A story in the latest issue of Fortune asks, "What's trendy on Wall Street"? Its answer: shell companies, or Spacs — special acquisition companies that go public for the sole purpose of buying other companies. Proof of Spacs' hotness is offered in the form of controversial clothier Dov Charney, who sold his company, American Apparel Inc., to a Spac in December. "His ad campaigns look more like nudie mags than the Neiman Marcus catalog," Fortune informs. "So it should come as no surprise that Charney has managed to take his company public using an edgy technique that, like some of his ideas, is fast becoming trendy."
Continue reading below
Becoming trendy? Maybe not. Like the grungy layers of last fall, this trend might have already come and gone.
According to a Feb. 12 story in The Wall Street Journal, blank-check companies (another name for Spacs), though having "achieved a tinge of respectability in 2006," are "unlikely to continue growing at the fast clip seen during the past two years." (In case you're wondering, The Deal ran its own Spacs-are-hot story nine months ago.) The piece isn't just anecdotal; it cites Dealogic data showing that Securities and Exchange Commission filings for blank-check offerings peaked in 2005 at 72 and that the backlog for new offerings is down 35% from the same point last year. Moreover, it notes that in recent months several Spacs have seen proposed acquisitions rejected in shareholder votes.
So much for Fortune's trend-spotting prowess. Meanwhile, Fortune and the WSJ collided again last week over Fortune's cover story on Zillow.com, which estimates home values. While Fortune gushed over "how Zillow is turning online voyeurism into a real estate revolution," the Journal bluntly asked, "How Good Are Zillow's Estimates"? The answer is often very good, but sometimes very, very bad.
Though the piece doesn't war with Fortune's thesis that Zillow is ushering in the Webification of real estate, it does answer the question that pops up for people when they read Fortune's opus — does Zillow really work? By doing that, it's sure to temper some of the hype that develops when a company that's barely a year old scores the cover of Fortune.
The media's appetite for the Maria Bartiromo story is nothing short of mind-boggling. Three weeks to the day that news of Bartiromo's flight on Citigroup Inc.'s corporate jet first surfaced, The New York Times on Feb. 12 produced yet another piece — its fourth — on the "scandal," complete with a large and glittery photo of the Money Honey partying with racecar driver Mario Andretti. The story's point appears to be that Bartiromo lives a glamorous life and that has been a boon to CNBC. Yeah, no kidding. The piece's "news" is that a CNBC reporter had gotten wind that the job of Bartiromo's Citi pal, Todd Thomson, was in jeopardy, "but some within the network say Ms. Bartiromo's role in the story prevented it from being fully reported."
Interesting? Yes. But hardly the smoking gun this scandal, now entering week four, continues to lack.
Talk about the pot calling the kettle black. The Times' Gretchen Morgenson on Feb. 11 went after one of the paper's favorite targets, Marty Lipton of Wachtell, Lipton, Rosen & Katz. Lipton lamented the rise of shareholder activists who are "destroying the role, focus and collegiality of the board of directors" and asked whether qualified people would stop serving on boards and whether directors would become so risk-averse that corporations would suffer.
"Those are both worthwhile topics for a reasoned, probing discussion," Morgenson allowed. "But the sheer desperation in Mr. Lipton's speech, called 'Shareholder Activism and the Eclipse of the Public Corporation,' subverted the more intellectually challenging elements of his argument, leaving what remained something of a rant."
Um, excuse us, but isn't "rant" pretty much what Morgenson does each week when she sounds off on executive pay, dealmaking or whatever she deems to be bad corporate behavior? When has she ever dealt with the "more intellectually challenging elements" of her arguments? Indeed, we were shocked to see her even admit that some of Lipton's questions were worthwhile. Maybe that's because Lipton recently concluded that the New York Times Co., itself under fire from shareholders, "appears to be employing state-of-the-art corporate governance procedures." It wouldn't be prudent for Morgenson to declare him a total dolt. — Yvette Kantrow
