Bad news abounds this week, from the telecom business to retail sales, from Warren Buffett to Arthur Andersen. On Andersen’s recent maneuverings, read this “Frame Game” column by my Slate colleague William Saletan. The Justice Department announced criminal charges against the beleaguered accounting firm today. Here’s what else is up—or down.
Berkshire Buffetted: Warren Buffett’s holding company, Berkshire Hathaway, reported over the weekend that its profits had fallen sharply, in large part because its insurance business was whacked by Sept. 11 fallout. The folksy Nebraskan also blamed his own “poor” management of Berkshire’s equity portfolio. Shucks. Meanwhile, his letter to shareholders is reported to have reiterated objections to the way stock options are used by many firms. Finally, if you’ve always wanted a shirt featuring a fist clutching a wad of money, order Berkshire Hathaway “Activewear” here.
Hang Ups: The Securities and Exchange Commission is looking into accounting practices of Qwest and WorldCom, adding to the cloud over the telecom business generally. The Wall Street Journal says that the market value of companies in the sector have fallen by 60 percent, or around $2 trillion, in the past two years. A big problem is an excess of fiber-optic cable; it used to be that investors believed demand for such capacity would be limitless, forever. Now it almost seems that people think there won’t be any demand, ever. Accounting suspicions, some of which will almost certainly prove to be justified, add fuel to the fire. Qwest honcho Joseph Nacchio complains of “corporate McCarthyism.” Qwest has already been questioned by the SEC about certain transactions with telecom fellow-traveler Global Crossing.
Conseco Clarity: Last week Conseco announced that its chief financial officer was leaving to “pursue other interests.” Typical murky exit-line boilerplate. But wait! The company’s chief executive subsequently issued a clarification. His guy didn’t really leave to pursue other interests. He was fired. “I did not believe he was up to the job,” CEO Gary Wendt declared. In a somewhat astonishing letter to investors, he went on to say: “When we said essentially nothing about [the CFO’s] departure, I assumed that the meaning would be clear.” Got it. So next time you hear a bland statement from a corporation, remember to assume that it probably obfuscate some unpleasant truth. Is that clear?
Can You Stand the Suspense? KPMG Consulting, which is not to be confused with KPMG, the auditing firm from which it was earlier spun off, is changing its name. “The sooner the better,” a spokesman tells Reuters. To come up with a name, the consulting firm will rely on advice from … another consulting firm.
Marketing Gambit of the Week: An online casino had its name scrawled across the backs of three participants in the “celebrity” boxing matches televised this week by Fox: Danny Bonaduce, Todd Bridges, and Tonya Harding. All three won.
Another regular member of that annual summer party of “Vagabonds” (up until his death in 1921) was the writer and naturalist John Burroughs, who shows up as an image in the ad (the old guy with the long white beard) but is not named. Burroughs—one of the founders of the modern American conservation movement and a close friend of John Muir—would, I’m sure, be horrified to find himself involved in promoting gas-guzzling SUVs. Burroughs was preaching against fossil fuels and for solar power in all its forms in the teens of this century. PS: By the way, only ONE president took part in those camping expeditions. And that was Harding, who barely qualifies. (Burroughs was dead by the time Harding showed up. In fact, I believe Ford saw Harding as a replacement for Burroughs, whom I gather he would have preferred having along because Burroughs shared Ford’s passion for amateur ornithology, while Harding didn’t.)
Winners: In response to last week’s Prince trivia contest, the first correct answer came from one Michael Dewberry. The question: What Prince song contains the lyric, “That skinny motherfucker with the high voice?” Answer: “Bob George,” from The Black Album. (Other memorable lyrics include, but are not limited to: “I’ll kick your ass—twice” and “Who do I look like, baby? Yesterday’s fool?”) A flurry of right answers came within minutes of Dewberry’s, so I decided to award the valuable prize (a copy of Titans of Finance, the mysteriously obscure business comic book) to everyone who got in during the hour or two before we managed to put up an update saying we had a winner. The sub-winners: Travis Mitchell, Ryan Teague Beckwith, Tom Anderson, Timothy Danford, Justin Sovich, Monica E. Shirley, and Jimmy Guterman. Demographic analysis: Most of the winners are male. What does it mean? Also, four of the eight are in Massachusetts, and two are in San Francisco. Makes you think, eh? Comment from winner-among-winners Dewberry: “I didn’t think I’d be first. Every other indie-rocking Prince fan I know reads Moneybox. Well, the one other, I mean.” Who do I look like, Michael? Yesterday’s fool?