Category: Big Business

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Let Them Eat Tort

(here’s the From the Editor column from my magazine this month)

Sometimes, writing this column requires compulsive news-trawling, and my paranoid-detective method of reading people’s quotes. It can be a painstaking process, involving market and biographical research, trend analysis, and interpretations of government health statistics. And sometimes there’s a Vioxx trial, in which case this column pretty much just writes itself.

Recently, Merck won a federal Vioxx suit in New Orleans. The plaintiff, Robert Smith, took Vioxx for four months and suffered a heart attack. Or we could say that Mr. Smith was obese, had high blood pressure and atherosclerosis, took Vioxx for four months, and suffered a heart attack after shoveling snow for nearly an hour. After the verdict, Merck’s lead lawyer on the trial, Philip Beck, commented, “Unfortunately, Mr. Smith would have suffered a heart attack whether he was taking Vioxx or not.” After a few hours of deliberation, the jury agreed with Mr. Beck.

But that’s not the part of this trial that so lends itself to my mean-spirited but occasionally entertaining tirades. No, that honor is reserved for Mr. Smith’s lawyer, Christopher Seeger, who is the plaintiffs’ co-lead counsel for federal Vioxx suits. According to the Reuters report for the trial verdict, Mr. Seeger didn’t exactly put his heart into this one:

“This was a defense pick. . . . It was an impossible case to win going in,” said Chris Seeger, . . . referring to the process of selecting which lawsuits go to trial.

He said Merck could have settled the suit for far less than the $10 million to $15 million it cost them to take it to court, but the company’s “scorched earth strategy” leaves no room for such calculations.

Got that? Provided his definition of ‘impossible’ is the same as mine, it would seem that Mr. Seeger, who co-represents 39 law firms across the country in federal Vioxx suits, pursued a case that he knew he had no chance of winning. From that second quoted paragraph, I infer that he pushed this ‘impossible case to win’ because he wanted to get paid off by Merck to make Mr. Smith go away. A shakedown like this would embarrass the mafia, but it seems that Mr. Seeger and the 39 law firms figure that enough of these $10–$15 million price tags for victories (could it really have cost Merck that much?) will lead Merck to start settling, which will bring them contingency fees without the risk of going to trial. Merck, on the other hand, seems to have the mindset that forcing the Contingency Corps to walk away with empty pockets will cause the ‘impossible cases’ to go away on their own. And that might be the biggest tort reform of all.

While I think there is a benefit that comes from trial lawyers’ discovery processes, I have to wonder about the ethics of a person who told Robert Smith, “You may be entitled to compensation from Merck!” Scorched earth, indeed.

Gil Roth
Editor

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They call him the Gambler

In honor of Kenny Rogers’ sterling performance in yesterday’s MLB playoff game against the A’s (but let’s not forget Kenny’s run in the 1996 playoffs for the Yankees, where he managed an ERA of 13.13, even though the Yanks won every game he started), the official VM wife offers us the following quote from Rep. Barney Frank, following Congress’s idiotic passage of a bill banning internet gambling:

If an adult in this country, with his or her own money, wants to engage in an activity that harms no one, how dare we prohibit it because it doesn’t add to the GDP or it has no macroeconomic benefit? Are we all to take home calculators and, until we have satisfied the gentleman from Iowa that we are being socially useful, we abstain from recreational activities that we choose? . . . People have said, ‘What is the value of gambling?’ Here is the value. Some human beings enjoy doing it. Shouldn’t that be our principle? If individuals like doing something and they harm no one, we will allow them to do it, even if other people disapprove of what they do.

Well said, Rep. Frank, no matter what Dick Armey calls you.

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Nothin’ stupider than a man chasin’ his OS

Both BizWeek & the NYTimes run interviews with Microsoft bigwig Steve Ballmer this week. I’m not sure why there’s a PR push just now. Maybe it’s due to the impending release of the new version of Windows, but that’s still months off. Could be to get the business world’s attention away from the Google guys, I guess.

Anyway, the interviews both have points of interest. The BW piece centers on the high valuations for recent transactions (Google buying YouTube, News Corp. buying MySpace, and FaceBook talking a minimum of $1 billion to sell). Ballmer seems to be saying that these businesses just aren’t worth it, and might be hinting that we’re heading to another dot-com bust. (But he hedges his bets by saying that MS might just pay such high prices, depending on the circumstances.)

