiday"--by an insider-trading scheme worthy of Ivan Boesky. I mean, the manipulation of stock prices by insider pools was an essential component of the stock market before the crash of 1929, but I thought the SEC was created to palliate public outrage about that manipulation. Yet here in 1938 is Grant happily orchestrating a deal that makes him a very rich man while presumably leaving other people out in the cold, and yet he's the hero.
Thankfully Arthur Levitt, head of the SEC, has no patience for the Cary Grants of the world, at least if they're on the Internet, as yesterday's piece detailed. And thankfully we seem to have returned in the past month to a stock market in which everyone can get rich. The Asia crisis, continued doubts about Brazil, corporate earnings that were down 3 percent from this time last year: Don't worry, be happy. The train's leaving, baby. Time to get on it.
Well, maybe not. But after today's stock-market rally the Dow's only 800 points below its all-time high. Memories are short on the Street. But at least tonight's parties will be full of happy people (at least if they didn't sell at the bottom). Onward, then, to this weekend's Cocktail Chatter. Chuckles will be welcome.
1. "Michael Jordan announced he would be retiring as chairman and CEO of CBS at the end of the year, having decided that if the NBA strike ends it will be too difficult for him to play for the Bulls and run a major media company. Bulls GM Jerry Krause expressed relief at the decision."
2. "What? It's not that Michael Jordan? Well, whatever Michael Jordan that told the New York Times , 'I'm not retiring, retiring.' Presumably this is similar to saying about a girl in 9th grade, 'I don't like her, like her.' The only problem is that Mel Karmazin will be taking over as CEO in January, and given Karmazin's reputation for toughness, I suspect he would say 'Jordan is retiring, retiring, retiring.'"
3. "Amazon.com came in with quarterly earnings that beat analysts' estimates. Of course, CNBC did a story yesterday in which it talked to analysts who said that they expected Amazon to beat estimates. But if the analysts are making the estimates, and they estimate that Amazon will do better, doesn't that mean that the estimates are somewhat lacking in credibility?"
3a. "Actually, of course, Amazon.com didn't come in with quarterly earnings. It came in with quarterly losses, losses that were about three times as large as they were last year. At some point I know these tremendous revenue gains--300 percent year-over-year--are going to translate into profits, but when?"
4. "One company that really does seem to have figured out how to make money is America Online, which had another excellent quarter, now has 13 million subscribers, and does not appear to be slowing down. The company's official history may someday be titled, 'Stumbling Our Way to Greatness,' but AOL has always stumbled on the same unswerving track. Steve Case can look in the mirror and say, 'I was right, dammit!'"
5. "In the latest issue of Fortune, Oracle CEO Larry Ellison, talking about Java, explains why an Internet-based standard makes more sense than a Windows-based standard by saying, 'After all, the Web is already everywhere.' Is it possible Ellison doesn't know that Windows is everywhere a lot more than the Web is? Not that that means Microsoft has a monopoly, of course."
6. "HardChoice for Brazil: 8 percent unemployment and rising, overvalued currency, global markets waiting anxiously, and an IMF plan that requires budget cuts and tax increases to gain further assistance. The Brazilians got themselves into this, but it's going to be painful to watch Brazil's working poor sacrificed on the altar of global free capital flows."
7. "Memo to NBA players: talking about the possibility of having to sell one of your luxury cars in order to keep up your payments on your million-dollar house will not endear you to the fans. Try again."
CORRECTION: Tuesday's piece about CNET spinning its third-quarter earnings numbers to make them look better was wrong about CNET's relationship to Snap, the Internet portal site it co-owns with NBC. The loss that CNET reported from Snap was not a loss from continuing operations, but was a write-off, and will not recur in future quarters. My confusion stemmed from the fact that although CNET had been paying for Snap's expenses through April, and although it currently owns a majority stake in Snap, NBC has the right to acquire up to 60 percent of the company, and NBC has assumed responsibility for all Snap's expenses going forward. CNET's press release didn't mention anything about this, but there's a big difference between being confusing and being dishonest. Apologies for implying the latter.
In other words, Snap will not be adding or subtracting to CNET's operating bottom line going forward, so looking at its numbers without Snap--as CNET did--is reasonable. Curiously, according to CNET execs, NBC doesn't include Snap's results in its bottom line, either, so even though the portal is being funded by NBC and even though it's played a prominent role in CNET's publicity--eight of the last nine CNET press releases were about Snap--it's not having a material effect on the reported numbers of either company.