Misery Index

John Mullen, Global CEO of DHL Express stated, "Making a decision that affects the lives of many dedicated employees is never easy, but this is the best path forward for our company."

Sherrod Brown, (D-OH) wants quick action on federal aid to retrain workers and provide other help for the thousands who lose their jobs and said he would press DHL to help Wilmington financially.  The city wants to purchase the airport and attract new business but needs help.  "DHL really owes something back to the community, to say the least," Brown said.  "I'm hopefully that it will be a good citizen and turn over the air park with some subsidies."

Hubs in Allentown, PA, and Riverside, CA, are also scheduled to close, as well as 18 regional sorting centers.  The move is expected to reduce operating costs to less than $1 billion, from $5.4 billion.

Now one is going to have  to rely on UPS or FedEx for package deliveries.  If I had anything shipped by DHL, it was on time, delivered at my door and undamaged.  UPS and FedEx deliveries never stop, don't leave a note, and just throw it in a package room, for me to call them three days after it is due to find its already been delivered, but not to my address, but has my signature, and the package is crushed.  Or to find out that it's been misrouted and will be delayed 2-4 days, and again is never delivered to my door, a note is never left, yet its been "delivered" to my address, with my signature, yet its sitting in another building in a package room.  Happens every darn time.

SOURCES:

• DHL Press Release
• Houston Chronicle
• The New York Times via Daily Advance
• Wilmington News Journal
• Dayton Daily News

As part of the cost-cutting measures, ABC News will be canceling all of its magazine and newspaper subscriptions, will not be throwing any holiday parties, and will be scaling back on travel accommodations for executives.

The Media Networks Group includes ESPN, Disney-ABC Television Group, Disney Channel, ABC TV, ABC Family, ABC Studios, Disney ABC Domestic TV, and Radio Disney.

Here's the e-mail:

"We report every day on the economic climate and the effects being felt throughout the country.  We are not immune from the downturn.  At the same time, the importance of the election and economic stories reminds us how much we have to do to help our audience absorb and understand what is going on around them.  What we need to do - and will do - is to make sure that we have all the resources we need to cover the news.

To that end, we (together with the rest of the Media Networks Group) are adopting the following, new guidelines to reduce some of our administrative costs.

1. All executives are asked to fly one grade below what they're entitled to.  Some have contractual provisions on air travel, and the company is not breaching any contracts.  But we are being asked to use our discretion on this.
2. [Missing]
3. All executives are asked to stay in "B" level hotels.  I'm told that Travel knows what this means.
4. Starting immediately, the only business meals for which we will be reimbursed are those with third parties.  Any meals (or drinks) with ABC or Disney employees will not be reimbursed.
5. All non-production (i.e. administrative) travel must be pre-approved by the CFO (in our case, Jim Hedges) in writing.  Your finance and operations people can help you with this.
6. As of December 1, we will cancel all subscriptions (newspaper and magazine) for executives and production employees and more them to on-line.  This change will have the added benefit of helping the environment.  If there are particular circumstances where you believe this will materially impair your ability to get your work done, you should make your case to yore executive producer or supervisor by November 15th.  Dave Davis, Kate O'Brian, and Paul Slavin will review these requests and submit recommendations to me.
7. We're asked to keep any convention or conference attendance to an absolute minimum.  Anyone who attends things like NAB or RTNDA, we need to have a conversation.  If someone needs to attend, it will be a skeleton crew.
8. We'll forego all holiday parties this year.  This means that the company parties in LA, NY and DC are canceled.

Thanks again for your understanding and cooperation.  I won't pretend that this won't be difficult.  But, I truly believe that there is a way for us to do this together that will result in a stronger ABC News.

Additionally, in an internal memo titled "new wardrobe guidelines" according to MSNBC [Define irony.  NBC reporting on ABC.], budget cuts are taking place at some of ABC's biggest primetime shows.  That memo outlines the "maximum allowable spend" for categories of clothing for each character.

No more than $150 may be spent on men's or women's accessories; no more than $250 on a pair of women's shoes (only $200 for men's shoes).  Handbags should cap out at $300 and men's suits at $1,500.  Note however, there is no "guideline" for women's wardrobe.

