'In the News' Archive
The Mojave Desert is a barren and desolate place. Encompassing the iconic Death Valley in California and adjacent states, the High Desert has inspired generations of artists with its arid, unforgiving beauty, as expressed in U2’s classic 1987 album, The Joshua Tree, and many other works.
The word “Mojave” has lately come to be associated with a barren and desolate corporation from the rainy Pacific Northwest, however. Microsoft hired the advertising and branding firm Bradley and Montgomery to conduct consumer testing of a “new” computer operating system. The subjects were told the demonstration they witnessed was of an OS code-named “Mojave.” At the end of the demo, the subjects were told that “Mojave” actually is — wait for it — Windows Vista! Yes, Vista, the much-slagged iteration of Windows that first shipped 18 months ago and has underwhelmed PC users around the world.
Videos of the demos and reactions are posted at MojaveExperiment.com. All over the blogosphere, this attempt at redeeming the reputation of Vista has drawn widespread derision and scorn.
I’ve been using Windows Vista Home Basic on my personal notebook computer since early last year, and I’ll say I’m still generally happy with the operating system. Sometimes it seems like an overbearing spinster aunt, asking me if I really, truly want to visit that unfamiliar Web site, but you can disable such hurdles. My computing requirements are quite simple, however, and I haven’t had the unpleasant experience of trying to connect an old printer with my Vista-based PC or other horror stories.
At Hoover’s, we’re still using Windows XP Professional (and Internet Explorer 6!), and we don’t seem to have any immediate plans for big changes in our company IT infrastructure when it comes to operating systems and browsers. (A lot of people here use Firefox to take advantage of tabbed browsing and other useful features, things that are incorporated into IE7.)
Whether you think Vista is a blessing, a curse, or something in between, you’ve got to admit this is a curious way for a big corporation to market a controversial product.
We all know that 2008 has been a tough year for banks. But forget the heavy real estate- and mortgage-related losses endured by the big boys; entire institutions are going under. Eight have failed so far this year, and four have been taken over by the FDIC in the last month alone. By comparison, only three banks failed in all of 2007, and none did in 2005 or 2006.
The latest was small Florida-based First Priority Bank, which fell into receivership on Friday. Superregional SunTrust Banks assumed control of First Priority’s six branches and some $200 million in customer deposits. The week before, California’s First Heritage Bank and First National Bank of Nevada were closed by the Office of the Comptroller of the Currency, and Mutual of Omaha took over the banks’ deposits. The most spectacular collapse this year, of course, was IndyMac Bancorp, which was seized by the FDIC on July 11 and filed for Chapter 7 bankruptcy on Friday. It is the third-largest bank failure in US history.
So what happens when the FDIC steps in? It usually does so on a Friday, so it can take care of business over the weekend, and gives no advance notice, as to not incite panic and a run on the bank. Customers with FDIC-insured deposits (up to $100,000) usually can access their accounts as normal (by check, ATM or debit card, or online), or at a branch when the bank reopens on the following Monday, either under FDIC supervision or by an acquiring bank.
We surely have not seen the last of the bank failures. Indeed, the man who some think shoulders some of the blame for the current mess says there are more to come. The FDIC maintains a watch list of around 90 banks that it deems “troubled”. It doesn’t share its list with the public, for obvious reasons, though some analysts have their own opinions about which banks may be included. Most are small institutions, similar in scale to First Priority.
Of course, with everyone so skittish, naming names can get one in trouble too. Ladenburg Thalmann financial services analyst Richard X. “Dick” Bove was sued by BankAtlantic for suggesting that the bank and its parent company BFC Financial could be next to go under.
Perhaps Martha Stewart should have held onto that ImClone stock a little longer. Not only would she have avoided jail time, but she might have earned a little more bang for her buck. Bristol-Myers Squibb’s $4.5 billion bid to acquire the 83% of ImClone it doesn’t already own values the company’s shares at $60 a pop (ironically, the same price that triggered Martha’s stock ditch in 2001). But speculation over the deal has already raised the stock’s price tag above that bar and ImClone has hinted that it may seek a higher offer.
BMS’s unsolicited takeover attempt marks the second large biotech takeover attempt by a big-name pharmaceutical firm this summer (the first was Roche’s bid for Genentech) and is part of the larger and seemingly intensifying trend of the pharma industry’s shift towards biopharmaceuticals. (It’s a sign of the times, but also of dwindling revenues from traditional drugs.)
What is BMS hoping to gain through the purchase? While ImClone only has one commercial product (cancer treatment Erbitux, which is approved to treat colorectal, head, and neck cancers), that single product brings in over $1 billion in annual revenue. ImClone also has a pipeline of similar antibody-based cancer drugs, and it is pursuing additional indications for Erbitux. If the company’s development candidates make it to market ImClone will also hold a corner on treatments for lung, pancreatic, breast, prostate, and ovarian cancers.
So despite a history laden with patent disputes, management shake-ups, and stock-trading scandals, ImClone represents an opportunity for growth to the struggling BMS. Whether ImClone accepts the offer is another question. The biotech indicates that it may decide on another course to maximize shareholder value, such as the separation of its Erbitux and development operations into two companies. The deal’s success will also largely depend on the opinion of ImClone chairman Carl Icahn, the formidable investor who has already voiced his doubts on the BMS offer.
There’s an old saying that goes something like this: Be careful what you wish for, lest it come true. Take heed John Mackey!
Let me explain. In a previous post (read here) I mentioned that the Whole Foods Market founder and CEO was quoted as saying that if he could go back in time “we wouldn’t have done the Wild Oats acquisition.” Now a US appeals court ruling reversing the decision that allowed the $565 million purchase to proceed, has put the deal on hold, at least temporarily. The court has remanded the case for reconsideration to US District Judge Paul Friedman, saying that he erred when he dismissed the Federal Trade Commission’s claim that the deal violated antitrust law. The FTC opposes the combination saying it could stifle competition and lead to higher grocery prices.
From the point of view of WFM, the deal is a fait accompli as the company has already closed some Wild Oats stores, sold others, and is well down the road toward integration of the two chains. However the ruling, which states that “only in a rare case would we agree a transaction is truly irreversible,” leaves the door open for redress if the acquisition of Wild Oats is found to be unlawful. Of course, that has yet to be determined. (Read the appeal court’s opinion here.)
But even the prospect of reversal begs the question: How do you undo a (largely) done deal?
Potential consequences include a freeze on any further integration of the two chains, including ordering WFM not to close or rename any more Wild Oats stores. And if the FTC ultimately prevails it could order WFM to divest the Wild Oats stores it acquired to be run independently.
In a statement, WFM said that it was disappointed with the court’s ruling and was considering its legal options. Until then, the continuing integration of the Wild Oats business is in limbo while Whole Foods awaits the District Court’s response.
I wonder what Mackey is wishing now?
Friday’s annual meeting of Yahoo! shareholders will be anticlimactic, thanks to a deal worked out last week between the company and activist investor Carl Icahn, who owns about 5% of Yahoo!’s shares.
Icahn called off his proxy challenge, striking a settlement agreement with Yahoo!’s board and management. Basically, one incumbent director will leave the board, the board will expand from nine to 11 seats, and two of the three vacant seats will be filled by Icahn and former AOL CEO Jon Miller, with Icahn to name a third director. (Please let it be Mark Cuban!)
Icahn briefly blogged on the settlement, which is so 21st century, of this aborted proxy battle.
What brought about this rapprochement? As others have noted, one event that may have tipped the balance and caused Icahn to seek a deal was the declaration by Legg Mason the week before that it planned to vote its shares in favor of the management nominees at the Yahoo! annual meeting. Bill Miller, the manager of Legg Mason’s flagship Value Trust fund, loudly criticized Yahoo!’s board and management for scaring off Microsoft, yet decided in the end to go with the devil he knew. Icahn reportedly saw Yahoo!’s institutional investors circling the wagons around the incumbent board and management and apparently decided against suffering a public defeat.
For their part, the Yahoos in Sunnyvale, California, knew they were about to report mediocre results from their second quarter, so they also had an impetus to come to an arrangement with the barbarians at their gate.
This sally by Icahn is looking like his crusade against Motorola — he buys a small but significant stake in the target company, blusters about the sins of the board and management, pulls together a proxy bid, and then calls it off in exchange for seats on the board for him and some cronies. It remains to be seen whether the Yahoo! episode will play out like Motorola did, with the CEO banished and the company broken up.
Meanwhile, the Evil Empire in Redmond, Washington — excuse me, I mean Microsoft — is officially washing its hands of any interest in all or part of Yahoo!, and turning to its own knitting to defeat Google. Knit one, Perl two? (A little coding humor.)
Yahoo!’s not out of the woods, with Congress scrutinizing its search advertising deal with Google and some shareholders still mad about losing out on $33 a share in cold, hard cash from Microsoft. (The stock closed Monday at $20 and change.) Not much yodeling going on at Yahoo! HQ these days.