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Sentry Over America |
Ignorance in America1 Disney and 75% of Enron—What's the Difference?Sunday, Jan.13,300 p.m., 2002
With all the buzz, screaming, and crying going on about Enron, the employees' 401k plan, shareholder losses, and with all the political fingerpointing, a dose of reality is in order— the two year drop in the value of Disney equals the same drop in the value of Enron . . . . . . well, within 4 billion, but who's counting pennies. Why isn't Representative Henry Waxman (RAT-CA) taking his massive nostrils and sniffing in the corners of the big RAT house, the Mouse headquarters at Buena Vista Street in Burbank? Could it be because Enron is headquartered in Texas, home to President Bush, and the big RAT house is headquartered in Waxman's home state? I have not heard of Senator Diane Freakandswine (RAT-CA) complain about the $43.7 billion dollar loss to shareholders and employees of Disney, have you? If Waxman took his nostrils to Disney, what would he find? In 1998, Mike Eisner sold $575.6 million in Disney stock. Since 12/31/98 Disney stock has fallen $16.5 billion dollars. Since that same time, Enron's stock has fallen $20.7 billion (as mentioned above, within 4 billion or 75% of Enron's loss--see footnote 3). So who does Waxman contact? He contacts Chairman Kenneth Lay of Enron saying ``you had already sold $40 million of Enron stock during 2001 and over $100 million since October 1998'' but he never questioned Eisner selling 5 times as much stock while Disney's stock proceeded to tank about the same value as Enron's over the same period. The table above shows that Cisco Systems lost more than 5 times as much as Enron from its peak until 1/11/2002. What is common to Cisco, Intel, Yahoo!, and Disney? They are all headquartered in CA. General Electric has their HQ in CT, home to Senator LIEberman (RAT-CT) and Senator Dodd (RAT-CT). General Electric lost more than 3 times as much as Enron for its shareholders and employees so why is there no finger pointing there? (footnote 6) JDS Uniphase, HQ in CA, has lost $161 billion—two and one-half times Enron's loss—for employees' 401k plans, for shareholders, and sobbing retirees. And, with a stroke of the pen, wrote off $30 billion dollars of goodwill from all their acquisitions, a record (until, that is, AOL-Time Warner the other day—HQ in NY—announced up to a $60 billion write off of goodwill, about equal to Enron's loss). Oh . . . wait a minute. NY is home to Senator SCUMBAGETTE (RAT-NY) and Senator Schumer (RAT-NY). That explains the silence. A lot of this Enron buzz rests on the fact that it is an 1] energy company and 2] that is is headquartered in Texas. You don't see the investigations going on in California where all the venture capital dealings took place and where the high-tech industry has their HQs. The losses to 401k plans and employee sob stories are more plentiful and have a greater magnitude than with Enron but Waxman wants to sniff elsewhere. Alan Greenspan happens to be "headquartered in Washington D.C." and the 5 trillion in stock market value loss since March of 2000 can be attributed in a large part to his raising of interest rates in 1999 and 2000 in the face of a pending slowing of the economy due to the post-Y2K unwinding. Where is the subpoena for Mr. Greenspan from Waxman's office? Even the RATs can figure out 5 trillion is a bit larger than 66 billion. Or can they? You know the "big pharmaceutical companies" Al Gore and the Rats like to talk about making all this money and not giving away the kitchen sink for free? Merck employees and shareholders have seen their stock value drop $48 billion dollars, more than half of Enron's. So much for Al Gore's next speaking gig. Why doesn't Waxman do some sniffing at Wall Street analysts? Some things never change. After these analysts had Yahoo! and Cisco and nearly all high-tech companies rated a strong buy or buy in March 2000, they proceeded to keep those ratings while those stocks got driven into the ground. More recently with Enron, same story. What about the crying over the employees 401k? It is quite common to force matching contributions into company stock so nothing unusual there. Many of these Enron employees were idiots by not seeking professional advice when it came to investment planning and chose to keep most of their "non-matching" dollars also in Enron. If they felt they were smart enough to choose investment options on their own, well—they have a right to be stupid. In addition, many of these people saw the value in their Enron stock soar and never sought professional advice on proper diversification. The loss figures the media sob stories will present will be from the peak, not from their cost basis. Let the investigation into Enron reveal what it may and it may indeed uncover some criminal activity. But it was simply the risk they took as a corporation that led them to desperate measures (if undertaken). Some companies are going to fail, and even those that don't, employees and shareholders of countless companies have far more massive losses than those at Enron. Eastern Airlines, K-Mart (soon to be) and countless high-tech startups in recent years took the risk with some passing and some failing. The difference is the high-tech failures by the thousands have their HQs in RAT-infested California where Waxman's nostrils don't sniff. But, he can smell oil and gas from as far away as Texas. So far, the biggest culprit in the Enron mess is not the company, but the Big Five firm Anderson. It was financial problems that nailed the coffin, and Anderson, besides shredding documents, was there right along. Management can make bad operational decisions, but the accounting firm should have prevented the financial screw-ups. Oh . . .wait a minute. Anderson has their HQ in RAT-infested Chicago, the stomping grounds of Jesse Jackass. Maybe Jesse did one of his corporate shakedowns with Anderson and the RATs don't want to go there. Look for the sob stories to flood the airwaves soon with the leftist media making sure many interviews are done in Texas so Dan and Tom can repeat "now reporting from Texas . . .". Charles Prestwood is a retired Enron Employee and he told the Senate Commerce Committee last month he lost over $1 million and said "the rank and file got burned." Well, there has been a lot of "burning" going on in California at the Mouse HQ, at Yahoo!'s HQ, and at many others but until Waxman pumps a case of Sinex Nasal Spray up those massive nostrils, he will not smell the smoke. SENTRYNotes: 1. Peak value dates: CSCO 9/1/200; INTC 8/23/2000; GE 8/28/2000; YHOO 1/3/2000; ENE 8/23/2000; DIS 4/28/2000. Value at Peak and Value Today in the table are from these dates to 1/11/2002. 2. Shares outstanding were kept constant using latest share totals. CSCO 7.3349 billion; INTC 6.712 billion; GE 9.9328 billion; YHOO 569.6 million; ENE 743.9 million; DIS 2.0386 billion 3. DIS on 12/31/98 price $30.00; ENE on 12/31/98 28.53. The $22 billion difference between DIS and ENE in the table is peak to current. The $4 billion difference is from 12/31/98--after Eisner's stock sale. 4. Data from corporate annual reports, historical prices from Zachs.com and BigCharts.com. 5. Eisner's sale of stock was from accumulated stock options. His salary now is in the $1 million range and with his bonus of $8.5 million had total compensation in 2000 of $9.3 million. He still has about $266 million in options. 6. Author's note and opinion: CSCO, INTC, and GE happen to have some of America's finest and most respected management teams. The massive losses in market cap are not a reflection on the management but resulted in part from Alan Greenspan's assault on interest rates and Greenspan's assault on the free enterprise system by raising interest rates in the face of an impending post Y2K slowdown. For more on the hideous moves of Alan Greenspan, read Issue 12 of Sentry Over America in the article Pull a Reagan, Mr. President.
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Copyright © 2002 Sentry Over America
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