Category: Business

Tribune Company Files

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So, one of the largest media companies in the world has filed for bankruptcy.

A lot of people will say that this shows how badly newspapers are hurting as a business, and they are wrong.

Sam Zell’s model was as follows:

  • Borrow lots of money to buy company.
  • Borrow lots of money to expand company.
  • Borrow lots of money to go private.
  • Attempt to maintain a positive balance sheet by gutting the product to cut costs.
  • Fail.

This is a model of someone who does not believe in the product. This is passenger rail in the 1960s, when the railroads decided that they could not compete, so they sucked money out of the operations in order to buy other things, and created a product that no one wanted to buy.

Wall Street has been demanding profit margins in excess of 25%, and you cannot do that and deliver a good product, so they achieve it for a while delivering a bad product, and people like Sam Zell talk about cutting the fat.

The only fat here is between Sam Zell’s ears.

So, Tell Me How You Really Feel

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A review of the Windows Vista™ successor beta, Windows 7:

So far, Windows 7 looks and behaves almost exactly like Windows Vista. It performs almost exactly like Vista. And it breaks all sorts of things that used to work just fine under Vista. In other words, Microsoft’s follow-up to its most unpopular OS release since Windows Me threatens to deliver zero measurable performance benefits while introducing new and potentially crippling compatibility issues.

Ouch, though some of the things that it breaks may very well just be the fact that it’s beta, but the final analysis, which uses some fairly deep level diagnostics to see how the OS works is that, “We can now say with some certainty that Windows 7 is in fact just a repackaging of Windows Vista – an “R2” release, to use Microsoft’s nomenclature on the Windows Server side of the house.”

The folks at Microflaccid still do not get it. They don’t need a software upgrade drop, they need rewrite.

Eclipse Aviation Files Chapter 11

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Well, first they missed a payroll, and noe Eclipse Aviation has filed for reorg under Chapter 11, but it also, “simultaneously announced an offer for the sale of its assets for a combination of cash, equity and debt to an affiliate of Etirc Aviation, its largest shareholder.”

It looks like there may be an auction, and they filed in Delaware (where else) to get Debtor in Possession funding.

Like I said, put a fork in them, they are done.

The Arbitration Industry is Hopelessly Corrupt

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Normally, this is the sort of crap I don’t give a damn about, specifically Dov Charney, CEO of American Apparrel, and his raft of sexual harassment lawsuits, but the machinations of this specific case show just how unbelievably corrupt this system is.

You see, Mr. Charney settled with one of his victims, and part of the agreement was that in addition to the money and a non disclosure agreement, that they enter into a “special” arbitration:

Los Angeles’ 2nd District Court of Appeal revealed in an unpublished ruling Oct. 28 that attorneys for Charney, CEO of American Apparel Inc., a public company known for its racy ads, had conspired with lawyers for former sales manager Mary Nelson. Both sides had agreed, the ruling says, to enter into an arbitration whose outcome was preordained to favor Charney, and agreed to a press release stating that Charney “never sexualized, propositioned or made any sexual advances of any nature whatsoever toward Mary Nelson.” Nelson, in turn, would get $1.3 million if she kept the settlement secret, according to the ruling.

The 2nd District, in an opinion authored by Justice Paul Turner, said that settlement — which never went through — would have raised “considerations of illegality, injustice and fraud.” The court also held that the purpose of the proposed press release “was to mislead journalists and the public.”

Of course this raises the obvious question:

The attempted under-the-table agreement raised some questions about whether JAMS Inc. arbitrator Daniel Weinstein — a retired San Francisco Superior Court judge and co-founder of the 20-year-old JAMS — had gone along with the ruse.

The answer is that it would have been impossible for him not to have known, of course, because of the precedent that they wanted used:

The appellate decision lays out the sham arbitration of the settlement. It stipulated that the arbitrator would absolve Charney of the sexual harassment claims based solely on his consideration of a California case, Lyle v. Warner Brothers Television Productions.

In that case, the California Supreme Court in 2006 reversed a lower court’s finding that a writer’s assistant on the television show Friends did not come up with enough evidence for a “hostile work environment claim” by contending that the writer used sexually explicit language during the writing of the show.

Any arbitrator, particularly one who is a retired Superior Court Judge, would look at the filings and think that one side was deliberately throwing the case. At that point, they would be required by legal ethics to notify the bar.

First A380 Super Jumbo With Standard Production Wiring Flies

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As many of you are aware, the Airbus A380 has a number of setbacks and delays on the way to production, primarily having to do with problems with wiring.

Basically, the wiring guys and the structures guys had problems interfacing with each other, and so EADS had to implement a new production standard, “Wave 2”, for the ramp up to full production.

What they have been shipping has had much more in the way of touch labor than they would have liked, and so has been much slower and more expensive.

Well, Airbus has now flown its first A380 constructed using their “Wave 2” production standard, which clears the way for full rate production.

(the picture is of a Wave-1 aircraft)

What Happens When Shipping Collapses?

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So the Baltic Dry Index, a measure of the costs of shipping bulk cargo, have have dropped to 826 points on November 5, down from its high of 11793 in May:

Put simply, the cost of shipping has dropped through the floor. Sending a tonne of iron ore from Brazil to China in early June would have set you back more than $100 (£62) per tonne, or around $15m per voyage. But freight rates have now dropped to only slightly over $10 per tonne, or just $1.5m for the 70-90 day journey.