A representative for ABC, Charissa Gilmore, says that the memo is nothing more than a guide.  "Probably everyone is looking at costs," says Gilmore, "and there are guidelines for every single department."  Gilmore also states that the cost allotted are just suggestions.  "All of our people can go over.  If someone argues that we need red-soled (Christian Louboutin) shoes to show that Lucy Liu is the power attorney (on 'Dirty Sexy Money'), then she's going to get them.  It's about making smart decisions.

"One Price Promise assures CC shoppers that they will be treated fairly and equally regardless of how they shop with us," said Jeff Maynard, vice president, marketing at Circuit City Stores, Inc. in a press release. 

"We plan to let consumers know about One Price Promise in a big way," added Maynard. "We are launching an aggressive national advertising campaign that includes print, broadcast, Internet and in-store marketing tools..."

Yesterday however, Circuit City according to the Wall Street Journal, is considering a plan to shut down at least 150 stores and cut thousands of jobs to avoid filing for bankruptcy protection.  By shutting the stores, CC hopes to liquidate about $350 million in inventory, which it could use to pay off certain real-estate costs and pressure existing landlords to renegotiate some leases many of which CC regards as overpriced.  Of CC's $3.98 billion in off-balance sheet obligations related to operating lease commitments, more than half is tied to leases with more than four years remaining and about 80 are for vacant locations.

In the meantime, CC's advisors are doing what they can to line up additional financing, but so far lenders have shown little or no interest at all.

Seems that CC has hired the same firm that oversaw Kmart's Chapter 11 reorganization, as its bankruptcy counsel.  If Circuit City would file, it would make it the largest retailer to enter bankruptcy protection in several years, said the WSJ.

CC has also hired FTI Consulting to help the company devise a turnaround plan.  FTI has advised on several troubled retailers, including Bombay Co and Winn-Dixie Stores.

They have also hired investment bank Rothschild Inc. to guide talks with banks in hopes of securing emergency financing.

"We're not going to speculate on rumors and comment beyond our original statement," said CC spokesman Jim Babb in a response to an emailed question by Market Watch.  The company's management team, board of directors, and its strategic financial advisers are conducting a "comprehensive review" of all aspects of its business to determine the best methods of accelerating its turnaround and delivering substantially improved operating and financial performance, the company said in a written statement.

"While we would appreciate [Circuit City] for its attempt to stay solvent, we remain highly pessimistic on holiday sales and on consumer spending in 2009," said S&P Michael Souers.

As of Aug 31, CC had 714 stores in the U.S> and 772 stores and dealer outlets in Canada, employing about 45,000 people.  Share of CC fell 2.6% to $0.38 a share yesterday afternoon, erasing earlier gains and wiping out 91% of their value this year.

Perhaps bargains will be found for Christmas via CC.  Remember, your TV needs to be digital soon!  And perhaps CC is "banking" on this to help them out of their hole however, I don't think it's going to happen.

And if they do a go out of sale, chances are Gordon Brothers Retail Partners, who were responsible for the liquidation of CompUSA, Sharper Image and Tweeter will almost certainly buy what's left or at least get hired to run the "Clearance".  Gordon Bros has a reputation of increasing prices, and then discounting and also shipping out all the good items before the clearance sales even begin, leaving nothing but high price junk to sell.

And I wouldn't even "think" of purchasing an "extended warranty" on anything bought there now, as if I would ever recommend purchasing an "extended warranty" from CC anyway.  Which brings up a question, if CC goes bankrupt, and if you purchased an extended warranty from CC, what happens then?

And we as consumers are left with only Best Buy to monopolize the market.

And recently Mad Magazine did a parody of a Circuit City advertisement, needless to say, a higher up demanded that all issues of Mad Magazine in store on the racks be destroyed.

PELOSI:  This is Herbert and Marion Sandler.  Tell us your story.

HERBERT:  My wife and I had a company which aggressively marketed subprime mortgages, and then bundled them into securities to sell to banks such as Wachovia.  Today, our portfolio is worth almost nothing - though at one point, it was worth close to $19 billion.

PELOSI:  My God.  I am so sorry.  Were you able to sell it for anything?

HERBERT:  Yes, for $24 billion.

