Monthly Archives: June 2007

Why these shareholders?

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wholefoods060507.jpgThis Bloomberg article on Austin-based Whole Foods’ proposed acquisition of Wild Oats Markets confirms that officials at the Federal Trade Commission do not have enough to do:

U.S. antitrust regulators plan to file suit to block the proposed merger between Whole Foods Market Inc. and Wild Oats Markets Inc., the largest and second- largest natural-foods grocers. [. . .]
The agency is concerned that the combined company will control too much of the U.S. natural-foods market and increase prices. . .
“If Whole Foods is allowed to devour Wild Oats, it will mean higher prices, reduced quality, and fewer choices for consumers,” Jeffrey Schmidt, director of the FTC’s Bureau of Competition, said in a statement. “That is a deal consumers should not be required to swallow.”
The commission voted 5-to-0 to authorize staff to seek a temporary restraining order.

I mean, what on earth are these people at the FTC thinking? Since they haven’t moved to block a retail merger in a decade that it’s time to try and block one? What else could explain attempting to block a relatively small $600 million deal that would result in a combined company with just over 300 stores? Besides, it’s not as if Whole Foods is doing all that great, anyway.
The FTC seems to be saying that Whole Foods and Wild Oats are in a different market than conventional grocery chains. But that’s just plain silly. Not only will customers move to non-organic products if Whole Foods and Wild Oats price an organic alternative too high, virtually every retail grocery operation is now offering their own organic section in their stores. For goodness sakes, even Wal-Mart is offering an organic product section in many of its grocery stores these days.
Dana Cimilluca over at the WSJ DealJournal speculates that the FTC action is a pure political move to chill the overheated merger market. Maybe so, but that’s sure a petty reason to deny a relatively small group of shareholders an opportunity to realize some increasingly rare equity upside in the brutally competitive grocery business.

Minor League baseball can be pretty entertaining

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Elk gets his spikes right

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Elk060507.jpgHoustonian and Clear Thinkers favorite Steve Elkington apparently found a U.S. Open qualifier this year that allowed the competitors to wear spikes on their shoes. Elk fired a 36 hole score of 137 (64-73) to earn one of the 16 U.S. Open qualifying spots on Monday at the Colonial Country Club in Memphis, only the second time since 1999 that Elkington has qualified for the Open. 72 players were already exempt for the Open and Elkington nabbed one of the additional 83 spots that were up for grabs in sectional qualifying at 13 courses in the U.S., England and Japan on Monday. The Open will be held for a record eighth time next week at Oakmont, where Geoff Ogilvy will attempt to defend the title that he won last year at Winged Foot.
Speaking of local golf, the venerable Texas State Amateur Championship begins on Thursday and runs through Sunday at Whispering Pines Golf Club in Trinity, one of the best tracts in the Houston region. The 144-player field will be cut to the low 54 and ties after Friday’s second round. Former winners of the Texas State Am includes such noteworthy PGA Tour pros as Ben Crenshaw, Bruce Lietzke, Scott Verplank, Mark Brooks, Charles Coody and Bob Estes.

The importance of the images of war

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iraq%20war%20dead.jpgFollowing on recent posts here and here on the seemingly intractable problems in Iraq, this David Carr/NY Times op-ed comments on the efforts of the U.S. military to control the publication of images of injured or killed soldiers from the Iraq War. Carr’s op-ed prompted this letter to the Times editor by University of Houston Professor Bill Monroe, who you may recall had the best line at the Memorial Service for the late Ross M. Lence. Professor Monroe’s letter provides as follows:

To the Editor:
ìNot to See the Fallen Is No Favor,î by David Carr (The Media Equation, May 28), suggests that the reigning assumption among leaders in Iraq is that we canít handle the truth. In a curious way, it may well be the duty of fallen soldiers to let us see them ó wounded, dying and dead.
If we have the temerity to ask them to risk life and limb protecting American interests, we must ask them to help us know what it looks like, what it feels like, so that we can decide, as a Republic and a people, whether we in fact want to exact that private and public cost.
ìIt is well,î Robert E. Lee is reported to have said, ìthat war is so terrible, lest we grow too fond of it.î
We canít handle the truth? We had better.
William Monroe
Houston, May 30, 2007

Milberg Weiss on the Brink

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The longstanding criminal investigation and finally the indictment of the class action plaintiffs’ firm Milberg Weiss Bershad & Schulman has been a common topic on this blog, so it has been with interest that I have been following the WSJ’s Nathan Koppel, Peter Lattman and Ashby Jones’ excellent coverage (see here and here) over the past week of the plea deal rumblings for the firm and at least one of the prominent attorneys ensnared in the prosecution. In short, David Bershad is supposedly negotiating a plea deal with prosecutors that reportedly could have a domino effect on several current and former partners of the firm, including Mel Weiss and Bill Lerach.

Inasmuch as the plaintiffs’ class action securities fraud bar tends to be a lightning rod for criticism regarding vexatious, costly and unproductive litigation, there hasn’t been much public support for Milberg Weiss and the individuals involved in this episode.

