Yes We Have No Strong Buys

From a Buckingham Research analyst report that crossed my (virtual) desk this morning. The subject is Netscreen, a publicly-traded firewall company whose stock Buckingham was extolling:

“We expect the conference call to be upbeat with conservative, yet positive, guidance.”

The preceding is one of those magnificently opaque bits of analyst phraseology that covers off all bases. They like the stock, yet they think that guidance will be conservative, but in an upbeat way. No matter what happens, the Buckingham analyst is in a perfect position to say “I told you so”. As Strunk & White say, if you’re going to obfuscate, at least have the decency to obfuscate clearly.

Larry Ellison’s Nuptuals

Quirky piece in the Independent about Oracle CEO Larry Ellison’s recent marriage to romance novelist Melanie Craft. It is requisitely snide in that U.K. way, so you get bon mots like the following:

“At 34, Ms Craft is 25 years younger than the Oracle chief. Cruel commentators suggested her background in archaeology – which she studied at the American University in Cairo – may stand her in good stead.”

Schadenfreude and Conrad Black

Some snippets from my Tuesday National Post column about the escalating struggle over Hollinger International and Conrad Black:

You can cut the schadenfreude with a knife. The latest twists in the Conrad Black affair have Canadian media sorts nearly giddy with delight over Lord Black’s escalating problems.

Despite rising media claims to the contrary, so far there is no Enron-style scandal here. Yes, over the weekend Conrad Black was pushed out of his position as non-executive chairman of Hollinger International. And yes, a special committee at Hollinger International brought a complaint against Black et al., looking for more than US$200 million in damages.

But this is full-contact, multi-dimensional financial chess played by adults. While Black apparently ran Hollinger International through subsidiaries as if it was his own personal fiefdom, Hollinger International – and shareholders like Tweedy Browne — are up to their own games.

Shakespearean Echoes in Conrad Black Battle

You’ll have to read my column in Tuesday’s National Post to get my views of the latest developments in the tussle between Conrad Black and the company, Hollinger International, that he once ran as a private fiefdom. I promise that it will be entertaining.

In the interim, however, this wonderfully Shakespearean quote from Herbert Denton, an adviser to several institutional investors of Hollinger International. He said the following about a recently-expired buy-out offer from Black to a special commitee of the Hollinger International board:

“The purpose of the special committee is not to buy out Lord Black but to investigate him.”

Or in the words of the bard, “I come to bury Caesar, not to praise him.”

“What about Dick?”

I don’t do much politics here, but I’ll make an exception for this excellent weekend Washington Post piece on Dick Cheney. He comes across like something created by an offspring of Thomas Pynchon and John Le Carre: an almost absurdist paragon of secrecy in a field, politics, where reticence and information are the twin keys to power. Whatever your feelings about the man and his successes and/or failings, the piece is essential reading.

Here is a snippet:

But as you follow him around, you can never hear what Cheney is saying.

You hear Cheney cough. You see Cheney’s lips move. If you’re standing close enough, maybe you’ll hear a quick mutter. But it’s next to impossible to decipher his words.

You can hear Lawrence Small, the secretary of the Smithsonian Institution, who is leading the tour. You can hear the hushed voices of Cheney’s staff and the Secret Service detail. You can hear Sen. Bill Frist (R-Tenn.), who booms “Hello, sir,” to Cheney as he sees him standing near a Sparrow 2 missile exhibit.

“It’s a great day, sir,” the Senate majority leader adds.

And Cheney says something back, presumably something innocuous like Yes, it is.

But you can’t tell for sure.

Henry Blodget, Michael Lewis, and Vampires

Good piece in the NY Times today noodling about freelance journalist Henry Blodget’s (yes, that Henry Blodget) coverage of the Martha Stewart case in Slate. To be blunt, Blodget’s work, while earnest, is plodding and doesn’t hold a candle to Michael Lewis’s magnificently strange, if overly short, coverage in Slate of the Microsoft antitrust trial.