The BW interview also addresses questions about Microsoft’s play into consumer electronics, via Xbox and Zune. Several years ago, there was an article in Wired about how Microsoft was rewriting the outsourcing equation by not manufacturing any of the components for the Xbox. The model worked so well, MS was losing about $100 on each Xbox sold. Bang-up job. (With the new Xbox, launch costs led to a $1.26 billion loss in fiscal 2006. Given MS’s cash & equivalents of around $48 billion, this isn’t a huge hit, but it’s still pretty amazing.)

The NYTimes interview focuses a lot more on the new version of Windows, which is the unsexy part of the MS business. The interviewer seems intent on proving that MS won’t be able to sell an operating system after this generation, since we’ll all be downloading bits and pieces via them thar interwebs or something. Ballmer tries to explain gently that this won’t be the case:

Q. Doesn’t that mean that software product cycles are going to be much shorter, months instead of years?

A. Things will change at different paces. There are aspects of our Office Live service, for example, that change every three months, four months, six months. And there are aspects that are still not going to change but every couple of years. The truth of the matter is that some big innovations — and it’s a little like having a baby — can’t happen in under a certain amount of time. And, you know, Google doesn’t change their core search algorithms every month. It’s just not done.

I bring this stuff to your attention for two reasons. First, even though this seems like boring business-stuff, it actually is going to have an impact on how you use a computer on a day-to-day basis in the years ahead. As ‘regular’ readers know, I’m interested in how businesses work, and what their choices indicate about the way they perceive their markets. Ultimately, it helps me understand the way they perceive the end-user, providing me with yet more perspectives on human psyches, and what people think we’ll spend money on.

The second reason for this post is because there’s a Miller’s Crossing moment. It comes in the Times piece, when the interviewer asks how the company’s getting along since Bill Gates announced his departure in 2008.

A. With Bill Gates making the transition out of day-to-day involvement at Microsoft, what is the biggest challenge you have to overcome?

Q. Well, there are sort of two. First, it’s not like Bill’s written every line of code or designed every product or done anything like that for many, many years. But Bill’s been an incredible contributor. If Office 2007 is a great product, give Bill 3 or 5 or 10 percent of the credit. We have to make sure that — whether it’s 5 or 7 or 10 percent — we get those values someplace else. And second, with Bill people have understood that we’re committed to long-term innovation. Bill’s been emblematic of that. We’ve shared that vision all along the way. But I think I have to pick that up. Because people want to know that the buck-stops-here person is committed to continuing to invest and do things.

Maybe it’s because of his shiny dome, but all I could think of was how much Ballmer delivering that answer in the style of Johnny Caspar’s “Leo ain’t runnin’ things!” rant.

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F-books

“The market for downloadable books will grow by 400 percent in each of the next two years, to over $25 billion by 2008,” predicted the keynote speaker at the 2001 Women’s National Book Association meeting. “Within a few years after the end of this decade, e-books will be the preponderant delivery format for book content.”

This NYTimes lede serves double duty: it sets up a review of Sony’s new e-book and provides more proof that women should never talk about technology.

(Sorry, Carly)

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You’re IT!

This conversation from BusinessWeek explores the question, “Does IT Matter?”

This article from BusinessWeek about the software problems leading to Airbus’ $6.1 billion wiring problem answers the question pretty handily, I think.

Both of our flights for this trip were on Boeings (767-200 and 757-200), and they were pretty smooth, except for the hydraulic problem I mentioned for yesterday’s flight home. When we touched down, I said to Amy, “Well, I guess the hydraulics worked, huh?” She joked that, when we looked back from the jetway, we’d notice that the plane had flat tires.

Followup: Airbus’ CEO quit after 100 days on the job, because he couldn’t get authority to make the sweeping changes. What’s BW say today?

The debacle has exposed a fundamental Airbus flaw. Far from the smooth-running pan-European group depicted in its public relations, its units in Germany, France, Britain, and Spain remain surprisingly balkanized, each clinging to traditional operating methods and cross-border jealousies. “It is still, in part, a juxtaposition of four companies,” Streiff [the departing CEO] told the French newspaper Le Figaro in the only interview he has given since resigning.

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Unrequired Reading

I promised some Unrequired Reading for a Friday morning, so here it is:

Jane Galt has a sad post about the economic destruction of Zimbabwae. There are some “interesting” comments after the post.