PELOSI:  I see.  So in that sense, you're not so to speak, actual victims.

HERBERT:  (chuckling):  Oh no.  That would be Wachovia Bank.

MARION:  Actually, we've done quite well.  We're very happy.

HERBERT:  We were sort of wondering why you asked us to come today.

MARION:  Anyway, it's delightful to see you, Nancy. (Kisses Pelosi.)

HERBERT:  And thank you, Congressman Frank, as well as many Republicans for helping block Congressional oversight of our corrupt activities.

FRANK:  Not at all.  [...]

The real life Sandlers, who use their wealth to finance a variety of nonprofit organizations such as the Human Rights Watch, the American Civil Liberties Union (ACLU) and ACORN,  are infuriated over the skit. 

Sandler, 77, spoke to the Associated Press in the San Francisco office of his family's charitable foundation the morning after NBC's "Saturday Night Live" broadcast a skit deriding the Sandlers as predatory lenders who had duped unsophisticated borrowers and Wachovia, too.  A caption shown during the sketch skewered the Sandlers as "people who should be shot."

Although the timing of the interview was coincidental, Sandler was seething after watching a replay of the skit on the Internet.

"I have been listening to this crap for two year," Sandler said.  "We are being unfairly tarred.  People have been telling us to speak out for some time, but we didn't think it was appropriate.  That was clearly a mistake."

The video was re- released by NBC with the statement above in red being removed from the newly posted NBC video.  Additionally during the skit,  the statement of "People who should be shot" that was shown below as a footer, was also removed.

On October 5th, a Los Angeles Times article addresses the issue of the removal of the video and a response from NBC.

The skit, a parody of a C-SPAN news conference, ridiculed subprime borrowers, housing speculator and Herb and Marion Sandler, the real-life couple who built Golden West Financial into a subprime lending powerhouse and sold it to Wachovia before the subprime collapse.  At one point in the skit, the Herb Sandler character says he made $24 billion off the subprime boom.  Graphics then appear labeling the Sandlers as "People who should be shot."

"Upon review, we caught certain elements in the sketch that didn't meet our standards," a spokesman for the program said in an e-mail message today.  "We took it down and made some minor changes, and it will be back online soon."

Ed Lasky recently reported on how the Sandlers - allies of left-wing billionaire George Soros - helped bring down Wachovia Bank:

Herbert and Marion Sandler, a New York lawyer and Wall Street analyst respectively, bought a small California thrift in 1963 and built it into GDW - one of the largest thrifts in the nation.  The company's business was built on adjustable rate mortgages (ARMs).  These were mortgages offered at low "teaser" rates that ratcheted upward as interest rates increased.  They were often sold aggressively to unsophisticated home buyers who did not comprehend the vast financial risks they were taking, or who assumed that housing prices would rise high enough to provide a profit to them when they sold their houses.  They were targets for lenders peddling mortgages that should have been stamped with a skull and crossbones, for these were among the most seductive and dangerous types of mortgage.

This book of business is the core reason for Wachovia's current difficulties.

The Sandlers knew their business far better than any other person could.  Not only were they the founders and major owners, they famously ran the company as a husband and wife team for all these years.

So why did they happen to cash out at precisely the right time?  Did they see the handwriting on the wall, realizing the massive risks inherent in the mortgages they originate throughout one of the most overheated real estate markets in the nation's history?  They are not talking, but when smart people cash in some of their chips, it's rarely a good time to bet against them.  Nevertheless, Wachovia bet 24 billion dollars and lost big time.

The collapse was primarily caused by the GDW purchase, which became an albatross around Wachovia's neck soon after the purchase.  "Wachovia found itself in ARM's Way" was the headline  of a recent Wall Street Journal article.  A huge percentage of these Wachovia ARMs were made to deep subprime borrowers with very poor credit scores.  Most of these were "inherited from its ill-timed acquisition of Golden West" at the end of the housing boom in 2006.

The Sandlers have started to invest their billions of dollars politically, in the manner of George Soros, sugar daddy of many far-left wing groups and an early and prominent supporter of Presidential candidate Barack Obama.  Soros has developed an empire of so-called 527 groups, putatively independent political activists groups that have influence within the Democratic Party.  These 527 groups include the Center for American Progress, MoveOn.org, Human Rights Watch, Media Matters and a slew of other like-minded groups...