Here are two prose highlights from Lewis’s Microsoft coverage at Slate from years ago:

Lewis on Bill Gates’ taped testimony: He looked “like he had swallowed a bad oyster”

Lewis on Microsoft lawyer Theodore Edelman: “if the courtroom population were asked to vote who in the chamber were most likely to be a vampire, he’d win by a landslide.”

Repealing the Byrd Amendment

A few paragraphs from my weekend National Post column on the escalating tussle over the Byrd Amendment:

The ongoing trade spat over the so-called Byrd Amendment is an exercise in deep cynicism on all sides. No matter what resolution is reached, it exposes some of the central hypocrisies in international trade.

More properly known as the Continued Dumping and Subsidy Offset Act of 2000, CDSOA was one of the last legislative acts of the 106th U.S. Congress. It was inserted by Senator Robert Byrd into a larger agricultural bill that outgoing U.S. President Clinton wanted badly to sign before he left office.

The Byrd Amendment redirects monies collected in the U.S. from import tariffs. It tells U.S. Customs to put all such antidumping tariffs into special bank accounts, one for each case. In the past that money went to the U.S. Treasury, but post-CDSOA the money was collected by Customs and then paid out to the companies successfully participating in each case.


That that hasn’t always been the case. Instead of being a revenue stream for companies, tariffs have historically been a revenue stream and incentive for government, whether in the U.S., Canada, or elsewhere. It is difficult to argue that the latter is truly preferable to the former. Both are distortions; both create wrong-headed incentives.

Perhaps, therefore, one consequence, entirely unintended, of the tussle over the Byrd Amendment will be to draw this “tariffs as profit center” hypocrisy to the fore. And that wouldn’t be such a bad thing.

NPR: Doomed by Success?

What happens to an organization’s fund-raising when it raises “too much” money? National Public Radio has that problem after Joan Kroc, wife of McDonald’s founder Ray Kroc, gave the radio organization a little more than $200-million last year as part of her estate. As strange as it may seem, receiving the money could very well make the organization’s economics more tenuous.

Here is the problem: Money publicly received in such large amounts can have a dissuading effect on fund-raising. After all, people may understandably feel as if they no longer need to contribute to NPR’s quarterly on-air fund-raising drives given the huge influx of cash from Ms. Kroc. Call it a sort of squeezing-out phenomenon, wherein a large amount of money publicly-received from a single source to some degree offsets money that would have been received from many other smaller sources.

At the same time, some misunderstand how this sort of money is used. A naive view is that NPR has an $800-million annual budget, so a $200-million gift is a large offset. It is a silly view, but it is one expressed directly by the Los Angeles Times in a November 7th front-page story after the Kroc gift:

“…. the days when National Public Radio is forced to ask member stations to hold fundraising drives just so it can stay on the air are over.”

In December, for example, one Los Angeles public radio station missed its fund-raising goal by 25%. It blamed, in part, the Los Angeles Times story, and widespread perceptions about the effect of Joan Kroc’s $200-million gift to NPR.

There is, of course, another possibility. Sometimes large charitable gifts can inspire others to do the same thing. In the limit, however, as gifts get larger and larger, it is hard to imagine how a sufficiently large gift does not begin to discourage other contributors. It appears that the one of the main effects of Ms. Kroc’s gift will be, strangely enough, to make NPR’s future fund-raising even more difficult.

Reverse eBay: Why not?

Why is there no reverse eBay? In other words, why not have a site where motivated buyers can put up notes advertising things that they really want to buy? Sure, you’d have to have the would-be buyer pay a fee so that you don’t end up cannibalizing your auction business, but it makes perfect sense — and it belongs at eBay.

The idea, by the way, comes from a recent post at the excellent Why Not? website. It is a spin-off from a fascinating 2003 book of the same name by an economist, Barry Nalebuff, and a law professor, Ian Ayres. In essence, the book suggests ways to come with creative ideas that revolve around reversing, combining, or otherwise intermixing existing good ideas.

CNBC: Miller & McEnroe

I missed this somehow. Business news network CNBC is book-ending its new Dennis Miller primetime program with a new show hosted by former tennis brat John McEnroe.

First there was Cramer & Kudlow, now there is (sort of) Miller & McEnroe. CNBC is definitely looking to up the edginess.