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Via Bookslut, a collection of covers from old Penguin and Pelican books.

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Ten YEARS of South Park?! Man, I’m getting old.

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It’s Ramadan. Don’t be a jerk.

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What’s organic?

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Mark Cuban talks balls.

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Ron Rosenbaum on William Kennedy, Hunter Thompson and the America’s Cup.

Bonus: Ron on the Dunkin Donuts Coffee Roll.

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Made it!

Maybe (?) it’s dweebish to take pride in being able to help put on a good pharmaceutical outsourcing conference, but it’s an awfully good feeling when an event works out as well this one has.

The first day of the event is the more stressful one: We had 130 companies at the one-day tabletop exhibition and more than 300 attendees in the house for the conference sessions (between sessions, we had events in the exhibit hall, so the attendees could learn about the exhibitors and do business). It’s basically a four-person operation, with some day-of-show help from some of our office staff.

The buildup is pretty harrowing for us, knowing that more than 500 people are on site because of the strength of the brand 0f our magazine. But the big day was a rousing success. The exhibitors were ecstatic with the quality of the leads they were getting from the attendees, while the attendees loved the presentations we put together (I take a little more pride in that part, since this was the first year I was largely responsible for organizing the presenters and topics).

Anyway, I know this is coming off as a rah-rah horn-self-tooting, but I feel awfully good about how well it all turned out. Exhibitors were seeking us out at the cocktail reception after the show, to tell us they wanted to sign up for next year’s event now. It takes months of preparation that still leaves plenty of last-minute stress, and it’s a great feeling when everyone else is happy with the results.

Now, on to Paris, for a conference about 9 bazillion times bigger than this one.

(I’ll try to post some Unrequired Reading this afternoon, when I’m home.)

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Unrequired Reading: party like it’s 5767

Happy Jewish New Year, dear readers! In honor of Rosh Hashanah, this week’s Unrequired Reading features a bunch of Jewish-connected links and others that have nothing to do with Judaism.

First, we have Michael Totten’s interview with Yaacov Lozowick, author of Right To Exist: A Moral Defense of Israel’s Wars. He thinks neither of the Lebanon wars is defensible, and provides some good insights into the shifting emotional landscape of Israelis during the most recent war.

If the story about Israel’s use of cluster bombs in the war’s last days proves true, that oughtta get categorized as “really REALLY indefensible.”

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Johnny Knoxville isn’t Jewish , but he gets to celebrate our new year with his new movie’s debut. Here’s an interview with him and Jeff Tremaine, the director of Jackass Number Two.

On Howard Stern this week, Knoxville admitted that he got the idea for getting gored by a bull (watch the trailer) from watching a Tom & Jerry cartoon. We’ll probably see the movie tomorrow, along with a shopping expedition to the new Century 21 store in Paramus, and a White Manna run. Because we’re all about the gracious living.

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For its first season or two, The State was one of the funniest television shows ever (I seem to recall the last season completely melting down in attempts at absurdism that went nowhere, as it its wont). Even though every other series in the world has gone DVD, The State languishes in MTV vaults. Good news: the first season is getting released on iTunes’ video store!

I can legitimately tie this into this week’s Jewy theme because of the great skit in which the cast members were all asked to introduce themselves and make a personal confession, as a way of becoming closer to the audience: “I’m Michael Ian Black. My real name is Schwartz, but I changed it because I’m ashamed of being Jewish.”

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My buddy Ian’s not Jewish, but he IS a chief petty officer! Congrats! Check out the pix from the ceremony!

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Cory Maye’s not Jewish either, but there are probably Jews at the law firm that helped get him off death row, pending a new sentencing hearing. Here’s hoping it’s the first step to springing Maye from prison!

Oh, and the “informant” whose tip led to the botched raid that landed Maye on death row probably doesn’t like Jews. He sure doesn’t like black people.

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Rich people don’t always stay rich. Larry Ellison is Jewish, and he spent a ton of money, but he managed to stay rich:

A raft of e-mail messages and financial documents introduced in a lawsuit that disgruntled shareholders filed against Mr. Ellison and other Oracle executives in 2001, give witness to some of Mr. Ellison’s budgeting practices. (The suit was settled last November and the judge in the matter subsequently unsealed financial documents submitted as exhibits in the case). The documents, first reported by The San Francisco Chronicle earlier this year, also show how far Philip E. Simon, an adviser who described himself as Mr. Ellison’s “financial servant,” went in trying to persuade his boss to pay off about $1.2 billion in loans. (Neither Mr. Ellison nor Mr. Simon responded to interview requests for this article).

