Minimal Disclosure.

Minimal Disclosure.

Minimal Disclosure.

Moneybox
Commentary about business and finance.
April 25 2002 4:56 PM

Minimal Disclosure: Tyco's Latest Plan, Congrats to AOL, Etc.

When the best news of the week is Amazon.com's lower-than-expected losses, you know things are bad. (The company made a small profit in the fourth quarter of 2001 but was expected to dip back in the red this year, as its fourth quarter is usually its strongest.) The Dow sank below 10,000 yet again today before recovering to slightly above that mark at the close. Here's what else is going on.

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Tyco says nevermind: Nobody's favorite conglomerate, which has been in the line of fire for months, said its earlier scheme to split itself into four companies was a mistake. The theory had been that if Tyco split into pieces, it would "unlock shareholder value." But after it was announced, shares fell. The new plan is to "create shareholder value." This morning, shares fell. Why so much skepticism? The CEO's letter to shareholders grouses: "That some in the media would compare us to companies that may have intentionally misled investors through the use of financial chicanery is insulting and inaccurate. To be thrown into stories about 'accounting scandals' damages our reputation and casts aspersions on our employees." Duly noted.

Congratulations AOL! Records are made to broken, but high-fives to AOL for shattering an impressive one: Less than a year ago, JDS Uniphase made history by posting what was believed to be the biggest-ever quarterly loss, $45 billion. But yesterday, AOL took an even bigger write-down, $54 billion. In your face, JDSU! The underlying reason for AOL's write-down was the massive decline in the value of some of its assets since the famous merger with Time Warner in early 2000. Some wags now estimate that if you back the value of Time Warner out of the merged company's share price, you would find that the AOL part is now worth next to nothing in the market's eyes. This has in turn led to speculation that perhaps AOL will be spun off. Which would be funny.

Fiorina fumes: Hewlett-Packard CEO Carly Fiorina has spent several hours this week on the stand in a hearing over whether she and her firm misled or bullied institutional shareholders about the potential benefits of a merger with Compaq. Reports say she was " agitated"  or even " exasperated" by some questions and gave in to Gore-like bouts of theatrical sighing "several times." On the other hand, reports also suggest that dissident board member Walter Hewlett and his lawyers have no smoking gun, and the merger will not be derailed. We'll see.

Enron-o-blah-blah: Jeffrey McMahon, who was seen as sort of, kind of, possibly a good guy in the Enron fiasco (he stood up to Fastow … a bit), announced his resignation. Meanwhile, settlement talks between Arthur Andersen and the government fizzled, and it seems likely that Paul Volcker is going to take his "holy water" and go home. But let's face it, this whole story is running out of steam. The Times resorted to a 1,200-word story on downtown commercial real estate in Houston the other day, centering on the 40-story headquarters Enron was constructing: "The building, nearing completion, is a reminder that the pain caused by the Enron implosion can ripple far beyond its initial victims." Right. Bring back Sharpton!

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Just shoe it: Nice piece in the Wall Street Journal Wednesday on Nike's sneaky tactics for undercutting Vans in the battle for the shoe dollars of the skateboard set. Vans used to have that authenticity thing going for it in its rivalry with the leviathan Nike, but now a Vans marketing honcho laments the passing of anti-establishment sentiments: "Skaters are much more open to the idea of Nike coming in. There's no such thing as selling out anymore." Definitely good news for Nike.

Value judgment: As it happens, I did not have easy access to a computer when I heard the news about the racist Abercrombie & Fitch T-shirts, which the chain obviously had to pull off the shelves after an unsurprising backlash. But my first thought was: Those things are going to go for big bucks on eBay. By the time I got back online a couple of days later, Kottke.org had done the dirty work for me: eBay listings showed the shirts getting bids of $80, $100, or more. Before the shirts were merely evidence of corporate stupidity, mass-produced. Now they are evidence of corporate stupidity, in finite supply. What that says about America is … I'm not sure. If you bought one of these shirts I would be interested to hear why, should you care to tell me.

Recommended: My New Fighting Technique Is Unstoppable, a collection of comics by David Rees. Maybe you read about Rees in the Times last weekend. Maybe you've seen his much-e-mailed series of strips, "Get Your War On" (which was the focus of the Times story). Profane? Yes. Crude? A bit. Sophomoric? Maybe. Recommended? Yes, yes, I've said that already—the book is very funny. (Although you should definitely peruse the above-linked samples first because some people will probably not be amused.) Rees' site says a "Get Your War On" book is coming, with "100% of author proceeds [to] be donated to landmine relief efforts in Afghanistan."