here's a snipet that came from the Motley Fool.... and no, this company has nothing to do with Manhattan Bagels..
What's got me thinking about business models, though, are the related franchising disasters that are BOSTON MARKET (Nasdaq:BOST) and its majority-owned sidekick EINSTEIN-NOAH BAGELS (Nasdaq:ENBX) . For those who haven't followed the story, both of these former highflyers have collapsed over the last year, with many consumers who loved the restaurants left hating the stocks. What happened? The financial press, from Fortune to Business Week, finally offered some astute reporting on the charade that began in these corporations' SEC filings and was perpetuated by certain Wall Street analysts who couldn't get enough of these stocks.
These analysts just happened to work for firms that made a lot of money underwriting financing deals that raised hundreds of millions of dollars for these companies in just the last year, reinforcing a powerful if perhaps misguided belief that the supposed firewall between the investment bankers and the presumably objective sell-side analysts at most firms is quite porous. In the past ten weeks, both the "Chicken" and the "Bagel" have been hit with a spate of class-action lawsuits charging that the firms' top managers falsified earnings reports, hiding the fact that the companies overall were actually losing money despite reports of rising earnings. At least one lawsuit also names underwriters Alex. Brown, Morgan Stanley, and Merrill Lynch. |
