(3 of 4)
Still, the news about Viagra is mostly happy. It works for many men, and Pfizer, the manufacturer, estimates that 5 million prescriptions have been written. The company's stock has risen from 75 11/16 in January to 116 as of last Friday (slightly down from its peak of 121 3/4). Sales may get a boost when a new ad campaign begins next year featuring that charismatic pitchman Bob Dole.
LONG TERM CAPITAL Let Them Eat $3.6 Billion
It is a maxim in Hollywood that "no one knows anything." Of course, this couldn't be true in non-show business because if it were, what would be the point of listening to heavyweight economists and high-flying financial managers? Surely such people--and their very rich clients--know precisely what they're doing. Surely. But that faith didn't prevent penny-ante investors from enjoying a bit of Emperor's-new-clothes schadenfreude at the near collapse of Long Term Capital Management, the secretive multibillion-dollar hedge fund based in Greenwich, Conn.
The fund was founded in 1994 by John Meriwether, a former vice chairman of Salomon Brothers, and its partners included Nobel laureate economists Myron Scholes and Robert Merton, whose market models helped give Long Term Capital an aura of near infallibility. Until September, that is, when word leaked that the firm was in danger of suffering losses so catastrophic they could send the already troubled world financial system into a tailspin. A $3.6 billion rescue package was cobbled together by the Federal Reserve Bank of New York and a consortium of 14 U.S. and foreign lenders.
So far, the bailout seems to have worked, thanks in large part to autumn's upturn in the global markets. But the real hero of the story is probably Federal Reserve Chairman Alan Greenspan, who lowered interest rates three times since September, prompting overseas banks to do the same. Long Term Capital's assets rose more than 20% in November alone, giving it a profit for the first time in at least seven months, though that gain may be partly wiped out now that markets have turned softer.
No, the golden days have not returned for the firm, where management must now report to an oversight committee. The original investors, relegated to a measly 10% share of the fund, have recovered only a sliver of their pre-August stakes. Meanwhile, the Securities and Exchange Commission is reportedly investigating whether Long Term Capital violated securities laws by withholding information on its financial health. Moreover, the entire debacle may prompt long-term changes in the hedge-fund industry: Treasury Secretary Robert Rubin is examining whether such funds should be more closely regulated. --Reported by Bernard Baumohl/New York
LIPINSKI AND KWAN Victory Laps
Here's what you get if you win a gold medal in Olympic figure skating: endorsement contracts from Snapple, Capezio and autoweb.com (an online car store), plus a deal for four prime-time skating specials with CBS.
Here's what you get if you win the silver medal: an endorsement contract with Caress and a deal for four prime-time skating specials with ABC.