Category: Big Business

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Creative Creation?

A few years ago, I wrote about the American Jobs Creation Act (here and here), a bill passed in 2004 that permitted U.S. companies to repatriate overseas funds at a reduced tax rate (essentially 5.25%). It was a one-time act, and made some sense, given that the U.S. has one of the largest corporate tax rates in the world (essentially 35%). The joke I discovered about “jobs creation” was that, in the pharma business, this act overlapped with the onset of massive layoffs in this industry.

Today, the NYTimes writes about the bill, how the amount of money that came back to the U.S. was 50% higher than government estimates ($312 billion to $200 billion), and how the tax revenues generated were six times higher than a congressional committee anticipated ($18 billion to $2.6 billion). It’s great that tax revenues got a big boost, but the it looks like the biggest “creation” was in the creative accounting department.

Companies were told by the government that the repatriated funds had to be dedicated to R&D, employment, and other “jobs creation”-y domestic investments. Of course, there was no provision stating that funds previously allocated to those needs couldn’t be shifted away to other activities.

“It basically worked out to be one big giveaway,” said Robert Willens, a tax and accounting authority in New York. “The law never took into account the fact that money is fungible.”

Mr. Willens said while companies did make investments in their domestic operations, the repatriated money also freed up a corresponding amount of cash to pay out to shareholders or buy back stock — moves that do not generate job growth or investments. “We know that a lot of stock was retired during this time,” he said.

While you read all about it, I’ll get back to last year’s financials and letcha know what neat accounting tricks I come across.

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Kindle, part 1

Ahoy, dear readers! I’m awfully busy at the BIO show in San Diego. But rather than leave you without your daily dose of my ramblings, I thought I’d post this e-mail I wrote a pal in response to his query of, “How do you like your Kindle?” I have more in-depth/conceptual points to make about the e-reader and its place in the market, but I figure this is a good starting point for that conversation. Enjoy:

I like the Kindle, but I’m a strange person. The screen is just fine for reading, and battery life hasn’t been an issue. Some people may have issues with the fact that all books are in the same typeface, or that they can’t tell how long a book is (there’s a row of dots on the bottom of the screen that show your progress in the book/article). I experienced that with Lord Jim, which I thought was a brief novel (Heart of Darkness length), but which I eventually realized was around 300 pages long.

The great advance is the Kindle store, which lets you buy books on the fly. On Sunday, at 5:30am, waiting at the gate in the Louis Armstrong Airport in Louisiana, I decided I’d like to read Netherland, the new novel by Joseph O’Neill. I looked it up on the store, bought it, and had it on the device within a minute. The store selection isn’t good enough for my oddball tastes (they have very few of the Pevear & Volokhonsky Russian translations, for example, sticking instead to the old Garnett or Maude ones), but for new(ish) books, it’s perfect.

Even better is the “try a sample” function, which sends the first chapter (approx.) of any book in the store to your Kindle. You can access the store either from the Kindle itself (kinda clunky, but fine when you’re not around your computer) or through your computer, since the Kindle is synched to your Amazon account. I can’t say enough about this sampling function. It’s similar to the 30-second samples you’d find on iTunes, but 30 pages is so much more worthwhile in figuring out whether a particular book is up your alley. Plus, the sample remains on your device; that is, it’s not a streaming, time-limited sample.

Pricing for new books is generally $9.99, with older ones much cheaper. There’s also a huge selection of public domain books at manybooks.net, formatted for Kindle. You can download those to your computer free (they accept donations), and then put them on the Kindle via USB. I picked up a bunch of classics that way, so I’ll never get trapped in a foreign country with nothing to read (you can’t access the Kindle store outside the U.S.). Last year in Milan, I got caught bookless after finishing books by William Gibson and Tom Stoppard, and the only bookstore I had time to get to had a minuscule English-language section, mainly of Penguin Classics. The upshot was that I finally read Middlemarch. Now, I’ll have a ton of choices waiting on the Kindle.

I don’t have to travel as much this year as I have in recent ones, but I’m still quite happy that I won’t have to lug multiple books in my carry-on anymore.

