Daily Archives: May 7, 2004

Redding cancels flight plan to New Orleans

Posted on by
Reply

Tim Redding finally pitched a game this season similar to the way he pitched last season as he led the Stros to a 5-3 victory over the Braves in Atlanta. Redding pitched six innings, gave up four hits, a walk and a run, which came on a J.D. Drew dinger. Relievers Backe and Miceli were a bit shaky in the seventh, but Lidge bailed them out again with an inning and a third of strong relief. Dotel closed it with another strong ninth as he appears to catching his stride. Jeff Kent was the hitting star again with three hits and three RBI’s, including his sixth jack of the season.
The Stros have now won four in a row and eight out of their last nine. Hard luck Roy O goes for his third win tomorrow evening in the second game of the weekend series with the Braves.

Skilling gets mild slap for his New York adventure

Posted on by
Reply

U.S. Magistrate Frances Stacy told ex-Enron CEO Jeff Skilling this afternoon that he must quit drinking alcohol, get both alcohol and mental health treatment, be subject to a curfew and get a job or do volunteer work in order to remain free pending his criminal trial in connection with the collapse of Enron. Judge Stacy, handling the matter for U.S. District Judge Sim Lake, added those restrictions to Skilling’s $5 million bond because of a bizarre escapade in New York City last month that landed Skilling in the hospital for a night. Judge Stacy declined to add $2 million to his $5 million as prosecutors requested, which was the absolute right decision.
Prosecutors have said Skilling violated his bond by being seriously drunk, trying to lift a woman’s blouse in search of an FBI wiretap, and attempting to steal a car’s license plate. Defense attorneys contended the government has gotten its facts wrong about the incident and Skilling, though he had been drinking, was a victim.
Earlier posts on Skilling’s New York adventure can be reviewed here.

VDH on our weird way of war

Posted on by
Reply

I am at a loss to describe the brilliance of Victor Davis Hanson’s insight, which has been a bright light in America ever since the 9/11 attacks. In his unequaled string of outstanding columns over the past three years, this week’s op-ed for NRO may be the best. Read the entire piece, but the following will give you a flavor for it:

But our problems are not just with the paradoxes of the fourth-dimensional, asymmetric warfare that the United States has dealt with since the fighting in the Philippines and knew so well in Vietnam.
No, the challenge again is that bin Laden, the al Qaedists, the Baathist remnants, and the generic radical Islamicists of the Middle East have mastered the knowledge of the Western mind. Indeed they know us far better than we do ourselves. Three years ago, if one had dared to suggest that a few terrorists could bring down the Spanish government and send their legion scurrying out of Iraq, we would have thought it impossible.
Who would have imagined that Americans could go, in a few weeks, from the terror of seeing two skyscrapers topple to civil discord over the diet and clothing of war in Guantanamo, some of whom were released only to turn up to shoot at us again on the battlefields of Afghanistan? Our grandfathers would have dubbed Arafat a gangster, and al Sadr a psychopathic faker; many of us in our infinite capacity for fairness and non-judgementalism deemed the one a statesman and the other a holy man.
So our enemies realize that the struggle, lost on the battlefield, can yet be won with images and rhetoric offered up to alter the mentality and erode the will of an affluent, leisured and consensual West. They grasp that we are not so much worried about being convicted of being illiberal as having the charge even raised in the first place.
The one caveat they have learned? Do not provoke us too dramatically to bring on an open shooting war, in which the Arab Street hysteria, empty threats on spec, and silly fatwas nos. 1 through 1,000 mean nothing against the U.S. Marines and Cobra gunships. Instead, their modus operandi is to push all the way up to war ? now provoking, now backing down, sometimes threatening, sometimes weeping ? the key being to see the struggle in the long duration as a war of attrition, if you will, rather than a brief contest of annihilation.
These rules of the strategy of exhaustion are complex, and yet have been nearly mastered by the radicals of the Middle East. First, shock the sensibilities of a Western society into utter despair at facing primordial enemies from the Dark Ages. The decapitation of a Daniel Pearl; the probing of charred bodies with sticks, whether in Iran in 1980 or Fallujah in 2004; the promise of torturing Japanese hostages ? all this is designed to make the Western suburbanite change channels and head to the patio, mumbling either, “How can we fight such barbarians” or ? better yet ? “Why would we wish to?”
If, on occasion, an exasperated and furious West sinks to the same level ? renegade prisoner guards gratuitously humiliating or torturing naked Iraqi prisoners on tape ? all the better, as proof that the elevated pretensions of Western decency and humanity are but a sham. A single violation of civility, a momentary lapse in humanism and in the new world of Western cultural relativism and moral equivalence, presto, the West loses its carefully carved-out moral high ground as it engages not merely in much needed self-critique and scrutiny, but reaches a feeding frenzy that evolves to outright cultural cannibalism.
For someone in a coffee-house in Brussels the idea that Bush apologizes for a dozen or so prison guards makes him the same as or worse than Saddam and his sons shooting prisoners for sport ? moral equivalence lapped up by the state-controlled and censored Arab media that is largely responsible for the collective Middle East absence of rage over the exploding, decapitating, and incinerating of Western civilians in its midst.