But as Larry Ribstein points out in this wise post, the Milberg Weiss criminal case is not only thick with ironies and contradictions, the issues involved in the case are not easy to sort out.

Encouraging the government to use its overwhelming prosecutorial power as the default regulatory tool to deal with the unpopular businesspersons or business lawyers of the moment is not as neat and tidy as it may seem on the surface, despite what this narrow-minded WSJ ($) editorial suggests.

Texas’ medical licensing logjam

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texas_doctors_comp.jpgThe number of insurance companies offering medical malpractice insurance policies has dramatically increased and malpractice insurance premiums have substantially decreased since the 2003 legislation enacting medical malpractice caps in Texas, but the med mal caps have contributed to at least one unanticipated problem:

. . . about 2,250 license applications await processing at the Texas Medical Board in Austin. The wait could be as long as a year for some of the more experienced doctors because it takes longer to review their records.
The fear is that some doctors will give up on Texas and go elsewhere instead of waiting. A $1.22 million emergency funding request was approved during the last days of Texas legislative session for the Texas Medical Board, which licenses physicians. That is on top of the $18.3 million regular biennial appropriation, said Jane McFarland, the board’s chief of staff.
The board plans to add nine new employees to its 139-member staff, seven of which will help chop away at the backlog of license applications.

Champions Cypress Creek overrated?

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Champions_6green.jpgDon’t expect Jack Burke, owner of Houston’s venerable Champions Golf Club, to be taking out any new subscriptions of Golf Magazine any time soon after this Golf.com article rates Champions’ Cypress Creek Golf Course as the fifth most overrated course in the U.S.:

Champions was founded as an Augusta Nationalóstyle retreat 50 years ago by Texas golf legends Jimmy Demaret and Jackie Burke, but the only thing this Ralph Plummer design shares with its Georgia counterpart is that Tiger Woods has won at both. The grand historyóa U.S. Open, a Ryder Cup and multiple Tour Championshipsódoesn’t compensate for the flat fairways, shapeless bunkers and overgrown ditches masquerading as water hazards.

At least Burke and his Champions members can take solace in the fact that Augusta National, Pebble Beach, the Country Club, and Pinehurst No. 2, among others, also made the list.

Competing with the NFL? Or with NCAA football?

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Mark%20Cuban%20on%20stage.jpgMark Cuban’s Shareslueth speculative venture has not exactly been going gangbusters, so his announcement last week of a new professional football league to compete with the National Football League probably does not have the NFL owners quaking in their very well-heeled boots. Phil Miller has a good rundown on the basic economics behind Cuban’s football venture, not the least of which is the current cost of an expansion NFL franchise — probably $800 million or so to the other NFL owners even before absorbing other startup costs.
But is the NFL the real competition for this new venture? It seems to me that NCAA football will be the new venture’s main competition, particularly for players. Could Cuban’s venture be the professional minor league football league that could spur NCAA members to reform big-time college football toward the college baseball model that has been so successful over the past couple of decades?

Life in Baghdad

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baghdad02_large_300.jpgFurther in line with this sobering analysis from last week on the obstacles that U.S. Armed Forces face in training the Iraqi Army, Terry McCarthy — Baghdad correspondent for ABC News — provides this equally daunting report on day-to-day life in Baghdad:

Danger is everywhere in Baghdad; life here is a continuous series of risk assessments. From the moment people wake up, they have to check whether it is safe to leave the house. Is there an unusual amount of gunfire? Have strangers been seen driving through the neighborhood? Is there something new to be afraid of?
Anything out of the ordinary is cause for fear. A friend who lives in southwest Baghdad says a man recently parked a car on the main street across from his apartment block, then ran away. He was spotted by a butcher, who summoned a U.S. patrol. The troops cordoned off the area and defused what turned out to be a massive bomb inside the suspicious car. The brave butcher was taking a risk either way: He could have had his store blown up, but now he risks a bullet from insurgents for informing the Americans about the car.

Read the entire intriguing piece. And also this one on the status of the current U.S. “push” to stabilize Baghdad.

A Wie incongruity

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wietop.jpgAnyone who follows professional golf even casually knows about the recent travails of teenage phenom, MIchelle Wie, who Butch Harmon thinks is playing worse now at the age of 17 than she was as a 14 year-old. The latest golfing embarrassment for Wie was withdrawing this past Thursday from her first LPGA tournament of the season after posting a 16 over par score on her first 16 holes of the tournament. As Geoff Shackelford reports, most folks think Wie withdrew to avoid the LPGA’s “88 and over rule,” which bans a non-LPGA member from playing in an LPGA event for a year if the non-LPGA member shoots 88 or over in any tournament round.
Juxaposed against Wie’s golf problems, however, is this annual Sports Illustrated list of the 50 highest earning athletes for 2007. Tiger Woods laps the field with his prodigious $100 million in endorsement income, but the only female on the list is Wie, who comes in at no. 22. Interestingly, Wie has the higest ratio of endorsement income to income derived directly from competition at 26-to-1 (she earned about $750,000 in golf earnings last year). And she hasn’t even entered Stanford University yet!
Is American a great country or what? ;^)