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It’s better to travel

My flight to San Diego was supposed to leave Newark at 7:30pm, but the terrible weather coming across the east delayed the inbound flight. I got wind of that early in the day, and saw the flight was pushed off till 8:53. Still, I got to the airport about 2 hours early, so I could avoid driving in the crappy weather. As I waited for the airport monorail, the departures board changed from 8:53 to 9:44. Sigh. Well, with the 3-hour gain, I wouldn’t be getting in too late.

I figured I’d spend some time in the Presidents Club, but it was warm, humid, and there were two-year-old twins running in circles around the place, screaming.

So I headed over to Gallagher’s for a nice steak dinner around 7:15, feeling I’d earned it. I made my order, and checked my iPhone for messages and e-mail. Why, there’s one from Continental! My flight is leaving at 7:45pm and I need to be at the gate!

I got up, grabbed my bag and my carry-on, and found my waiter. I said, “My flight might be here early, but I’m not sure. I have to run over to find out. I’m really sorry!” He told me not to worry about it as I hurried out; in his hands was a plate with my salmon appetizer.

I got to the gate, and found a lot of puzzled passengers. No one knew why we were suddenly listed as a 7:45 takeoff, especially since the gate indicated a 7:45 takeoff . . . for a flight to Las Vegas. Still, the main departures board had us listed at 7:45 and, since there was not a single rep from Continental at the gate, we waited.

Eventually, a stewardess walked up to the desk. We asked her what was up, and she said, “Well, I’m supposed to be working that flight to San Diego, and I don’t know why they just posted this time. The incoming plane isn’t here, so there’s no way we can be leaving at 7:45.”

The passengers, many of whom were biotech executives and scientists waiting to get out to SD for the big conference, were exasperated. Then the two-year-old twins showed up, with their parents and two more kids. One of the twins was well-behaved, but the other was screaming her head off.

I said to the stewardess, “Y’know, I was making my dinner order at Gallagher’s when I got that 7:45 notice.”

“Did you get to eat? Gallagher’s is great!”

“Nope. So, can you do me a favor? In the off-chance that they bring in another plane or something and decide to board us in the next hour, can you please give me a call on my cell and let me know, so I can get back here?”

“No problem!”

So, yes, on my first night away from my wife, I technically did give a stewardess my number.

With that, I headed back to Gallagher’s, and discovered that they’d kept my table for me, right down to the half-empty glass of water! I found my waiter, who said, “I didn’t think you’d be back! Let me get your salmon, and we’ll start your steak order.”

We added a G&T to the order, and I was a happy man. Even when the restaurant’s Muzak system decided to play James Taylor’s Fire & Rain. In an airport.

I headed back to the gate around 8:30 to check on the flight. It had changed back to a 9:44 departure. I’d been checking on Continental’s PDA page, which is an awesome idea, even though it showed me that I was #20 on the first-class upgrade list.

Around 9:15, we got word that the incoming flight had been delayed because of weather, and had been re-routed to Cleveland. It was going to arrive shortly, and would be brought over by 9:30, with a boarding time of 10pm. The board above the gate changed times to 10:13. As we got closer to 10, the time on the board changed to 10:25. Then it changed to “DELAYED” with no time of departure. That’s when we were informed that the plane had originated in Mexico City and thus needed to land at the B terminal and clear customs before getting towed over to the C terminal, where we waited.

When 11pm rolled around with no sign of our plane, passengers began calling their hotels to make sure their rooms were going to be waiting for them. I’d done the same early in the day, figuring on weather-delays. Of course, I didn’t figure on hitting 11pm with no set time of departure.

We were excited to see a plane roll up and passengers disembark, but one of the other stewards told me, “That’s not our plane.” They felt bad that the passengers were getting excited over this arrival.

Midnight eventually hit, and we were the last flight in our area of the terminal, except for an El Al flight to Tel Aviv, which was cordoned off from the rest of the gate area. They finally cattle-called us on to board, eschewing the Elite/everybody else split. The family with the two-year-old twins was ahead of me, and managed to block up the line for quite a while with clearing up the tickets for all of their family members.

Of course, the screaming one was in the row in front of me.

And, boy, could she scream. It took all the Xanax, gin, Bose noise-reducing headphones and illicit (we were below our cruising altitude) iPod use available to drown her out.