Dr. Bart Smith updates forecast on Houston real estate market

Posted on by
Reply

The leading expert on the regional economics of the Houston metropolitan area is Dr. Barton Smith, University of Houston professor of economics and director of the UH Institute for Regional Forecasting. This Chronicle article reports on Dr. Smith’s latest report on the local housing market that he gives a couple of times a year to the Houston real estate business community.
In short, Dr. Smith believes that rising interest rates aren’t a good trend, but that the city should escape the serious housing bust that is looming in other markets. Inasmuch as the difference between income levels and home values in Houston is not as wide as it is in some other cities, Dr. Smith believes that smaller difference should help the local housing market relative to other markets. However, Dr. Smith predicts that, by 2006, many regions will experience a harsh housing market correction where home prices will begin to fall.
While rising interest rates are not good for home sales, Dr. Smith believes they will have a more positive impact on one more troubled sector of the local housing market: apartments. Vacancies in Houston area apartments have increased as renters have abandoned their apartments in favor of buying homes at historically low interest rates. However, Dr. Smith reasons, once rates go back up, consumers won’t be in such a hurry to buy homes, creating more demand for apartments.
Nevertheless, due to overbuilding over the past several years, Dr. Smith predicts that it will take at least a year before the local apartment industry records any significant occupancy gains. With occupancy at 86.5 percent and nearly 15,000 units expected to be delivered in 2004, Smith gave the same advice yesterday that he gave to local developers in the early 1980’s immediately before the that decade’s bust in energy prices: “Stop building.”
Aside from the apartment industry, Dr. Smith was more bullish on other commercial sectors of the regional economy. He noted that the local office market had bottomed out and will improve this year. In general, the retail market appears healthy, but Dr. Smith observed that much of the new retail is simply diluting sales of older stores. Barring any unforeseen events (i.e., terrorist attacks), Dr. Smith predicted that the regional economy will continue to improve, and Houston could see 30,000 to 50,000 new jobs this year.Consequently, Dr. Smith overall was quite optimistic about the regional economy in his remarks on Thursday.
Dr. Smith reiterated his previous predictions that gentrification will increase in Houston’s inner core, and that substantial growth will continue in the city’s suburban areas. Dr. Smith predicted that the currently under construction Grand Parkway (Houston’s third and outermost “loop” outside of the existing 610 Loop and the outer Beltway loop) will be congested by 2025. To help alleviate congestion and environmental problems, Dr. Smith encouraged developers to build master-planned employment centers –such as The Woodlands in north Houston — that locate large amounts of workers in a single area near suburban employment centers and that have good access to the other metro area employment centers.

What’s wrong with the NBA

Posted on by
Reply

Given my interest in sports, several friends have asked me why I have not blogged much on professional basketball. My stock answer is that, even though I have followed the NBA for about 45 years or so, I find it less interesting now than most other sports, particularly baseball, golf, professional football, intercollegiate athletics, and bowling (well, maybe not bowling).
The Houston Rockets are a good reflection of my reservations. The Rockets won two championships in the 1990’s by building a team of interesting complementary players to surround the wonderful talents of Hakeem Olajuwon, who is one of the top five NBA players of all-time. Now, the Rockets have promising young center Yao Ming surrounded by a boring mish-mash of players who do not play well as a team. The Rockets other star player — Steve Francis — exemplifies this problem, as he is a phenomenal athlete who is frankly a poor point guard. As a result, the Rockets have made the playoffs only once in the last five years (this season), and were dispatched in that series with relative ease by a Lakers team whose individual parts are better than its whole.
That’s a long introduction for this Geoffrey Norman Wall Street Journal ($) op-ed in which he addresses lagging interest in the NBA and the reasons for it. The entire op-ed is quite witty and well worth reading, and here is a sampling:

Many pro-basketball games are so poorly played and tediously long that the fingers seem drawn irresistibly to the remote. You find yourself seeking relief in “The Battle of Stalingrad” on the History Channel or the food channel’s primer on how to make jerk sauce. Even some stranger eating worms or getting fired by Donald Trump seems preferable to enduring 10 minutes of undisciplined motion, interrupted occasionally by a dunk, some chest-thumping, a shove, a technical foul, a missed free throw and a beer commercial.

. . . The problem is with the product, not the consumer.
The first game of the Spurs/Lakers quarter-final series was played on Sunday afternoon and, according to Nielsen, drew a 4.9 rating, which translates into 7.3 million viewers. That afternoon’s NASCAR race scored a 6.1 rating and 9.8 million viewers. The contrast is especially telling when you consider that this is probably the most desirable matchup in the NBA’s unending postseason, with each series lasting longer, it seems, than the Florida recount.

