Quotes of the Day
Cell-Phone Shuffle
The world's two largest cell-phone makers are cleaning house. Motorola's Christopher Galvin, grandson of founder Paul Galvin, resigned as CEO in September after six years at the helm. The company then decided to dump its semiconductor arm. Then Helsinki-based Nokia shuffled top management positions, bringing in Rick Simonson as chief financial officer, the first Yank to crack Nokia's upper ranks.
Previewing the holiday season, analysts give Nokia the nod; Motorola's profitability lags Nokia's, and Motorola has been slow to deliver a camera phone in the U.S., a setback since sales of this item could double, to 16% of the industry total, in 2004. Writes Paul Sagawa of Bernstein Research: "The rest of the competition will eat away at its market share."
Europe's Grasso Effect
Outrage about executive salaries is missing a couple of decimals in Europe. In September New York Stock Exchange boss Dick Grasso resigned amid a backlash over his $188 million deferred-compensation package. Around the same time, the chairman of the world's third largest food retailer, scandal-tainted Netherlands-based Royal Ahold (whose U.S. chains include Giant Food and Stop & Shop), stepped down following national outrage over his failure to inform investors of the two-year, $6.8 million contract he gave new CEO Anders Moberg. The French government pressured Pierre Bilger, the ex-CEO of engineering giant Alstom, into returning a $4.6 million severance payment, and shareholders of Europe's largest drugmaker, London-based GlaxoSmithKline, rejected the $36.5 million payment CEO Jean Pierre Garnier would receive if he lost his job. "Everyone in Europe is being very careful right now," says Dan Konigsburg, a corporate-governance analyst at Standard & Poor's in London. "No one wants to be like Grasso." They will need a big raise for that.
Goldman Tees Off in Japan
With the Japanese economy in an upswing, Goldman Sachs is teeing off. In May the investment bank launched Accordia Golf Co., a subsidiary that has become Japan's biggest golf-course operator by acquiring more than 60 clubs. About half are operating; the rest should emerge from bankruptcy early next year. During Japan's late-1980s bubble, schacho (CEOs) flooded the links, paying up to $1 million for a membership. Today a membership costs about $22,500. In the past three years nearly 200 of Japan's 2,400 golf courses have declared bankruptcy, according to Teikoku Databank, a credit-research agency. "Goldman is buying these distressed properties at a great discount," says Joel Gomberg, an analyst at William Blair & Co. "There's great value potential here; it's a savvy move." Among Accordia's tactics to lure people to the game — which many Japanese have played within strict guidelines — loosening dress codes and letting players drive golf carts on the grass.
Toyota's New "Center"
Naming rights to sports facilities usually go to local companies: there's Raymond James Stadium in Tampa, Fla.; Pacific Bell Park in San Francisco; and America West Arena in Phoenix, Ariz., among others. So why is Toyota, a Japanese company with U.S. offices in Torrance, Calif., the nameplate for the new Toyota Center arena in Houston? For one 7-ft. 5-in. reason: Yao Ming, the Houston Rockets star from Shanghai. Toyota opened a new plant in Tianjin, China, and hopes millions of Yao fans will soon be Corolla fans.
The company will pay $100 million over 20 years for the rights to Houston's home, even though Yao has only three years remaining on his Rockets contract. "Attaching a personality to a car can generate interest," says Alexander Edwards of Strategic Vision, an auto consultancy, "but it alone rarely increases sales." Houston stadiums have had some bad karma too. Reliant Energy bought naming rights to the NFL's Houston Texans stadium three years ago. The company, now called CenterPoint Energy, has seen its stock drop 70% since the deal. Remember Enron Field, home of baseball's Houston Astros? The team had to buy back the name from the scandalous energy company. New name: Minute Maid Park.
What Lies Beneath
Skip the analyst conference calls. Turn off CNBC. If you want to be a savvy investor, curl up with a 10-Q instead. Such is the advice of veteran financial journalist Michelle Leder in Financial Fine Print: Uncovering a Company's True Value. She doesn't expect you to read all 300 pages of a company's financial statement or try to comprehend complex derivatives. The most crucial section is the footnotes, where many companies bury bad news. An attentive reader can spot the red flags: inflated growth assumptions for pension assets, a subsidiary controlled by a son-in-law, lots of synthetic leases. Then get your money out. Compare the most recent reports to those of past years, and skim for the new material — if more investors had noticed Enron's infamous Footnote 16 from its 1999 10-K, which described sketchy off-balance-sheet deals, they could have saved millions. And look for onetime charges that appear year after year. "It's a little bit about being a nerd," says Leder.
Windows That Talk to You
It doesn't welcome you by name and tell you that "we still have those chinos in your size," as in the movie Minority Report, where talking billboards plug products to Tom Cruise's Detective John Anderton. But Whispering Windows, a new audio system from ETREMA Products, based in Ames, Iowa, at least sings to passersby, bringing us a little closer to that sci-fi future.
Using an amplifier connected to two small pucklike objects that stick to any smooth surface, Whispering Windows turns shopwindows and tabletops into speakers in milliseconds. Retailers can now play soothing music or sales pitches to lure you into their stores. Britain's largest department-store group, John Lewis Partnership, tested Whispering Windows at its Peter Jones shop in London, and sales shot up 40% over a three-week period. Bars and auto dealerships are using it in the U.S. The system costs $1,500, and for those who want to hear Moby in the mirror, a $20 version called Soundbug let's you play CDs and MP3s through the glass.
- Sean Gregory