Fortunately, once we got off the ground, a stewardess asked me and the gentleman sharing my row (only two of us for three seats, thankfully) if we’d switch over to the exit row; the family of three there included a 13-year-old, which was against regs. We headed back, and passed the 5-hour, 40-minute flight in relative quiet, landing at 3:15am. The movie was Definitely, Maybe. I looked at it a little but didn’t listen in. I had two thoughts about it:

a) Abigail Breslin is adorable and I hope she has a long career ahead of her

b) Ryan Reynolds appears to have no interior life whatsoever. I have decided to call him Big Empty.

Then, touchdown! Since I had no checked luggage, all that was left was getting to my hotel and getting some sleep!

Not so fast, Mr. Roth! In fact, all that was left was finding a way to my hotel from the airport, since there was only one cab at the taxi-stand and no dispatcher.

I considered going all GTA and jacking a car, but realized I was in no shape to drive. This is rare for me, since alcohol, Xanax and loud music usually make me invulnerable to insight, but I knew I was flying on autopilot.

I decided to call my hotel (thanks, iPhone!) and ask them for their cab service’s number. Then I called the company and said, “Airport. Terminal 2. Late flight. At least 25 fares are standing on line. More coming out of baggage claim. Send help.”

And they did! I got to my room at 3:45am, slept(ish) for 5+ hours, and managed to get to the convention center in time to get my badge, set up our booth, and blow off tonight’s dinner plans with my coworkers.

Thanks for listening.

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Mobil Eyes

I didn’t take any pix yesterday when I went to NYC to interview an exec at Pfizer, but that doesn’t mean I didn’t see any neat stuff. In this case, I discovered the Mobil Building, a block or so southwest of Pfizer’s HQ. A gent named wallyg posted a neat pix of the building (and the nearby Chrysler building) over at flickr:

Photo by wallyg, who appears to have some other really wonderful shots up at flickr, too!

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Full circle!

I’ve long goofed that the Wall Street Journal’s standard headshot drawings look like they’ve been put through The Drew Friedmanizer. Today, the WSJ has a headshot by none other than. . . Drew Friedman!

That sad part of my “Drew Friedmanizer” reference is that Mr. Friedman hasn’t used his pointillist drawing style for more than a decade. But far be it from me to develop new material!

Anyway, the article is an interview with AT&T CEO Ralph de la Vega about his view of the future of wireless (centered on the iPhone, of course).

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Taleb and Taliban

I enjoyed this profile of Nassim Nicholas Taleb by Bryan Appleyard. I haven’t read his books yet, but I’m sympathetic to his notion that the radically unpredictable will trump your bitch-ass plans no matter how farsighted you think you are:

Last May, Taleb published The Black Swan: The Impact of the Highly Improbable. It said, among many other things, that most economists, and almost all bankers, are subhuman and very, very dangerous. They live in a fantasy world in which the future can be controlled by sophisticated mathematical models and elaborate risk-management systems. Bankers and economists scorned and raged at Taleb. He didn’t understand, they said. A few months later, the full global implications of the sub-prime-driven credit crunch became clear. The world banking system still teeters on the edge of meltdown. Taleb had been vindicated. “It was my greatest vindication. But to me that wasn’t a black swan; it was a white swan. I knew it would happen and I said so. It was a black swan to Ben Bernanke [the chairman of the Federal Reserve]. I wouldn’t use him to drive my car. These guys are dangerous. They’re not qualified in their own field.”

Reading the profile reminded me of a post I wrote about Ahmed Rashid’s book Taliban. I wrote

The book is also a product of its time, of course. One of the “problems” with Taliban is that oil was priced around $13/barrel in the years leading up to its publication. That fact was a key to his understanding of Russian and Iranian policy, and it’s completely understandable; who would even entertain the notion that oil would someday trade for 5x that price?

Of course, the black swan that I missed was that oil would soon trade for TEN TIMES that price. The profile is filled with some pretty neat anecdotes about the way our sophisticated models — especially the financial ones — can’t stand up to reality. Or, as Mr. Appleyard puts it:

He doesn’t make predictions, he insults people paid to do so by telling them to get another job. All forecasts about the oil price, for example, are always wrong, though people keep doing it.