Soros, Lewis and the Sandlers form a core group of billionaire activists and Democrat partisans who have formed a group called The Democracy Alliance.  They realize that they could magnify their power by working in unison and tapping other wealthy donors to further their agenda

(the superb Boston Globe article “Follow the money” is a good primer on how money and 527 groups have come together to have a huge impact on politics in America).

The Democracy Alliance is a major avenue to help them achieve their goals. The roster of its growing membership consists of a list of billionaires and mere multi-millionaires who collectively hope to give upwards of 500 million dollars each year to further promote a left-wing agenda. A partial roster of the Democracy Alliance membership can be found here.

Half a billion dollars a year can purchase a great deal of influence.

The Sandlers certainly know quite a bit about leverage from their savings and loan days.

Among the beneficiaries of their largesse: Air America, ACORN (a group that has very close and long lasting ties to Barack Obama and has a long history of engaging in voter fraud. Citizens for Responsibility and Ethics in Washington (basically a private detective group focused on the private faults and foibles of Republicans), Media Matters, a media watchdog group that engages in harsh partisan attacks against media figures and articles it considers supportive of Republicans). The list goes on and on.

They are not merely out to elect Democrats, but to also permanently realign U.S. politics and shift our society and culture in a far-left wing direction…

The website snlbailout.com, has followed the updates on this video, and hosts the original unedited video on their website and the edited version or just the portion of the video that was eventually edited, in unedited format.

Michelle Malkin has a transcript of the original skit on her website.

Yahoo & Microsoft

Microsoft has denied reports CEO Steve Ballmer believes a Yahoo deal could still be on the cards.  "Our position hasn't changed," the company said in a statement.  "Microsoft has no interest in acquiring Yahoo; there are no discussions between the companies."  The comment follows media reports Ballmer told Gartner ITXpo conference attendees the Windows maker might still pursue some form of search tie.   

Ballmer had gone on to remark that "We offered $33 bucks (for Yahoo) and it's $11 today.  It's clear Yahoo didn't want to sell.  They probably still think it's worth more than $33 a share."

"I still think it makes sense for their shareholders and ours."

Meanwhile Yahoo has declined to comment on Ballmer's statement even though its shareholders are hoping that Microsoft may return to the negotiating table.

Yahoo's shares have lost more than half of their value since the company rebuffed a $33 per share, or $47 billion, takeover offer from Microsoft.  On Friday, the shares closed at $12.90.  The company is currently valued at $18.6 billion compared to the $47 billion originally offered by Microsoft in January.

Domino's additionally said it will save its cash and potentially make loans directly to its franchises.   And although the pizza company doesn't need access to that cash for day-to-day operations, the fact that it's likely no longer available could hamper long term plans such as stock buybacks.

Like other pizza sellers, Domino's has faced weak domestic demand and higher costs for items like cheese and wheat.  At the same time, U.S. consumers are more likely to make meals at home to save money due to unemployment, and higher food and fuel costs.

Revenues fell 4 percent to $323.6 million.  Sales at U.S. restaurants open at least one year fell 6.1 percent, overshadowing international same-store sales, which rose 5.4 percent.

Domino's said the company may not be able to meet its 2008 growth plans for 200 to 250 stores, and that Domino's expects to close more than the 50 to 75 U.S. stores it had originally planned to shutter this year.

Earlier this year, Domino's assigned 'F' grades to 247 operators, who were put on notice to improve sales or have their operations taken over.  Since then, 111 are trying to improve their stores, while 75 are in the midst of selling their operations.  Some 47 have already been removed from the system and 14 more are still weighing their options.

On Tuesday, shares of Domino's sank 26%, or $2.55 to finish at $7.45.

Of course maybe it would help Dominoes business in the U.S. if they wouldn't resort to calling the phone number you give when you order pizza to tell you specials [The Consumerist], or leaving specials in Ziploc bags weighted down with rocks [The Consumerist], or maybe actually honoring their coupons [The Consumerist].+

I miss the Noid.

SOURCES:

• Guardian UK
• Wall Street Journal
• MLive
• Forbes
• RTT News