As if that wasn’t dramatic enough, the drop in daily charter rates is even sharper. At the peak of the market, a 170,000-tonne Capesize bulk carrier was hired out at the eye-watering daily rate of $234,000. At the beginning of this week, it was $5,611 – a fall of nearly 98 per cent.

Obviously, shipping has not fallen 90%, but the world has gone from serious shortage of shipping capacity to serious surfeit of shipping in about 6 months.

While that is concerning as an indicator of economic activity, what might be more concerning is the likelihood that a significant portion of world shipping, may simply shut down completely, because they are unable to get letters of credit from financial institutions.

Letters of credit are essentially guarantees that once cargo goes out to sea, that the value of the cargo will be delivered to the purchaser, and like other forms of insurance, it’s becoming increasingly hard to get, and so there is unshipped cargo sitting on docks for want of a letter.

Free at Last! Thank God Almighty, We are Free at Last!

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McColo Corp. has been pulled off the internet.

It’s connectivity providers have disconnected it.

So, you don’t know McColo Corp.?

The servers are operated by McColo Corp., which these experts say has emerged as a major U.S. hosting service for international firms and syndicates that are involved in everything from the remote management of millions of compromised computers to the sale of counterfeit pharmaceuticals and designer goods, fake security products and child pornography via email.

But the company’s web site was not accessible today, when two Internet providers cut off MoColo’s connectivity to the Internet, security experts said. Immediately after McColo was unplugged, security companies charted a precipitous drop in spam volumes worldwide. E-mail security firm IronPort said spam levels fell by roughly 66 percent as of Tuesday evening.

(emphasis mine)

Hallelujah!!!!

They are STILL Having Fastener Problems?

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Boeing has delayed the first flight of the 787, again.

Not a surprise, considering the strike, but it appears that the work stoppage is only part of it:

Included in the assessment is a costly manufacturing error. Boeing acknowledges a need to reinstall slightly less than 3% of all fasteners throughout its production system.

I’m beginning to think that they should hire a Witch Doctor, and slaughter a pig to get the demons out.

Boeing Uses Labor Agreement as Cover to Trim Outsourcing

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So, we now see that Boeing will move more engineering and manufacturing in house after the debacle with its long-delayed 787:

Boeing has expected too much from major outsourcing partners and will take much detailed design work and some major production back in-house to avoid in future the troubles that have plagued its long-delayed 787 programme.

I think that some of the upper management will now say that they had to, because of the labor deal they cut with the IAM, as opposed to admitting that farming that much out to future competitors so as to reduce the initial investment, did not work, and transferred core competencies to the “partners”.

I think that the employment guarantees in the contract were a relief to management, because they had to bring this stuff back in, but admitting failure in an honest way would have meant some high level firings.

Also, toward the bottom, it appears that the SPEEA is feeling its oats with Boeing too, though I don’t expect a strike from them, they are engineers, who tend to be Randroid by nature.

Then again, I did not predict the last time, when they did go on strike, so YMMV.

Live and Learn: The Insane Makes Sense In Rock and Roll

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We live in a strange world when the bizarre demands and moods of Rock and Roll musicians make sense.

In the first case, it’s the musician Prince, who for a while simply went by that symbol, and was referred to as, “The artist formerly known as Prince.”

What we all discovered when he dropped the affect, and went back to being “Prince”, was that this was one of the ways that he was attempting to wrest back control of his career from Warner-Chappell, and once the contract expired, he went back to using his name.

Then we have the case of Van Halen, who as confirmed by Snopes, required in their, “standard performance contract,” that they be, “provided with a bowl of M&Ms, but with all the brown candies removed.”

Again, when one looks at what Paul Harvey would call, “The rest of the story,” it’s a lot more than just a bunch of self indulgent rockers, as related by David Lee Roth in his autobiography:

Van Halen was the first band to take huge productions into tertiary, third-level markets. We’d pull up with nine eighteen-wheeler trucks, full of gear, where the standard was three trucks, max. And there were many, many technical errors — whether it was the girders couldn’t support the weight, or the flooring would sink in, or the doors weren’t big enough to move the gear through.

The contract rider read like a version of the Chinese Yellow Pages because there was so much equipment, and so many human beings to make it function. So just as a little test, in the technical aspect of the rider, it would say “Article 148: There will be fifteen amperage voltage sockets at twenty-foot spaces, evenly, providing nineteen amperes . . .” This kind of thing. And article number 126, in the middle of nowhere, was: “There will be no brown M&M’s in the backstage area, upon pain of forfeiture of the show, with full compensation.”

So, when I would walk backstage, if I saw a brown M&M in that bowl . . . well, line-check the entire production. Guaranteed you’re going to arrive at a technical error. They didn’t read the contract. Guaranteed you’d run into a problem. Sometimes it would threaten to just destroy the whole show. Something like, literally, life-threatening.

(emphasis mine)

So they had this provision to see if the proprietors of the arena actually read their contracts, because if they did not, there was a very real chance that things would go seriously wrong, and someone could get hurt or killed.

Live and learn.

South African Rooivalk Attack Helo Still in Limbo

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I always thought that this was a promising project, particularly in an COINS application, as the SADF had that as its primary duty before the end of Apartheid.

It appears that I was wrong and the Rooivalk program is a mess (paid subscription required).

Only 12 production helos were delivered, there are no prospects for foreign sales, and they have dissimilar avionics fits across the fleet, and they are now talking about, “revised functionality within the existing allocated financial resources,” which means downgraded capabilities.