Here's some dubious best of 1999 awards: "Putting a Period on a Dot-Com Year. THE stock market was the story in 1999.
The Nasdaq composite roared, largely on the strength of technology
stocks. Initial public offerings soared, especially those of money-losing
Internet companies. Investors rewrote the rules of how to make money in
stocks. No revenues? No earnings? No problem!
And so it is time again for the Augustus Melmotte Memorial Prizes,
named for the scoundrel of questionable lineage at the center of "The
Way We Live Now," by Anthony Trollope. Melmotte's stock
manipulation scheme lured some of London's most established families,
and the awards go to some of the most alluring men and women of
business for various feats and foibles in the last year of the century.
THE MR. AMBIDEXTROUS AWARD
To Alan Greenspan, chairman of the Federal Reserve Board. Halfway
through the year, he began to raise interest rates, hoping to brake the
economy before it reached inflation's gate. Then, to forestall Year 2000
problems, he flooded the nation's banking system with money, canceling
out the slowdown that he hoped to create with his three rate increases.
THE "WHERE IS MIKE MILKEN WHEN I NEED HIM?"
AWARD
To Ronald O. Perelman, chairman of Revlon. Struggling under a
crushing debt load, Mr. Perelman put Revlon on the block. Yet he found
no one willing to pay his asking price for the company. It's a shame that
Mr. Milken can no longer bail him out with a sure-to-sell-out junk bond
offering.
THE HEDGING HER BETS AWARD
To Jill E. Barad, the beleaguered chairman and chief executive of Mattel
Inc. Her job is on the line, thanks to a stream of earnings disappointments
and the botched $3.8 billion acquisition of the Learning Company in
May, which resulted in $105 million in losses four months later. Despite
the problems, Ms. Barad announced in November that she had recently
bought 65,000 shares of Mattel stock at about $13.75 each. While some
investors saw the buys as a sign of her confidence that the stock had
bottomed, others surmised that Ms. Barad was simply hedging. If she
managed to cling to her job, she would retain her over-the-top
compensation ($4.75 million in 1998). But if Mattel's board were to
bounce her, the company's stock would no doubt jump, making her
newly bought shares worth much more than she paid for them.
THE INGENUITY IN ACCOUNTING AWARD
To Donald J. Trump, real estate developer, would-be president of the
United States and chairman of Trump Hotels and Casino Resorts. In
announcing its third-quarter results on Oct. 25, the company said its net
income had more than doubled from the corresponding quarter a year
earlier. The stock rose more than 8 percent on the news.
Only later, when a fixed-income analyst tried to delve into the numbers,
did it emerge that the rise in revenue was really just an example of
accounting moxie. Upon the closing of an Official All-Star Cafe in the
Trump Taj Mahal casino in Atlantic City, the casino was given use of the
restaurant's fixtures and memorabilia for four months. Presto change-o,
and Trump added $17.2 million to its revenues.
THE LESS IS MORE AWARD
To Carly Fiorina, the new chief executive of Hewlett-Packard. Under
her leadership, the company -- which had been known as a model for full
disclosure of quarterly results -- has significantly reduced the amount of
data it gives to investors and analysts in its conference calls. In its
fourth-quarter conference call on Nov. 17, the company said it would
henceforth provide actual figures on companywide orders only when it
thought they were meaningful.
"What we want to do is spend time providing accurate, insightful
information," said Marlene Somsak, manager of media and financial
communications for Hewlett-Packard, "not information that is potentially
misleading." It was not immediately clear how dispensing more
information could be misleading.
THE WHAT GOES UP KEEPS GOING UP AWARD
To the Nasdaq composite stock index, the highest flier by far of the
major indexes in 1999. The Nasdaq, which trounced both the Standard
& Poor's 500 and the Dow Jones industrial average, benefited greatly
from the mania for initial public offerings of technology stocks. Almost
every time a hot new stock came out, it went directly into the
stratosphere and the Nasdaq.
Because 1999 broke all records for both issuance of initial public
offerings and first-day jumps in the prices of the issues, it is little wonder
the Nasdaq was up 84 percent as the year was drawing to a close.
THE CAN'T BLAME HIM FOR TRYING AWARD
To Howard Schultz, chief executive of the Starbucks Corporation. In
May, the java-meister told analysts that Starbucks was going Internet
and would start a "destination" portal to sell furniture, kitchenware and
other household gear in time for the Christmas selling season. As happens
when any company makes known its e-plans, the stock rose smartly on
the news. That is, until late June, when the company announced that the
online plan would hammer earnings. Investors fled the stock. Even a July
announcement that the Internet plan had been sharply scaled back didn't
help. The shares are still in need of a jolt.
THE THROUGH-THE-LOOKING-GLASS AWARD
To fledgling Internet companies at the center of an investing mania unlike
any other, one that convinced investors to turn traditional stock valuation
methods upside down. Before the Internet came along, losses were
something investors did not like to see on a company's books. Here and
now in wonderland, the greater the losses, the higher the stocks fly.
THE MY MARKET'S BETTER THAN YOUR MARKET
AWARD
To Richard A. Grasso, chairman of the New York Stock Exchange,
and Frank G. Zarb, chairman of the National Association of Securities
Dealers and the Nasdaq stock market. In the race to build the biggest,
best, most global and influential market in the world, both men wanted to
be the first to issue stock in their operations to the public. As often
happens with ambitious plans, however, the details proved too devilish to
work out by year-end. The race was called off. Temporarily, of course.
THE DO AS I SAY, NOT AS I DO AWARD
To Harvey Houtkin, self-proclaimed father of electronic day trading and
proprietor of the All-Tech Investment Group, a brokerage firm that
teaches individual investors the joys of trading stocks furiously all day.
Anybody with $25,000 and a dream can make a living day-trading
stocks, Mr. Houtkin proclaimed on his Web site. Never mind that even
the master trader himself lost $392,558 day-trading for All-Tech in
1998.
THE "WHO SAID INSURANCE ISN'T SEXY?" AWARD
To Martin R. Frankel, the nerdy Greenwich, Conn., financier. He is
accused of plundering troubled insurance companies to secure the
hundreds of millions of dollars that made him the chick-magnet he knew
he could be. Mr. Frankel and a female companion were apprehended in
Hamburg, Germany, in September, four months after he fled his
Greenwich manse, leaving a pile of documents smoldering in the
fireplace. While investigators try to sort out Mr. Frankel's financial
dealings, he is cooling his heels in a German jail.
THE DECADE'S MOST EXPENSIVE HANDSHAKE AWARD
When Henry met Walter -- Henry R. Silverman, chairman of HFS, and
Walter Forbes, chief executive of CUC International -- neither knew that
the encounter would place them firmly in the record books. The two men
merged their companies into the Cendant Corporation in late 1997, but
the total cost of the deal didn't register until 1999, when Cendant agreed
to pay $2.8 billion to settle shareholder lawsuits -- the biggest such
settlement ever -- that grew out of accounting irregularities uncovered at
the former CUC. And don't forget the $335 million that Ernst & Young,
the accounting firm, agreed to pay to settle accusations that it had
certified CUC's questionable bookkeeping." |