Mr. Ellison’s ledger around the end of 2000 included annual “lifestyle” spending of about $20 million, the purchase of a Japanese villa for $25 million, a proposed underwater archeology project earmarked for $12 million and his new yacht, budgeted at $194 million (news reports later said that the yacht’s final cost approached $300 million).

“I know you view me as a pessimist,” Mr. Simon wrote Mr. Ellison in an e-mail message in 2002, several months after banks began sounding alarms about Mr. Ellison’s debt. “Maybe you’re right, though I would disagree. Nonetheless, I think it’s imperative that we start to budget and plan. New purchases should be kept to a minimum. We need to establish and execute on a diversification plan to eliminate (yes, eliminate) all debt and build up a significant, conservatively structured, liquid investment portfolio.

“I know you don’t like to discuss this,” Mr. Simon added. “I know this e-mail may/will depress you. View this as a call to arms.”

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During my previous visit to Paris in 2002, I visited some of the monuments and shrines that commemorated the Jews that France shipped out for the camps. There’s plenty of other stuff for us to do this time around, as this BW slideshow sez.

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Sven Nykvist wasn’t Jewish, but he was the cinematographer on several Woody Allen flicks, including one of my favorite movies: Another Woman. (Also, he had an affair with Mia Farrow pre-Woody, which makes their subsequent collaborations just plain weird. On the other hand, Amy & I had exes perform the readings at our wedding, so hey.) He died last week after a long illness.

A few weeks ago, Amy was looking through our Netflix queue, and asked, “What is Light Keeps Me Company and why is it in our queue?”

Yes, she married someone who’s interested in seeing a documentary about a cinematographer. All I can say is, like Rembrandt, Nykvist’s work taught me new ways of seeing light. Rest in peace.

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Tiki culture: something that could bring all the world’s faiths together. Except the ones that prohibit drinking, I guess.

Yo-ho-ho and l’shana tova!

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Unrequited reading

Sorry to be writing less frequently, dear readers. I’m in the midst of a work-crunch of monumental proportions. Gotta finish a giant issue of the magazine by next Wednesday, then help put on our annual conference & exhibition Thursday and Friday, then get on a plane Saturday for a chemical ingredient conference. On the doubleplusgood side, said ingredient conference is in Paris, and my wife’s coming along for the trip.

On the down side, the book I just started, Witold Rybczynski’s City Life, is boring me silly, so I may have to drop it. I enjoy WR’s architecture articles on Slate, but the first 50 pages of this book have been pretty dull and pedantic, especially the second chapter’s extended take on how population size does not say much about the importance of a city. Again and again.

Fortunately, Amazon is about to deliver my copy of Shakespeare Wars, the new book from Ron Rosenbaum. Unfortunately, I don’t want to carry a 640-page hardcover with me overseas. So why don’t you suggest a book for me to read, already?

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Unrequired Reading

I’ve decided to make Unrequired Reading a regular post on Friday mornings. It’ll consist of the same stuff I was posting at random in the past few weeks. Which is to say, thanks to the miracle of RSS feeds, VM goofs around online so you don’t have to.

As my friend Mitch put it, “You know you’ve bottomed out when Bobby Brown says you’re an unfit mother to his children.”

(It’s Mother’s Day, not All Everybody Day!)

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Here’s a slideshow about Jonathan Ive, the design guru at Apple.

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10 Highly Pretentious Musical Instruments

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You stay classy, Cleveland.

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You are your Netflix Queue.

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Visiting Kandor?

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Firing tons of people — even Japanese people — does not automatically make you a success. I can’t stress this enough. Restructuring by “cutting fat” is fine, but it doesn’t necessarily put a company in the position to succeed in the future. Carlos Ghosn is trying to stay ahead of the game by allying with an American automaker and firing a ton of people.

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A wide-ranging (by my lights) interview with U of Penn Architecture Department Chair Detlef Mertins, author of a book on Mies van der Rohe.

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Paul Wolfowitz is running into trouble as president of the World Bank, due to his policy of not lending money to corrupt regimes.