And Professor Bainbridge will appreciate Mr. Norman’s analysis of the Lakers:

The Lakers stars, of course, possess a celebrity that extends beyond the realm of sport. Shaq endorses everything that costs money, and Kobe did too until he got into trouble with the law. Just as people who didn’t know anything about the game would tune in to watch Michael Jordan, nonfans ought to be drawn to Shaq and Kobe, who has been called the heir to Jordan’s throne. Plainly, it isn’t working out that way.
Perfect for L.A., if not for basketball, these Lakers resemble a troubled film crew on location, with feuding stars, an ever more temperamental, gnomic director (coach Phil Jackson) and egos ceaselessly banging into each other so that the real point of the thing gets lost in the din. Great material for one of those fan magazines where celebrity is its own justification. Who cares if Kobe unilaterally decides to take over a game and plays as though making a pass to the open man might cost him a shoe endorsement? It doesn’t matter because…he’s Kobe.
The “Showtime” Laker teams of the late 1980s were built around Magic Johnson, who generally led the league in assists. They ran the fast break, and they moved without the ball. Their rivals, on the opposite coast, were built around another great all-around player, Larry Bird. The Celtics/Lakers rivalry was one of the greatest in the history of sport. A matchup of great stars — true — but also of great, and distinctive, teams. When they met in the finals, people changed dinner plans so they wouldn’t miss a game. The Celtics of the 1960s and the Knicks of the 1970s could inspire such loyal devotion, too, and for similar reasons.
With the Lakers now down 0-2 and on the ropes, it looks as though it may come down to the San Antonio Spurs and the Detroit Pistons in this year’s finals. This is a matchup that might be challenged in the ratings by “Animal Planet.” The Pistons and the Nets played a 78-56 contest the other night that was more grueling to watch than even “The Bachelor.”

Then, Mr. Norman closes with an astute observation about what is missing:

Those great Knick teams (of the late 1960’s and early 70’s) were much more than the sum of their parts, and that was the fascination. There was some kind of deep art at work. Fans sensed possibilities and valued, above all, a display of control in the midst of all that motion.
After all, if you just want movement, collisions and chaos between the beer commercials, you can watch NASCAR.

Two year update on HP-Compaq merger

Posted on by
Reply

This Wall Street Journal article ($) provides a good update on the now two year old merger between Hewlett-Packard Co. and Houston-based Compaq Computer Corp.
The theory of the HP-Compaq merger was that it would remake HP. However, the new HP looks about the same (albeit bigger) as the old one.
Prior to the $19 billion deal closing in May 2002, HP had a mediocre computing business that was buttressed with a traditionally first rate printer unit that generated most of HP’s revenue and profit. Two years later, that profile hasn’t changed much. HP’s printer unit continues to contribute about 30% of quarterly revenue and 70% of quarterly profit.
HP is a much bigger company now, with annual revenues of more than $70 billion compared with about $45 billion before the merger. HP employs about 140,000 employees in 170 countries. Before the merger, that number was closer to 85,000.
Moreover, HP’s upper management is essentially unchanged since before the merger. Chief Executive Carly Fiorina still runs HP, and the HP executives who were in charge of the tech services and printer units before the Compaq merger remain in those roles.
The bottom line is that HP continues to face the same questions over growth and the relative value that such growth brings beyond its printing business. As of the close of trading yesterday, HP’s stock price was $19.78, just slightly ahead of its closing price of $18.22 on May 6, 2002, the day on which the Compaq merger was consummated.
That doesn’t please money managers, according to the WSJ article:

“At the end of the day, you’re still left with a company that has a great printing franchise but is struggling to sustain profitability in its other businesses,” says Marty Shagrin, an analyst at money-management firm Victory Capital Management. “Our analysis of HP’s business today isn’t meaningfully different from two years ago.”

HP contends that it is less dependent on printer revenue and profit and has become a more well-rounded company. Revenue from the printing unit accounted for 31% of H-P’s overall revenue in fiscal 2003, down from 43% in fiscal 2001. Although the printing unit made 79% of total profits in fiscal 2003, that percentage was down from 100% in fiscal 2001. Accordingly, HP maintains that trend is good, and is likely to continue.
On the other hand, some analysts argue that HP has simply diluted the profitability of its printer unit by spending on its PC and corporate computing business. One analyst in the WSJ article calculated that a pre-merger HP would have generated earnings of $1.59 a share in fiscal 2003 from its printing unit alone, while HP’s actual earnings were $1.16 a share that year. Indeed, HP’s printer business alone is valued at $21 a share, which means the market assigns almost no value to HP’s other businesses. Accordingly, the WSJ quotes one sage as observing “HP paid $19 billion for the privilege of hardly making any money in some of these other businesses.”
H’mm. As Professor Ribstein might observe, was the Compaq acquisition price so high that it took a near-delusional synergy theory for HP management to justify it?