Magazine

Talk Show


"Many film stars have revealed their secret desire to broadcast the weather." -- Terry Connelly, senior vice-president for The Weather Channel, in a statement announcing celebrity guest forecasters

In the late 1990s, accounting analyst Jack Ciesielski kept a running tally of the charges companies were taking to cleanse their earnings of "one-time" costs. Today he is tracking something new: lease restatements. So far the publisher of The Analyst's Accounting Observer, has found 206 retailers, restaurants, and cellular service providers that are changing how they account for leases.

The companies seem to have stretched out rent expenses that should have been accounted for sooner. The restatements at companies including Cingular Wireless, Kohl's, and McDonald's (MCD) follow an SEC letter reiterating the long-standing rules.

The effect on earnings is modest compared to the shenanigans of the 1990s -- generally pennies per share. Ciesielski sees this round not as an attempt to puff up profits but as a step toward accurate earnings. Now that's progress.

It didn't take very long for $2 trillion in shareholder wealth to vanish after the dot-com bubble burst. But it's taking far longer for investors to see restitution for the misdeeds at companies such as WorldCom, Enron, Tyco, a scad of investment banks, and several mutual-fund companies that helped to erode confidence in the markets. Public agents such as the SEC and New York Attorney General Eliot Spitzer have wrangled huge settlements, meant to return at least some of investors' cash.

So where's your check? Tied up in red tape, probably. Since 2002, the SEC has set up 55 investor claims funds, holding a total of $4.5 billion. But only 1.3%, $60 million, of that has flowed to investors. The process is set up to be slow: Distributions must be approved by a court, which must approve a distribution agent, which must identify shareholders, who must file claims, and so on. It could take three years in large cases.

Payouts from private securities class actions have been quicker. From 2001 to 2004, the biggest 100 cases yielded $14.7 billion in settlements. Much of that has been paid out, says Institutional Shareholder Services. As of Mar. 18, there's $7.2 billion more -- including new WorldCom money -- in the pipeline.

Burned investors can also target the personal fortunes of CEOs. The SEC wants more than $90 million from Kenneth L. Lay in "ill-gotten gains" from his sale of Enron stock. Tyco's (TYC) Dennis Kozlowski and Mark Swartz, on trial for a second time, have had $600 million in assets frozen. Money gained from the forfeited property will go to a restitution fund for victims. Others, like ex-WorldCom CEO Bernie Ebbers, may face prison time. Some investors will just have to be satisfied with old-fashioned revenge.

Subaru of America's (FUJHY) all-wheel-drive station wagons and hatchbacks have long appealed to pragmatic consumers known for gushing about the cars' ability to guide them unscathed through snowstorms and washed-out roads -- so much so that the company is a longtime sponsor of The Weather Channel. So it's a bit surprising that not only has the company waited until this June to launch its first legitimate sport-utility vehicle -- the last auto maker to do so -- but that Subaru is pricing it above $35,000. That's out of reach for many of the frugal-minded Snow Belt letter carriers and New England schoolteachers who relished Subaru's long-running 1980s ad slogan, "Inexpensive, and built to stay that way."

Brands that reach upward in price and prestige usually feel the pull of gravity -- Volkswagen, for instance, has stumbled badly with high-priced sedans. But Subaru parent Fuji Heavy Industries Ltd. (FUJHY) feels it has no choice but to move its brand to a ritzier part of town. Unlike most other Asian carmakers, Fuji lost money in the U.S. last year, as U.S., German, and Asian rivals have threatened Subaru's niche with their own versions of all-wheel-drive vehicles.

The sporty new B9 Tribeca is named for a high-rent Manhattan neighborhood known for sushi bars. To show off the Tribeca, Subaru last week began a national tour where it's displaying the SUV at tony venues like the Houston Museum of Art and Phoenix' Biltmore Fashion Park/ Urban Village. The goal, says Lee Garfinkel, chief creative officer of DDB Needham, Subaru's new ad agency, is to "make it O.K. for someone to drive a Subaru up to a Broadway show or club."

Ladies, if you've gone off light beer, try low-calorie wine. On Apr. 4, Beringer Blass Wine Estates, part of Foster's Group, plans to unveil White Lie Early Season Chardonnay. At $10 a bottle, it has 25% fewer calories and 32% less alcohol than regular Chardonnay. In the '80s, several low-cal wines flopped because they tasted watered-down. White Lie is made from grapes picked early, containing less sugar. The label features prevarications women are said to tell, such as "I always get up early to exercise." Patronizing? Sure. Still, guilt-free wine could appeal to weight-conscious men, too.

Brad Smith is in the market for some street cred. As the head of Intuit's (INTU) consumer-tax division, he manages one of the best-known brands in software. But sales growth of the popular TurboTax program is slowing -- from a 29% increase in 2002 to an expected 5% to 10% this year.

This tax season, Smith, 41, is trying a new tack: making the staid brand hip. In an effort to appeal to first-time filers, Smith brought in 18-to-24-year-olds to find out what makes them tick. The answer: It's not ads. "You can advertise, but they will TiVo (TIVO) it out," Smith says. "You can e-mail them, but they'll stop it as spam."

So he's offering them discount cards usable at BestBuy (BBY) and Expedia.com (IACI) to make their tax refunds go further. The Gen Yers also helped design a new portal for young tax filers, with the MTV-esque name "Rock Your Refund." And since Smith isn't exactly P. Diddy, he signed up hip-hop impresario Russell Simmons to promote tax-filing as cool. What's next, a music video?

When Phil Mickelson swats his first tee shot at the Masters Tournament on Apr. 6, his caddie won't be much taller than a leprechaun. For the annual par-3 tourney, a prelim to the main event, he has lined up his 5-year-old daughter, Amanda, who presumably will be paid for her club-toting services in Gummi Bears. It's fitting, since Mickelson, 34, has done more than any other golfer to burnish his image as a family guy -- and it's bringing in the bucks. At more than $20 million a year in endorsements, some sports marketers say he's the second-highest paid U.S. athlete in off-field earnings.

Though rival Tiger Woods tops that leaderboard at about $80 million, Mickelson gets deals that would be out of bounds for Woods, who doesn't have children, or Vijay Singh, who keeps his private life strictly private. Rolex, Bearing Point, and Callaway Golf have all tapped Mickelson. Ford Motor Co. pays him about $7 million a year. And the cars in the Mickelson garage are Ford Expeditions, because, Phil claims, they're safe for transporting the kids -- Amanda, Sophia, 3, and Evan, 2.

Skeptics question the Mickelson image. Last month, when Singh was asked on HBO's Real Sports with Bryant Gumbel if he envied Mickelson's endorsement deals and family-man persona, he replied: "Yeah. But is that the true Phil?" Says Mickelson: "I have good relations with everyone in the golf industry, or try to."

Even Mickelson's new memoir -- One Magical Sunday, which sold for more than $500,000, sources say -- is a bouquet to his family. Full-page ads for it feature photos of him with his dad and with wife Amy. Mickelson took home $5.7 million in prize money for his golfing last year. But family values are proving more valuable to the lucky lefty.


China's Killer Profits
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus