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In the world of Shake-Shack, everything is about “The Shack.” Where most restaurants report “same-store sales” and “store-level operating margins” and “store economics,” SHAK reports “same-shack” sales and “shack-level operating margins” and “shack-onomics.” It’s a cute, quirky culture the company has built from modest roots—the now-famous hot-dog stand in Madison Square Park—into an international phenomenon, in 12 short years. Of course, 12 years in today’s world is actually a long time, but things didn’t get serious until 2004 when the first Shake Shack restaurant opened, starting the launching pad that would shoot the rocket ship into orbit following the wildly hyped IPO just 16 months ago to the point where, by the end of the first quarter, there would be 88 such “Shacks,” with an inordinately large number—36 to be exact—licensed to other operators outside the U.S., mainly in the Middle East. And it is towards that Middle East exposure we turn our attention here, since Wall Street’s Finest haven’t bothered—and anything Wall Street’s Finest don’t bother with is always interesting to this virtual column. Not so long ago—in the July 2015 S-1, for the record—SHAK described the Middle East as “our most prominent growth market.” And the Middle East clearly was the prominent growth market at that point, having seen 49.7% licensing revenue growth in the fourth quarter of 2014. But by the first quarter of 2016 that growth rate had throttled down to 14.3%. What happened to SHAK’s “most prominent growth market”? Here’s what management said on the recent earnings call: “Now, while the Middle East remains a very important market and part of our international footprint, we are experiencing softness in sales there this year, particularly in our mall locations throughout energy-dependent markets that are seeing a natural economic slowdown right now coupled with currency headwinds. So we expect sales in our Middle East Shacks to remain under pressure through this year given the macro environment in the region.” Not too long ago—i.e. last summer, around the same time as the aforementioned S-1—the company was describing the Middle East in far rosier terms: “When we had just opened the second Shake Shack on the Upper West Side of New York, Mohammed Alshaya, probably many of you know Alshaya, from the Middle East, came to us and said, I don’t normally do this. I normally go with much bigger brands here, and I know you only have two, but I think Shake Shack would do tremendous in the Middle East and I want to bring you over. And Danny and Randy kind of looked at each other and shook their heads, but out of pure curiosity got on a plane and went to Dubai, saw the way Alshaya operates, saw how they do things, saw how their culture connects with ours and said, you know what, let’s take a chance, let’s do it. So they opened a Shake Shack in the Mall of the Emirates in Dubai and it was one of the leading restaurants in the system and still is at this time.” Alshaya is, indeed, a legit operator, and they do indeed normally go with bigger brands. They’ve opened Cheesecake Factories and Pottery Barns, and they know how to do it. But Cheesecake Factory and Pottery Barn took their time on the whole opening-a-zillion-stores-overseas thing. Specifically, it took Cheesecake Factory 35 years before they opened their first restaurant overseas, in Dubai, with Alshaya in 2012—and the company spent a lot of time getting ready. After all, Cheesecakes in Dubai can’t serve alcohol or sell pork products, so the menu had to be adjusted and the company’s culture had to be transported all the way from Calabasas Hills to the United Arab Emirates. Today Alshaya operates just 9 Cheesecakes, compared to the couple-dozen-plus Shacks it opened with a bang not so long ago. And while Cheesecake has let it be known, most recently in March, that its international units continue to do well, SHAK said on its recent call the Middle East market is already “maturing…quite a bit” as it switched the focus to new licensees in Asia: “If you look at our guidance of seven Shacks all year here for that, the Middle East has got quite a few restaurants there. Our region is maturing for Shake Shack quite a bit. We have some great opportunity. We just opened in Riyadh and doing really well there. As I’ve said, in Bahrain and Oman. So we fully expected that region to mature a little bit.” From “our most prominent growth market” to a “maturing” region in less than 12 months might be a record. Not the record a growth company wants to hold, but a record nonetheless. Jeff Matthews I Am Not Making This Up © 2016 NotMakingThisUp, LLC The content contained in this blog represents only the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. Also, this blog is not a solicitation of business by Mr. Matthews: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.

It’s bad enough when analysts thank CEOs for letting them ask a question on an company earnings call, at least when they do it in a way that goes beyond a simple act of politeness and more towards a cringe-making act of fawning, which too many analysts have a way of doing these days. This is, after all, a business: it’s an analyst’s job to ask questions; it’s a CEO’s job to answer them. Get on with it. What’s worse, however—much worse—is when an analyst who asks a good question gets schmoozed by the CEO, and instead of following up and getting an answer, surrenders. It happened tonight on the Apple call. After thanking the company for “fitting me in” (really?) the analyst asked Tim Cook—all quotes are from the indispensable Seeking Alpha—a very reasonable question about the “top two or three things” that had changed from the previous quarter, when Apple’s CEO was way more bullish about the demand environment for iPhones than it turned out to be. Cook’s response turned the question into a math equation: “…we did not contemplate or comprehend that we were going to make a $2 billion-plus reduction in channel inventory during this quarter. And so if you factor that in and look at true customer demand, which is the way that we look at it internally, I think you’ll find a much more reasonable comparison.” The analyst jumped on Cook for changing the subject—after all, he said, the fact that you decided to cut $2 billion out of channel inventory must mean you had $2 billion more product in the channel than you expected, which means “true customer demand,” as Cook called it, was $2 billion weaker than plan, right? Ha! We’re joking. The analyst did no such thing. He surrendered. “Okay, great. Thank you,” he said, and then asked a softball follow-up. Tim Cook took home $10.3 million last year. He can handle tough questions. Personally, I’d like to know why Cook—who gets on his high moral horse every time some politically correct brushfire starts up somewhere in America—gives up without a sound when the Chinese authorities demand the Apple Store stop carrying apps involving the Dalai Lama. We know the answer: money. Still, it would be fun to ask. But don’t hold your breath. Jeff Matthews I Am Not Making This Up © 2016 NotMakingThisUp, LLC The content contained in this blog represents only the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. Also, this blog is not a solicitation of business by Mr. Matthews: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.

Mr. McCleery: You aren’t one of those agitators, are you? Benjamin: What? Mr. McCleery: I hate ’em. I won’t stand for it. —The Graduate We here at NotMakingThisUp only write book reviews when we like the book. (If we don’t like it, we don’t write anything at all, because it’s hard—really hard—to write a book, so just the fact that someone has written a book ought to be respected, not criticized.) Journalist Dan Lyons has not only written a book, but it’s good—and not just “good,” but laugh-out-loud good. The subject matter, however, is not always laugh-out-loud funny. It’s about Lyons’ time at HubSpot, the “cloud-based marketing and sales software platform company” he worked for at roughly the peak of the Web 2.0 cycle (Lyons would probably describe it as a “spam-based marketing and sales software platform company,” but we’ll go with the official terminology), and while you may be more familiar with the frat-boy excerpts that have already made made plenty of headlines, they’re nothing anybody who was around during the last bubble hasn’t heard about before and don’t need repeating here. Way more interesting is Lyons’ take on what it’s like to be a 50+ year old Boomer working at a hotshot Millennial company—or “cult,” as he sees it. Lyons listens to conference calls with the company’s ‘social media scientist,’ “a competitive weightlifter who lives in Las Vegas and basically does nothing”; he spends too much time in meetings, which, “like most journalists—and, I would argue, most sane people” he detests; and he gets so fed up with the bubbly self-reinforcing “Happy!! Awesome!! Start-Up Cult” culture that he begins sending around emails like “Jan is the best!!! Her can-do attitude and big smile cheer me up every morning!!!!!!!” about the “grumpy woman who runs the blog,” until he is told to “cut that s— out.” It’s a riot, and it makes the book swing, but that’s not the important stuff. The important stuff includes the sheer whiteness of the workforce, which should be no surprise to him but is (did he really report on the technology world most of his career and not notice that before?); not to mention the youngness of the place, which should also be no surprise to him (does he not know how young Mark Zuckerberg still is?) But the spookiest bit has nothing to do with the age thing, or the “astonishing lack of diversity” (did he think poverty-trapped kids from Harlem are actively recruited by young affluent suburban white kids?), it’s the cultish behavior reinforced from the top, most notably in the way in which employees who’ve been fired are NOT said to have been “fired” or to have “resigned to pursue other interests.” They are said to have “graduated.” “Nobody ever talks about the people who graduate,” writes Lyons, “and nobody ever mentions how weird it is to call it ‘graduation.’” Yet “graduations” happen quite a lot, apparently: the best line in the book being “People just go up in smoke, like Spinal Tap drummers.” Of course, Lyons himself eventually “graduates” after the culture clash starts to get to him (which it actually did on his first day at HubSpot, but he persevered) and he begins to set himself up in ways that make you scratch your head and wonder if he ever actually worked in a corporate environment. Exhibit A in the did-he-really-not-see-this-coming-a-mile-away setup to his own graduation is when Lyons pitches a new online magazine—an idea his direct boss had already rejected—to his boss’s bosses without his boss knowing Lyons was going over his head. “They love the idea,” he says of the meeting with HubSpot’s co-founders. “That night I go home feeling like a conquering hero.” Poor bastard, you think, reading that line. Exhibit B in the did-he-really-not-see-this-coming-a-mile-away department is when Lyons is shocked—shocked!—that nothing subsequently happens, because he didn’t have anyone else at the meeting to verify that the two co-founders actually approved the idea. As one colleague far wiser than Lyons in the ways of corporate politics tells him, “You should have had a witness.” Exhibit C in the did-he-really-not-see-this-coming-a-mile-away department, naturally, is when Lyons’ boss-who-rejected-the-idea-before-Lyons-chose-to-go-over-his-head appropriates the idea as his own. By now, however, even Lyons has figured out what’s happening: “At this point the message could not be more clear,” he writes. His boss “is doing everything short of hiring a skywriter to scrawl GET OUT, DAN in the airspace above HubSpot headquarters.” Lyons at least has some fun as the clock winds down. At an anything-goes marketing idea meeting he proposes putting an “unbearably ambitious and energetic young woman who recently graduated from college, loves HubSpot more than life itself, and would do just about anything to get a promotion” in an orange (the Hubspot color) jumpsuit and helmet and firing her “right through an open window and into a cubicle. Bang! There she is! She doesn’t miss a beat. She just starts giving a lecture about marketing.” To a cynical career journalist, HubSpot was a gift that kept on giving. On the downside, however, Lyons stretches at times to make bigger points—something book editors tend to encourage authors to do in order to gin up the meaning of an otherwise highly enjoyable, and very telling fish-out-of-water memoir. For example, trying to turn his time at HubSpot into a lesson about the cheerful heartlessness of the Web 2.0 revolution, he actually quotes Carl Icahn—the slimeball takeover artist who bankrupted TWA while pocketing a sweet discount airline ticket deal for himself, among many other things that make Donald Trump look magnanimous and would normally set a cynical journalist’s hair on fire—about Marc Andreessen from back when they were fighting over eBay, which is stupid because Andreessen (think Netscape, Facebook, Twitter, among other life-changing companies he’s been involved in) has added more value to the current quality of life in America than even Carl Icahn has managed to extract for himself. Lyons also quotes, of all things, a snarky Robert Reich “Facebook post” about the sharing economy having become a “share the scraps” economy—tell that to the next Uber driver you get who’s paying his way through college or saving for a condo or running a non-profit and wouldn’t have the flexibility to earn extra income without Uber. Finally, Lyons surveys the money-losing business models of so many Web 2.0 start-ups and naively wonders “why there are so many companies that remain in business while losing money”—this after he has started the book with a chapter about getting fired from his prestigious and well-paying job at Newsweek Magazine, which, like most dead-tree publications “has been losing money for years.” Losing money, whether for a start-up with vast potential, like Amazon.com, or for a fading franchise like Newsweek, has never stopped anybody from trying. That is, after all, Capitalism. But the big-picture stuff feels like an editor made him do it, because the other 98% of the book moves fast, tells a great story, and actually will make you laugh. Out loud. —JM NB: Just for the record, prior to its publication, the author of Disrupted asked, and I answered, a couple of questions about my perspective on the SAAS business model of Salesforce.com.

Well it’s earnings season again. That means it’s time for IBM to puke another quarter and hold an incomprehensible—literally, incomprehensible—earnings call during which it spins every data point in such a positive light that you’d think they held the winning Powerball ticket, while strictly limiting analysts to one question—no follow-ups, please—and abruptly cutting things off when the hour is up. For those of us accustomed to the full disclosure practiced by the terrible, horrible, no-good banks, this practice of IBM’s management team not belaboring bad news is something out of Fawlty Towers (“Don’t mention The War. I mentioned it once but I think I got away with it.”) By way of comparison, Wells Fargo and Citi’s back-to-back earnings calls last Friday started at 10 a.m. E.S.T. and ended at 1:15 p.m., give or take. Analysts on both calls were free to “get back in the queue,” as they say, and they did, until every question was exhausted. But that practice is not the IBM Way. No sir. Windy analysts are quickly cut off and the opportunity to follow-up an obfuscatory answer (the IBM norm) is not given—bringing to mind yet another Basil Fawlty line: “Trespassers will be tied up with piano wire.” So if you didn’t get a chance to listen to IBM’s earnings call—and we’ve poked fun at them for years, most recently here—you really ought to read the transcript courtesy of the indispensible Seeking Alpha, here. If you didn’t know any better, you’d think that IBM is swimming in gold, that its cloud offerings are taking the world by storm (“We’re the largest,” they declare, without mentioning that their internal measure includes low-margin IBM hardware), and that Watson, which as they always remind us won Jeopardy in 2011 (or was it 2010? Or was it actually Wheel of Fortune during Kardashian Week?) is the next Amazon Web Services, which it is not. In reality, IBM’s revenues are down—even in the not-falling-apart Americas—its cash flows are down, its share repurchases are down (even though the stock is down, and presumably more attractive than the last time they spent billions propping it up), and the only reason it “beat the number” was, naturally, the tax rate, which IBM plays like Duane Allman played “Whipping Post.” (See “Bring Out the Belgian Waffle!” here.) Oh, and never forget that IBM always makes sure to exclude the negative impact of currency and divestitures on these calls and in their press releases, but does not exclude the positive impact of acquisitions. And IBM made seven cloud acquisitions alone in 2015. Altogether, it is, as we started at the top, literally incomprehensible. And if you don’t believe us, try this answer from the CFO on for size, about the miss in IBM’s super-high-margin software business: Sure thank you, thanks Toni. A few comments on software, so as we said in our prepared remarks, the deceleration third to fourth really was driven by this – by the mix shift and the continuation of the transaction closing rates that we saw in September. So we talked about – coming out of September we talked about a slower rate of closing in some of our larger deals and that’s what we experienced as well in the fourth quarter. And as I mentioned in my prepared remarks, because of the mix shift alone we see an improvement and as you point out the weather company another acquisitions by the way to the extent that they are – have software in them they will obviously bolster that growth rate. A few things, I think are important to note within software. First, as we said in our prepared remarks and the phenomena is really no different in the fourth and what we’ve seen all year, our annuity business within the software business. So that’s about 70% of our overall software stream. Our annuity business continues to grow. So that has a service in it, it has our subscription and support business in it as well, so that continues to grow. And then outside of our largest clients and this is a phenomena that we’ve been talking about, outside of our largest clients where they don’t have as broad access to our software portfolio, we continue to see growth as well, both transactionally and they’re obviously part of the asset service stream. Within the large clients as I mentioned earlier and as we talked about in our prepared remarks, we provide flexibility, it gives them – it gives our clients an ability now to manage their projects and they deploy maybe differently than they anticipated at the beginning of the year. From my discussions with our clients, a lot of that depends on the visibility they have both of their demand patterns and the visibility they have to sort of the – kinds of projects they might have to implement in the near-term. So I don’t think that’s any different than what we’ve experienced in the past… If you can make anything of that—and we’re pretty sure even Warren Buffett, the largest IBM shareholder, couldn’t make anything of that—let us know. Meantime, don’t mention the revenue drop, the earnings decline or the cash flow shortfall. I mentioned them once but I think I got away with it… Jeff Matthews Author “Secrets in Plain Sight: Business and Investing Secrets of Warren Buffett” (eBooks on Investing, 2015) Available now at Amazon.com © 2016 NotMakingThisUp, LLC The content contained in this blog represents only the opinions of Mr. Matthews.
 Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. Also, this blog is not a solicitation of business by Mr. Matthews: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.

2015 Editor’s Note: We have not heard much new in the way of holiday music, so let’s turn straight to the rock and roll biography scene—specifically Chrissie Hyndes’ autobiography, “Reckless: My Life as a Pretender,” which is like witnessing a car wreck in book form. While there’s plenty here that’s harmless and bland (early days in Ohio, e.g.), there’s plenty that makes you want to put the book away in a very dark place, and all you can think is, How was she not part of “that stupid club,” as Kurt Cobain’s mother called it? (Look it up, kids.) Similarly depressing are some rock movies we’ve been watching on Netflix—starting with the Levon Helms biography, “Ain’t In It for My Health,” which minces no words when it comes to his former bandmate and nemesis, the Canadian songwriter Robbie Robertson, who squeezed out of Levon (the only American in The Band) vibrant scenes of Americana (“The Weight,” and especially, “The Night They Drove Old Dixie Down”) without sharing the royalties. Even more depressing than the Hynes book and the Helms movie combined, however, is the Glenn Campbell-gets-diagnosed-with-Alzheimers-while-you-watch film, “I’ll Be Me.” Your editor saw Campbell perform at a Wall Street birthday bash circa 1997, and he was clearly miserable throughout: flushed faced and word-slurring, Campbell and his band blew through his greatest hits like Bob Dylan on a bad day, and, embarrassingly to everybody in the room, kept calling the host—whose name was Paul and who, when introducing the singer, nearly broke down while talking about how much it meant having him perform—“Pete.” But “I’ll Be Me” does a great job explaining Campbell’s life now and back when…and if you’re interested in knowing more about that back when, you ought to watch “The Wrecking Crew,” our last movie shout-out. “The Wrecking Crew” was the name of the L.A. session players behind The Byrds, The Beach Boys and classics like “I Got You, Babe”—just listen to Hal Blaine’s slamming drums on the outro—and the movie is a joyous look at the faces behind the instruments behind the songs. Glen Campbell was a supremely talented guitarist for the Wrecking Crew before he decided—to the initial amusement and later jealousy of some of the Crew—go for the gold himself. Suggestions on other movies (and books) are encouraged in the comments below…after all, your editor hasn’t finished compiling his Christmas list, if you get our drift… Merry Christmas, Happy Hanukkah and a Good New Year to All! —JM, December 3, 2015 2014 Editor’s Note: Well, Michael Bublé’s computer is still releasing holiday songs, which is the worst we can say about this year’s holiday music survey. The best we can say—and it is truly good news—is that The Boss’s hard-driving, live version of “Santa Claus is Comin’ to Town,” done entirely without computer-aided Bublé-style vocals, seems to be gaining much deserved traction. Meanwhile, one of our previous also-ran mentions in the What-Did-We-Do-To-Deserve-This? category, one Taylor Swift, deserves a big boo-yah for telling the Spotify algorithms to stuff it, pulling her entire catalogue from the automated listening service—including, by definition, the song mentioned here last year, which should be no tragedy to Spotify customers anyhow. As for our usual review of the latest rock memoirs, which tend to flood the bookshelves right about now—only to turn up in the mark-down bins come spring, which is when your editor actually buys them—the best read during brief trips to our local, increasingly down-on-its-heals Barnes & Noble, has to be Mick Fleetwood’s “Play On.” Fleetwood is one of the most underrated drummers in rock music, being the kind who drives the beat without histrionics and stays well behind the kit while the front-people do their thing (it was Fleetwood and fellow Mac bassist John McVie who rescued “Werewolves of London” for Warren Zevon and producer Jackson Browne, after the house band could not make the song work) so his remembrances of the formation of Fleetwood Mac are insightful and compelling even for those—including your editor—who were never big Fleetwood Mac fans. Currently priced at $30.79 at Barnes & Noble for the hard copy version, or $21.00 on Amazon, I’ll wait until spring and pick it up for $5.99—sorry Mick, but that’s the business we’re in. Merry Christmas, Happy Hanukkah and a Good New Year to all! —JM, December 19, 2014 2013 Editor’s Note: The most unnerving aspect to this year’s holiday music survey is the unavoidable, near-totalitarian presence of an insipid cover version of George Michael’s already-plenty-insipid-for-our-taste-thank-you-very-much “Last Christmas,” which, as we point out below has one of the most inane choruses ever written (no mean feat there), which wouldn’t be so bad except it is repeated over and over and over until you want to hand yourself over to Vladimir Putin’s security forces and let them do their worst. The perpetrator of this latest holiday music outrage is, it turns out, Taylor Swift, about whom your editor knows nothing except she adds exceedingly little to a song that needed plenty of help to begin with. But, as always with these annual surveys, your editor digresses. On the happier side of the music world, this last year has seen a number of excellent new rock memoirs, of which Kinks front-man and songwriting genius Ray Davies’ is the most interesting. The centerpiece of the story line in Ray’s “Americana” is his getting shot by a mugger in New Orleans some years back, but interspersing that tale he manages to tell much of the story of his career. If you want to read how Ray came up with classics like “Better Things” (why couldn’t that be a Christmas song? It’s as much about the holidays as “Same Old Lang Syne,” about which your editor has plenty to say later on), this is your book. Neil Young’s “Waging Heavy Peace,” which came out last year, is even better than “Americana,” however, and more fun to keep picking up when the mood strikes: Neil’s recollections are loopy, digressive, and admittedly unsure in some cases (at one point he compares his memory of a drug bust with Stephen Stills’ recollection of the same drug bust—and given that Neil only stopped “smoking weed” the year before writing the book, as he admits, it’s no wonder their recollections are very different), but like all things Neil Young, he says what he means and means what he says. And if you’re wondering where songs come from—great songs, eternal songs—Neil’s book is the place to begin. Would that a holiday song may one day spring from the fecund mind of Neil Young himself, for while he professes more of a Native American religious spirit than a Judeo-Christian one, either way, it would be so long Taylor Swift. Merry Christmas, Happy Hanukkah and a Good New Year to all! —JM, December 7, 2013 2012 Editor’s Note: We interrupt this holiday music review to bring you a potential stocking-stuffer that ought to bring tidings of good cheer… Amazon.com: Secrets in Plain Sight: Business & Investing Secrets of Warren Buffett (eBooks on Investing Series Book 1) eBook: Jeff Matthews: Kindle Store 2011 Editor’s Note: Back by popular demand, we’ll again try to keep this year’s update brief…but past performance would tell you not to hold your breath. Here goes. Our annual holiday music survey—highly biased, rankly unscientific and in no way comprehensive—covers new ground this year, to wit: the SiriusXM all-holiday-music channel. Actually, there are two such channels courtesy of the satellite radio monopolists at SiriusXM. There’s one for “traditional” music of the Bing Crosby kind, in which human beings sing traditional Christmas songs while other human beings play musical instruments to accompany those songs; and there’s another channel for everything else, including the Auto-Tune-dependent sensation Michael Bublé, who has only gotten more popular—unfortunately—this year, along with a new presence not entirely unexpected but nonetheless frightening in its implications: Justin Bieber. Enough said about that, for our main beef with SiriusXM is not the presence of yet another teen idol on the holiday music scene. Our beef lies with the soul-less quality of the entire SiriusXM gestalt, which requires its three thousand channels to carry songs strictly on the basis of whether they share either a common date of issue (as on the “40’s at 4,” “50’s at 5,” “60’s at 6” et al channels), or a common target audience demographic. Among the later, for example is the “Classic Vinyl” channel, which is essentially a “Classic Rock” channel (“Classic Rock” being a Baby Boomer euphemism for what our parents knew as “Oldies” radio) that plays the WNEW-FM playlist from around 1968 to 1978. And nothing else. And there is the “Classic Rewind” channel, which is another Oldies channel that plays the WPLR-FM playlist from about 1979 to the late 1980s. And nothing else. Then there’s “The Bridge,” a Baby Boomer euphemism for “Easy Listening.” It plays Oldies of the James Taylor/Carole King/Jackson Browne vein. And nothing else. Certainly there are one or two such channels that manage to jump around between genres (The Spectrum is worthwhile on that score). But, in the main, each SiriusXM channel is tightly focused on a specific, narrowly defined demographic…sometimes scarily so. Here we’re thinking of the “Metal” channel, which plays loosely defined “songs” that consist of young men screaming their apocalyptic guts out above what appears to be a single, head-banging, machine-gun-style guitar-and-drumming musical track that never, ever changes. You marvel at where these guys came from, what portion of the domestic methamphetamine supply they consume, and how many serial killers might be listening to “Metal” channel at the very same moment as you. If Beavis and Butt-Head could afford a car, this would be their channel. Unfortunately, no matter which channel you pick and who the purported “DJ” may be (there are a lot of old-time, smokey-voiced, recognizable DJs on the various Sirius Oldies channels) you’ll hear a sequence of songs that all sound like a computerized random-number-generator picked ‘em. Listening to the “60’s at 6” channel, for example, you may hear a great Beatles single like “Hello, Goodbye” from 1967, followed by the wretchedly excessive “MacAurther Park” from 1968, followed by an unrecognizable chart-topper from 1962 that nobody plays anymore because it wasn’t any good even in 1962. The listener ends up flipping around from channel to channel and wondering why the bandwidth-happy SiriusXM monopolists don’t just give each artist its own channel, as they in fact do for Springsteen, Elvis and Sinatra. Those are channels you might expect to find, but there is, oddly enough, no Bob Marley or Rolling Stones channel—and, head-scratcher of all head-scratchers, no Beatles channel. In fact, the absence of The Beatles from the SiriusXM digital bandwidth relative to, say, the Eagles and Fleetwood Mac, is one the great mysteries of our age. After all, the Beatles individually and collectively contributed 27of the Rolling Stone Top 500 Songs of All-Time or 5.4% of those songs, yet they get nowhere near 5.4% of the SiriusXM airplay, whether on “Classic Vinyl,” “Classic Rewind,” “The Bridge,” “60’s on 6, ” “70’s on 7,” “The Spectrum” or any of the other three thousand channels here. You quite literally have as much chance of hearing “Snoopy and the Red Barron” on SiriusXM as “Revolution.” So why then is there a Jimmy Buffett channel (called “Margaritaville,” of course)? Having gotten all that off our chest, we can move on, since SiriusXM’s holiday channels add no new material to our annual survey because most of the songs are widely played everywhere else. Furthermore, we’ve been asked to assemble a “Top Ten Worst” list of holiday songs for this review. The problem is there are just so many, as we’ll be getting to shortly. Rod Stewart’s somnambulant “My Favorite Things,” which sounds like he’s reading the lyrics from a child’s book of verses, is right up there, while Dan Fogelberg’s “Same Old Lang Syne” stands out in any crowd of non-favorites. Easier, then, to simply identify the All-Time, Number One, No-Question-About-It NotMakingThisUp Worst Holiday Song of All Time, and let everyone else argue about the remaining 9. It is “The 12 Pains of Christmas.” This so-called comedy song takeoff on “The 12 Days of Christmas,” a pleasant English Christmas carol discovered by a U.S. schoolteacher from Milwaukee and used by her in a Christmas pageant in 1910, is an easily forgettable humorous novelty song that is neither novel or humorous, in any way. It isn’t even fun writing about, so we won’t bother: we’ll simply move on to something pleasant, which happens to be an entirely different sort of humorous novelty song that is both novel and humorous, and, therefore, well worth a mention here. We’re talking about the wonderfully bizarre, catchy, Klezmer-style cover of “Must Be Santa,” from Bob Dylan’s 2009 Christmas album, “Christmas in the Heart.” (Yes, Bob Dylan made a Christmas album.) The music is fast and cheerful, and Dylan’s low, growly voice is almost indistinguishable from Tom Waits. (The truly bizarre music video is not to be missed, watch it here.) After you get over the initial shock of hearing Bob Dylan singing what most Baby Boomer parents will recall being a Raffi song, it becomes impossible to not enjoy. Another glaring absence from our previous years’ commentary is neither novel or humorous, and inconceivably does not appear to qualify for the SiriusXM random-song-generator holiday song playlist despite being many-times more worthwhile than most of the SiriusXM catalogue, whether holiday-themed or not. The song is “2000 Miles” by the Pretenders, and it belongs on anybody’s Holiday Top Ten. If hearing Chrissie Hynde on that original song (she’s also recorded some good Christmas covers, including one with the Blind Boys of Alabama) doesn’t get you in a mellow holiday mood, nothing will. Merry Christmas, Happy Hanukkah and Good New Year to all. —JM, December 4, 2011 2010 Editor’s Note: Back for the third consecutive year by popular demand, we’ll try to keep this year’s update brief—but don’t count on it. For starters, we’re going to plug a book: Keith Richards’ autobiography, “Life,” which happens to be one of the best books ever written—and we don’t just mean “Best in the Category of ‘Memoirs by Nearly-Dead Rock Stars’.” It is a great book, period. The story of how ‘Keef’ (as he signs sweet letters to his Mum while rampaging across America), Brian and Mick developed the Rolling Stones’ sound, for example, is worth the price alone (in short, they worked really hard; but the full story is much better than that). Yet there’s more—much more. Guitarists can soak up how Keith created his own guitar sound; drummers will learn—if they didn’t already know—Charlie Watts’ high-hat trick (and from whom he stole it); while songwriters had better prepare themselves to be depressed at how Mick wrote songs (‘As fast as his hand could write the words, he wrote the lyrics,’ according to one session man who watched him write “Brown Sugar”). And that’s just the rock-and-roll stuff. The sex-and-drugs stuff is also there, and the author lays it all out in his unfettered, matter-of-fact, straightforward style, often with the first-person help of friends and others-who-where-there (and presumably of sounder mind and body than you-know-who: the drug and alcohol intake is truly staggering) who write of their own experiences with the band. Okay, you may say, but how exactly is Keith Richards’ autobiography relevant to our annual review of holiday songs? Well, while furtively reading snatches of ‘Life’ during a stop at the local Borders (we expect to see the book under the Christmas tree sometime around the 25th of this month, hint-hint), we happened to hear another musical legend perform one of our favorite offbeat Christmas songs in the background, and it occurred to your Editor that of all the bands out there that could have done that same kind of interesting, worthwhile Christmas song, The Rolling Stones probably top the list. What with Keef’s bluesy undertones and Mick’s commercial-but-sinister instincts on top, it would have certainly made this review, for better or worse. (Along these lines, The Kinks’ cynical, working-class “Father Christmas” is one of the all-time greats, and doesn’t get nearly enough air-time these days.) Now, for the record, the offbeat Christmas song that triggered this excursion was “’Zat You Santa Claus?”—the Louis Armstrong and The Commanders version from the 1950’s. (The song was later covered, like everything else but the Raffi catalogue, by Harry Connick, Jr.) Starting out with jingle bells, blowing winds and a slide-whistle, you might initially dismiss “’Zat You?” as a sadly commercial attempt by Armstrong to get in on the Christmas song thing, except that his familiar, Mack-the-Knife-style vocal comes over a terrific backbeat that turns it into what we’d nominate for Funkiest Christmas Song Ever Recorded. It is a delight to hear, and the fact that it is suddenly getting more air-time this season is a step-up in quality for the entire category—or would be, if not for the apparent installation of Wham!’s “Last Christmas” in the pantheon of Christmas Classics. A 1980’s electro-synth Brit-Pop timepiece, “Last Christmas” combines a somewhat catchy tune with lyrics that make a trapped listener attempt to open the car door even at high speeds to get away: Last Christmas, I gave you my heart But the very next day you gave it away This year To save me from tears, I gave it to someone special Considering the fact that the songwriter (Wham!’s gay front-man, George Michael) decided to repeat that chorus six times, the full banality of the lyric eventually gives way to incredulity: “Let me get this straight,” you begin to ask yourself. “This year he’s giving his heart to ‘someone special’… so who’d he give it to last year? The mailman?” “Last Christmas” does have the distinction of being the biggest selling single in UK history that never made it to Number 1. Furthermore, all royalties from the single were donated to Ethiopian famine relief, the same cause which led to creation of what turned out to be the actual Number 1 UK single that year, “Do They Know It’s Christmas?” “Do They Know…” is a song that has received some push from readers to receive an honorable mention in these pages, and while it is certainly an interesting timepiece, with much earnest participation from the likes of Sting, Bono and even Sir Paul, it is not nearly as worthwhile as an album that seems just as prevalent these days: A Charlie Brown Christmas by jazz pianist Vince Guaraldi. How a jazz pianist was hired to create the music for a TV special with cartoon characters is this: the producer heard Guaraldi’s classic instrumental “Cast Your Fate to the Wind” on the radio while taking a cab across the Golden Gate Bridge. One thing led to another, and thanks to that odd bit of chance, future generations will have the immense pleasure of hearing a timeless, unique work of art every year around this time. (A second odd tidbit for our West Coast readers: Guaraldi died while staying at the Red Cottage Inn, in Menlo Park—of a heart attack, however, and not the usual, more gruesome fate of musicians who die in hotels.) One second-to-last note before we move on: we have been heavily lobbied by certain, er, close relations to include Mariah Carey’s “All I Want For Christmas is You” as a worthwhile holiday song—despite our previously expressed misgivings about her contribution to the genre (see below). And we have to admit, her “All I Want…” leaves behind the incessant vocal pyrotechnics that made some of her other Christmas covers (“Oh Holy Night,” for example) unbearable, at least to our ears. In this case she seems to trust the song to take care of itself, which it does in fine, driving, upbeat style. Now, as Your Editor previously hinted, all he wants for Christmas is Keef’s book. And it had better be there, if, as previously noted, you get our drift. Finally, and speaking of autobiographies, we happened to read Andy Williams’ own book this past year and must report that our reference to Williams below was overly harsh. For one thing, his book is as honest as Keef’s; for another, as a singer not necessarily born with the vocal equipment of, say, Mariah Carey, the man worked at his craft and succeeded mightily where many others failed. Which, we might add, is, after all, the hope of this season. And so, we wish for a Merry Christmas, Happy Hanukkah and Good New Year to all. —JM, December 13, 2010 2009 Editor’s Note: 
Back by popular demand, what follows is our year-end sampling of the Christmas songs playing incessantly on a radio station near you, and it demands from your editor only a few updates this holiday season. For starters, we have not heard the dreaded duet of Jessica Simpson and Nick Lachey singing “Baby, It’s Cold Outside” thus far in 2009, and for this we are most grateful. Indeed, if it turns out that their recording has been confiscated by Government Authorities for use as an alternative to lethal injections, we’ll consider ourselves a positive force for society. On the other hand, we are sorry to report an offset to that cheery development, in the form of a surge in playing time for Barry Manilow’s chirpy imitation of the classic Bing Crosby/Andrew Sisters version of “Jingle Bells.” For the record, “Jingle Bells” was written in 1857…for Thanksgiving, not for Christmas. And it’s hard to imagine making a better version than that recorded by Bing and the three Andrew Sisters 86 years later. But Manilow, it seems, didn’t bother to try.

 Instead, Barry and his back-up group, called Expos, simply copied Bing’s recording, right down to that stutter in the Andrews Sisters’ unique, roller-coaster vocals on the choruses, as well as Bing’s breezy, improvised, “oh we’re gonna have a lotta fun” throwaway line on the last chorus. Sharp-eared readers might say, “Well, so what else would you expect from a guy who sang ‘I Write the Songs’…which was in fact written by somebody else?” We can’t argue with that, but we will point out another annoyance this year: the enlarged presence of Rod Stewart in the Christmas play-lists. Don’t get us wrong: we like Rod Stewart—at least, the Rod Stewart who gave the world what Your Editor still considers the best coming-of-age song ever written and recorded: “Every Picture Tells a Story.” It’s the Rod Stewart who gave us “Do Ya Think I’m Sexy?” we’re less crazy about. So too the Rod who chose to cover “My Favorite Things” (for the definitive version of that classic, see: ‘Bennett, Tony’) and “Baby It’s Cold Outside” with Dolly Parton (for an only slightly more offensive version of this one, see: ‘Simpson, Jessica’ and ‘Lachey, Nick’). As an antidote to Rod, we suggest several doses of Jack Johnson’s sly, understated “Rudolph the Red-Nosed Reindeer,” which seems to be gaining recognition, and anything by James Taylor—especially his darkly melancholic “Have Yourself a Merry Little Christmas.” Of all the singers who recorded versions of this last—and Sinatra’s might be the best—it is Taylor, a former junkie, who probably expresses more of the intended spirit of this disarmingly titled song. After all, the original lyric ended not with the upbeat “Have yourself a merry little Christmas, let your heart be light/Next year all our troubles will be out of sight,” but with this: “Have yourself a merry little Christmas, it may be your last/Next year we may all be living in the past.” No, we are not making that up. The good news is it should keep Barry Manilow from be covering it any time soon. JM—December 19, 2009 Wednesday, December 24, 2008 Shazam! From the Boss to the King to John & Paul (But Not George or Ringo), Not to Mention Jessica & Nick Like everyone else out there, we’ve been hearing Christmas songs since the day our local radio station switched to holiday music sometime around, oh, July 4th, it feels like. And while it may just be a symptom of our own aging, the 24/7 holiday music programming appears to have stretched the song quality pool from what once seemed Olympic-deep to, nowadays, more of a wading pool-depth. What we recall in our youth to be a handful of mostly good, listenable songs—Nat King Cole’s incomparable cover of “The Christmas Song” (written by an insufferable bore: more on that later); Bing’s mellow, smoky, “White Christmas”; and even Brenda Lee’s country-tinged “Rockin’ Around the Christmas Tree” (recorded when she was 13: try to get your mind around that)—played over and over a few days a year…has evolved into a thousand mediocre-at-best covers played non-stop for months on end. Does anybody else out there wonder why Elvis bothered mumbling his way through “Here Comes Santa Claus”? 

It actually sounds like Elvis doing a parody of Elvis—as if he can’t wait to get the thing over with. Fortunately The King does get it over with, in just 1 minute, 54 seconds. Along with that and all the other covers, there are, occasionally, the odd original Christmas songs—the oddest of all surely being Dan Fogelburg’s “Same Old Lang Syne.” You’ve heard it: the singer meets his old lover in a grocery store, she drops her purse, they laugh, they cry, they get drunk and realize their lives have been a waste…and, oh, the snow turns to rain. So how, exactly, did that become a Christmas song? Then there’s ex-Beatle Paul McCartney’s “Wonderful Christmastime,” which combines an annoyingly catchy beat with dreadful lyrics, something McCartney often did when John Lennon wasn’t around.

 (After all, it was Lennon who replaced McCartney’s banal, teeny-boppish opening line for “I Saw Her Standing There”—“She was just seventeen/Never been a beauty queen” is what McCartney originally wrote—with the more suggestive “She was just seventeen/You know what I mean,” thereby turning a mediocre time-piece into a classic.) But Lennon was not around to save “Wonderful Christmastime” even though McCartney actually recorded this relatively new Christmas standard nearly thirty years ago, before Lennon was shot. It rightfully lay dormant until the advent of All-Christmas-All-The-Time programming a couple of years ago. Fortunately, by way of offset, Lennon’s own downbeat but enormously catchy “Happy Xmas (War is Over)” is played about as frequently as “Wonderful Christmastime.” Who but John Lennon would start a Christmas song: “And so this is Christmas/And what have you done…”? Of course, who but Paul McCartney would start a Christmas song, “The moon is right/The spirit’s up?” If anything explains the Beatles’ breakup better than these two songs, we haven’t heard it. Now, we don’t normally pay much attention to Christmas songs. If it isn’t one of the aforementioned, or an old standard sung by Nat, Bing, Frank, Tony, Ella and a few others, we’d be clueless. But thanks to a remarkable new technology, we here at NotMakingThisUp suddenly found ourselves able to distinguish, for example, which blandly indistinguishable female voice sings which blandly indistinguishable version of “O Holy Night”—Kelly Clarkson, Celine Dion, or Mariah Carey—without any effort at all. The technology is Shazam—an iPhone application that might possibly have received the greatest amount of buzz for the least amount of apparent usefulness since cameras on cell phones first came out. For readers who haven’t seen the ads or heard about Shazam’s wonders from a breathless sub-25 year old, Shazam software lets you point your iPhone towards any source of recorded music, like a car radio, the speaker in a Starbucks, or even the jukebox in a bar—and learn what song is playing. Shazam does this by recording a selection of the music and analyzing the data. It then displays the name of the song, the artist, the album, as well as lyrics, a band biography and other doodads right there on the iPhone. Now, you may well ask, what possible use could there be for identifying a song playing in a bar? And unless you’re a music critic or a song-obsessed sub-25 year old, we’re still not sure. But we can say that Shazam is pretty cool. In the course of testing it on a batch of Christmas songs—playing on a standard, nothing-special, low-fi kitchen radio—heard from across the room, without making the least effort to get the iPhone close to the source of the music, Shazam figured out every song but one (a nondescript version of a nondescript song that it never could get) without a hitch. And, as a result, we can now report the following: 1) It is astounding how many Christmas songs are out there nowadays, most of them not worth identifying, Shazam or no Shazam; 2) All Christmas covers recorded in the last 10 years sound pretty much alike, as if they all use the same backing track, and thus require something like Shazam to distinguish one from the other; 3) Nobody has yet done a cover version of Dan Fogelburg’s “Same Old Lang Syne,” which may be the truest sign of Hope in the holiday season; 4) None of this matters because Mariah Carey screwed up the entire holiday song thing, anyway. Now, why, you may ask, would we pick on Mariah Carey, as opposed to, say, someone who can’t actually sing? Well, her “O Holy Night” happened to be the first song in our mini-marathon, and it really does seem to have turned Christmas song interpretation into a kind of vocal competitive gymnastics aimed strictly at showing off how much of the singer’s five-octave vocal range can be used, not merely within this one particular song, but within each measure of the song. In fact Mariah’s voice jumps around so much it sounds like somebody in the studio is tickling her while she’s singing. More sedate than Mariah, and possibly less harmful to the general category, The Carpenters’ version of “(There’s No Place Like) Home for the Holidays” comes on next, and it makes you think you’re listening to an Amtrak commercial rather than a Christmas song (“From Atlantic to Pacific/Gee, the traffic is terrific!”), so innocuous and manufactured it sounds. Johnny Mathis is similarly harmless, although his oddly eunuch-like voice can give you the creeps, if you really think about it. Mercifully, his version of “It’s Beginning to Look a Lot Like Christmas” is short enough (2:16) that you don’t think about it for long. Now, without Shazam we never would have known the precise time duration of that song. On the other hand, we would we never have been able to identify the perpetrators of what may be the single greatest travesty of the holiday season—Jessica Simpson and Nick Lachey, singing “Baby it’s Cold Outside.” “Singing” is actually too strong a word for what they do. Simpson’s voice barely rises above a whisper, and you cringe when she reaches for a note, although she does manage to hit the last, sustained “outside,” no doubt thanks to the magic of electronics. Thus the major downside of Shazam might be that it can promote distinctly anti-social behavior: having correctly identified who was responsible for this blight on holiday radio music, the listener might decide that if they ever ran across the pair in his or her car while singing along with the radio too loudly to notice, they wouldn’t stop to identify the bodies. Fortunately, the bad taste left by that so-called duet is washed away when Nat King Cole’s “The Christmas Song” comes on next. Thanks to Shazam, we learn that this is actually the fourth version Nat recorded. The man worked at his craft, and it shows. This is the best version of the song on record, by anyone, and probably one of the two or three best Christmas songs out there, period. The second those strings sweetly announce the tune, you relax, and by the time Cole’s smoky, gorgeous voice begins to sing, you’re in a distinctly Christmas mood like no other recording ever creates. (Unfortunately, the song’s actual writer, Mel Tormé, had the personality of a man perpetually seething for not getting proper recognition for having written one of the most popular Christmas songs of all time. We did not learn this from Shazam: we once saw Tormé perform at a small lounge, during which he managed to mention that he, not Nat King Cole, wrote “The Christmas Song”—as if this common misperception was still on everybody’s mind 35 years later. When that news flash did not seem to make the appropriate impression on the audience, he later broke off singing to chew out a less-than-attentive audience member, completely destroying the mood for the rest of the set.) Like that long-ago performance by the “Velvet Fog,” the pleasant sensation left behind by Cole’s “Christmas Song” is quickly soured, this time by a male singer performing “Let it Snow, Let it Snow, Let it Snow” in the manner of Harry Connick, Jr. doing a second-rate version of Sinatra. Who is this guy, we wonder? Shazam tells us it’s Michael Bublé. We are pondering how such a vocal lightweight became such a sensation in recent years—the answer must surely be electronics, because his voice, very distinctly at times, sounds like it has been synthesized—when John Lennon’s “Happy Xmas” comes on. It’s a great song, demonstrating as it does Lennon’s advice to David Bowie on how to write a song: “Say what you mean, make it rhyme and give it a backbeat.” The fact that Lennon had the best voice in rock and roll also helps. Unfortunately, his wife had the worst voice in rock and roll, and a brief downer it is when Yoko comes in on the chorus like a banshee. (Fortunately she is quickly drowned out by the children’s chorus from the Harlem Community Choir.) The other songs in our Shazam song-identification session are, we fear, too many to relate. Sinatra, of course; Kelly Clarkson, an American Idol winner who essentially does a pale Mariah Carey impersonation; Blandy—er, Andy Williams; and one of the best: Tony Bennett. Then there’s Willie Nelson, who has a terrific, understated way of doing any song he wants—but sounds completely out of place singing “Frosty the Snowman.” One wonders exactly what kind of white powder Willie was thinking about while he was recording this, if you get our drift. Oh, and there’s Coldplay’s “Have Yourself a Merry Little Christmas,” which pairs the sweetest piano with the worst voice in any single Christmas song we heard; Amy Grant, a kind of female Andy Williams; the Ronettes, who are genuinely terrific—a great beat, no nonsense, and Ronnie singing her heart out with that New York accent; and then Mariah again, this time doing “Silent Night” with that same roller-coaster vocal gargling. Gene Autry’s all-too-popular version of “Here Comes Santa Claus” would be bearable except that he pronounces it “Santee Closs,” which is unfortunate in a song in which that word appears like 274 times. ‘N Sync is likewise unbearable doing “O Holy Night” a cappella, with harmonies the Brits would call cringe-making, and Mariah-type warbling to boot. Hall & Oates’s “Jingle Bell Rock” is too easy to confuse with the other versions of “Jingle Bell Rock”—thank you, Shazam, for clearing that up—while Martina McBride manages to sound eerily like Barbra Streisand imitating Linda Ronstadt singing “Have Yourself a Merry Little Christmas.” Winding things down is Dan Fogelburg’s aforementioned “Same Old Lang Syne,” and here we need to vent a little: something about the way he sings “liquor store”—he pronounces it “leeker store”—never fails to provoke powerful radio-smashing adrenalin surges. Fortunately, we suppress those urges today, because the Shazam experiment concludes with one of the best Christmas songs ever recorded. Better than Bing, and maybe even better than Nat, depending on your mood. It’s Bruce Springsteen. The Boss. Doing “Santa Claus is Comin’ to Town”…
live. Yes, this song was recorded live, and despite its age (more than 25 years old), the thing still jumps out of the radio and grabs you. Now, as Shazam informs us, this particular recording was actually the B-side of a single release called “My Hometown.” (Back in the day, kids, “singles” came with two songs, one on each side of a record: the “A” side was intended to be the hit song; the “B” side was, until the Beatles came along, for throwaway stuff.) Fortunately nobody threw this one away. Springsteen begins the familiar song with some audience patter and actual jingle bells; then he starts to sing and the band comes to life. Things move along smoothly through the verse and chorus…until ace drummer Max Weinberg kicks it into high gear and the band roars into a fast shuffle that takes the thing into a different realm altogether. Feeding off the audience, The Boss sings so hard his voice slightly breaks at times. Then he quiets down before roaring back into a tear-the-roof-off chorus, sometimes dropping words and laughing as he goes. This is real music—recorded in 1975 during a concert at the C.W. Post College—with no retakes, no production effects, and no electronic vocal repairs, either. Try doing that some time, Jessica and Nick. Actually, come to think of it, please don’t. Merry Christmas, Happy Hanukkah and a Good New Year to all. Jeff Matthews Author “Secrets in Plain Sight: Business and Investing Secrets of Warren Buffett” (eBooks on Investing, 2014) Available now at Amazon.com © 2015 NotMakingThisUp, LLC

In case you thought Berkshire Hathaway was involved in only one bad deal—the $36 billion all-cash takeover of cyclical, airline-supplying Precision Castparts for 20-times what may (or may not) turn out to be peak-cycle earnings—well, there’s another deal Berkshire is involved in, indirectly, that is not looking great for the acquiring company and its shareholders: M&T Bank’s $5.4 billion all-stock acquisition of Hudson City Bancorp. Berkshire Hathaway has owned shares of M&T for years, maybe decades, and for good reason: run by down-to-earth Bob Wilmers, whose annual shareholder letter is required reading for anyone in this business, M&T is one of the few banks with $50 billion or more in assets that made it through the financial crisis without losing a dime, or needing a bailout, or both, thanks entirely due to the sober culture of the place. And while your editor owns M&T shares for exactly the same reason as Berkshire Hathaway, the acquisition of Hudson City is looking more like a pig in a poke than the tarnished gem it appeared to be the day the deal was announced way back in August 2012. The Feds, you see, have yet to approve the deal, for reasons supposedly relating to concerns about M&T’s anti-money-laundering capabilities. And while M&T has been spending heaps of money to fix whatever accounted for the Fed’s concerns, the deal approval kept getting deferred. Meantime, M&T’s stock—and the value of the shares it agreed to pay for Hudson—kept climbing and now stands 30% above the initial $7.56 value per Hudson share to $10.20 today. With 530 million Hudson shares outstanding, that means the initial $4 billion price tag has jumped to over $5.3 billion. Worse, given the long-deferred approval, Hudson has been shrinking. Who, after all, wants to work with a bank that may or may not be around—depending on the Feds—in a year or two or three? And who wants to work for that bank? No surprise, then, that employment at Hudson has shrunk from over 1,600 to 1,466 at last count, while the loan book has likewise been shrinking—from $27 billion or so around the time of the announcement to around $20 billion today. Deposits have also skedaddled: there were $18 billion at last count, down from $23 billion back when. And despite the 30% jump in the value of the transaction, shareholder equity has barely budged: $4.8 billion, up from $4.7 billion. So what M&T was once paying below book value for it is now paying a pretty fancy multiple of book, in bank terms. Nevertheless, Wall Street’s Finest continue to cheerlead the transaction. When Hudson yesterday announced a $30 million settlement with the Feds (a different branch of the Feds from the ones who will decide on the deal’s fate shortly) over allegations of “redlining,” you would have thought Hudson had instead announced that it had discovered that the company’s Paramus headquarters was sitting on a giant shale gas field with a pipeline already connected to Con Edison ready to supply New York City’s energy needs for the next millennium: M&T’s stock popped and research reports declared that this was just the sign we needed that the deal would shortly be approved. And maybe it will be. But as an M&T shareholder, I’d just as soon not be paying 30% more for so much less. Jeff Matthews Author “Secrets in Plain Sight: Business and Investing Secrets of Warren Buffett” (eBooks on Investing, 2015) Available now at Amazon.com © 2015 NotMakingThisUp, LLC The content contained in this blog represents only the opinions of Mr. Matthews.
 Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. Also, this blog is not a solicitation of business by Mr. Matthews: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.

We present below excerpts from analyst presentations by two retailers. The first is an old, well-known department store chain, and the presentation was made last September, when its long-time CEO spent an hour or so ruminating about the transformation of his company. The second is more recent—like, this past Friday. And it’s by JC Penney, or “JCP” as its new-age executives insist on calling it—a misguided nod to the company’s stock ticker, which seems to be the one thing those executives understand about the company and its now-muddied 110-year old relationship with the American consumer…a relationship that won’t be getting any better any time soon so long as its executives insist on referring to a stock ticker that 98% of Penney’s customers wouldn’t recognize if you tattooed it on their foreheads. After all, did Steve Jobs walk around talk about the great things “AAPL” was creating? Does Coke run ads saying, “Enjoy a KO Today”? Do Wal-Mart greeters say, “Welcome to WMT” to the overburdened mothers and their screaming toddlers as they begin the hair-pulling search for the day’s bargains? No they do not. But Penney executives would. Worse still, the company runs newspaper ads with no identification except “JCP” on the page. And TV ads with only a “JCP” logo on the screen. It’s no wonder the company’s sales collapsed 21% last quarter. But if you’re expecting ex-Apple retail genius Ron Johnson to bend a little on the “JCP” thing, well that’s not going to happen, if last Friday’s earnings call was any indication—but we’re getting ahead of ourselves. The point here is to contrast Penney’s Friday morning transcript detailing its current “transformation” with last year’s presentation from another, larger department store—we’ll call it “XYZ” for now—describing its own “transformation.” If you can guess what company “XYZ” is, well, you just might be cynical enough to work on Wall Street. Who We Are XYZ: I think, overall, we feel good about our position in the marketplace…I would say that our transformation over the last five to seven years—I came [here] at a time when the turnaround had been complete and we identified the fact that we needed to be an attraction that people came to us for merchandise, but they also had to have an experience that was memorable. —9/7/11. JCP: We are going to become an entirely new class of department store that doesn’t exist today. We are going to create a new category that we call the specialty department store and we think it is going to be profound and let me tell you about it… —8/10/12 Our Customer Experience XYZ: So we focused very much on engaging our associates and having them be the best ambassadors. I’m pleased to say that our customer service scores have been outstanding and lead recent American Express poll three years in a row, lead for department stores. I think that is a real testimonial to the effectiveness of our sales associates. —9/7/11. JCP: But where we are most excited is how we are going to use RFID to transform the customer experience… So next spring we will be rolling out personal check out. So in addition to being able to check out from any employee anywhere, any time, you will be able to check out by yourself in our stores. And we think customers are going to like it and it is going to help our conversion and the customer experience. —8/10/12 Our Technology XYZ: We maintain a $650 million capital expenditure commitment this year primarily on digital infrastructure as well as remodels, two new stores, and fixture rollouts for our attractions and new initiatives… —9/7/11. JCP: From a technology perspective…we have overspent on technology as a company. Part of that is because we have an extraordinarily complex and an abundant number of applications to run the business. Mike shared last January we have 492 unique applications, 88% of them are customized, meaning we have done all this hard work internally to make them unique to us and the challenge of that is 95% of the money we spend every year, $400 million was spent to maintain and support outdated applications, which meant we only got to spend about 5% on strategic go forward initiatives. If you think about that, that is $20 million a year out of $400 million going to something new to improve the customer experience or ability to manage the business and the balance going to maintain outdated legacy systems. That is a problem. —8/10/12 Our Promotional Policy XYZ: Well, our pricing and promotion is set in a year in advance, so we don’t react on a week-to-week basis, but I will say that we are well priced; as I said, we’re the lowest priced anchor in the mall and we compete head-to-head in the off-mall. —9/7/11. JCP: In 2011 our Company ran 590 unique promotions and the average item had 20 to 30 prices — different prices during the year. And so I figured going to three types of prices would be a lot simpler. A great everyday price, some items at a month-long better value and then clearance, which we called best price. —8/10/12 Our Home Business XYZ: We’ve done very well in luggage, in housewares, in the soft home side. We have a very well developed window covering business. I think one-third of all windows in the United States have [our] window coverings. That’s a tremendous advantage when people are building homes and remodeling. —9/7/11. JCP: And on the home thing, just so you know, there is going to be a material change in home. —8/10/12 Our Online Business XYZ: I’ve said many times we’d been better off if we started from scratch the dot-com than trying to change the locomotive’s engine while we’re running down the track. So I believe we’ve done a good job of understanding the issue, but it has not been easy, and has not been accretive to our monthly comps. Having said that, we’ve invested heavily because we believe it is a strength and that we have a history of being able to ship items to a customer’s home effectively and the customer looks to us for that. —9/7/11. JCP: Yes, we have not been performing well online. It is one of our big opportunities. Steve Seabolt is here in the front row. Steve took over the online store in May, we have uncovered a lot of issues — basic issues. We don’t set up our items on time. We had items in our shops that weren’t set up online. Our navigation is kind of kludgy at times. —8/10/12 Our Cost Structure XYZ: Our expense program, overall, is really designed to get us to as competitive as possible of a cost structure. Our margins have been – are historically high, so we just need to make sure that our cost structure is competitive to get back to double-digit operating profit. —9/7/11. JCP: Expenses — we have talked a lot about this at $900 million. So in 2011 we had $5.1 billion of expense. Our anticipation is that number will be down by over $900 million in 2013. And where is that coming from? About $400 million of it is coming from our stores. It’s about $350 million coming out of our home office and about $150 million coming out of our marketing. —8/10/12 Our Workforce Scheduling System XYZ: Our workforce utilization, our jTime – what we call jTime, which is matching schedules to when the customer is in the store, that’s, again, we’ve taken out cost. But at the same time, our customer service scores have gone up because we have better staffing when the customers actually are in the store and save the expense when obviously there is less traffic. —9/7/11. JCP: So I think in many ways our employees are so far ahead of us and they are so tired of having to go find a piece of paper to figure out when they should work… —8/10/12 Our Store Merchandising System XYZ: We have a very sophisticated process that allows us to merchandise every store differently even if they’re in the same market or in the next community. —9/7/11. JCP: So we will have as many distinct shopping choices in our 130,000 square feet as you will find in a 1 million square-foot mall, except you won’t have to go from check out every time you leave a store, this will be a whole unique environment… —8/10/12 Those readers with good memories, or long experience with JC Penney, or long experience with this virtual column, are probably already ahead of the game and know that both XYZ and JCP are one and the same: JC Penney. Or “JCP.” Take your pick. Either way, will the new JC Penney “transformation” work any better than the previous one? If it does, Ron Johnson really is a genius. If it doesn’t, well, at least he tried a whole lot harder than the last crew. Jeff Matthews Author “Secrets in Plain Sight: Business and Investing Secrets of Warren Buffett” (eBooks on Investing, 2012) Available now at Amazon.com © 2012 NotMakingThisUp, LLC The content contained in this blog represents only the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. Also, this blog is not a solicitation of business by Mr. Matthews: all inquiries will be ignored. And if you think Mr. Matthews is kidding about that, he is not. The content herein is intended solely for the entertainment of the reader, and the author.

Office Depot announces that Steve Odland, Chairman and CEO, has resigned from co effective 11/1.2010 (4.63) .So reads the headline crossing the proverbial “tape”—in our case, the indispensible Briefing.com. .Seems the board of the once-mighty office products retailer has seen fit to divest itself of a once-heralded CEO who, to the applause of Wall Street’s Finest, helped lay low a thriving enterprise by, among other things, “clearing cash” from the company’s once-strong balance by buying paying absurdly high prices for its own shares. .And by “absurd,” we mean more than 6-times the most recent price. .Odland was not alone, of course: hundreds of companies engaged in “cash-clearing” exercises during the heady days of the pre-crisis 2000s, when balance sheets were flush and the uniform question from Wall Street’s Finest—most of whom have never so much had to meet a payroll, let alone run a public company—was “What are you doing to ‘return value to shareholders’?” .So companies bought back stock or paid special dividends, or both, with no thought of the future being any less bright than it was in those halcyon days. .Then, come the crisis, they were frozen, with no cash to take advantage of the once-in-generation opportunity to deploy capital at no-risk prices, while Wall Street’s Finest started peppering them with new questions, such as how in the world they were going to manage their way through the crisis with such lousy balance sheets? .In any event, Mr. Odland is now leaving Office Depot, and we thought it worth reprinting in these virtual pages a column we wrote nearly a year ago to the day, in defense of the still-thriving Google when its cash-hoarding instincts were being questioned by none other than the Wall Street Journal: Tuesday, October 21, 2008 Memo to Google: Don’t “Grow Up” Google’s Cash Conundrum: Too Much Could Google provide a stimulus package to help boost the ailing U.S. economy? Google CEO Eric Schmidt revealed Monday to The Wall Street Journal that the company is “thinking” about returning cash to shareholders. It’s only a concept at this point, mind you: Mr. Schmidt ruled out a dividend and said no cash return was likely anytime soon. —The Wall Street Journal, October 21, 2008 Did Eric Schmidt learn nothing this year? And does the Wall Street Journal not pay attention to the very headlines it has been writing these last few liquidity-deprived months? Could it be that a single weekend without five or six bank failures around the globe has blocked out the memory of five or six months’ worth of round-the-clock meetings involving sleep-deprived Treasury officials crafting rescue packages for every major investment bank—save the one that filed Chapter 11—in America? Did we miss something, or did Team Iceland—by losing all three of its banks in one week—not just bat 1.000 in the Bank Failure World Series? Was this whole crisis all a dream? Apparently it was, because the above-quoted Wall Street Journalarticle provides a circa 2005-2006 take on the miseries of a publicly traded corporation with too much cash: Google’s growth and love of experimentation is not over. But, on the financial front, it may be growing up. If “growing up” means throwing away cash on the kind of mindless, investment banker-enriching share buybacks and special dividends that Dean Foods, Scott’s Miracle-Gro, Office Depot and many others embarked on at precisely the wrong time, financial-crisis-wise, we vote for Google remaining a strapping youth. Readers may recall the “growing up” of Office Depot CEO Steve Odland, who “cleared the balance sheet” of nearly $1 billion in cash in fiscal 2006, buying 26 million shares of Office Depot at an average price of $37. (See “The Shareholder Letter You Should, But Won’t, Be Reading Next Spring,” from August 08, 2007 and “Attention Target Management: Pay No Attention to Analysts Begging for Buybacks,” from November 21, 2007). Odland’s move earned kudos from Wall Street’s Finest and temporarily provided a lift to the stock price of a second-string office products distributor, but it did nothing to turn Office Depot into a first-string office products distributor, nor did it prepare the company for whatever the world’s economy could throw at it: the stock could be bought yesterday at $2.85 a share. Thus it was with some shock we read the following about Google’s supposed interest in the same sort of “cash-clearing” exercise that crippled more than a few companies at precisely the moment they could least afford being crippled: Even so, it was a telling comment, indicating that despite Google’s continued investment in a range of new business initiatives and infrastructure, the company’s cash is piling up faster than it can be spent. On Sept. 30, Google had $14.4 billion in cash and marketable securities. It may also signal that management is concerned about the roughly 50% fall in Google’s stock price over the past 12 months. We have never seen a company—particularly a supposed high-growth enterprise such as Google—that has successfully propped up its stock in any other way than by continuing to grow its business in a rational, sustainable manner. And that includes especially the kind of “cash-clearing” follies that helped bring Office Depot from $37 a share to less than $3 in a few short years, and paralyzed hundreds of other companies that might otherwise have taken advantage of cheap prices in the current liquidity squeeze, while forcing the least healthy to seek shotgun mergers or worse. If a lesson is to be learned from the last three months, it is that cash is not ‘trash,’ as the saying goes: it is a valuable strategic asset that gives a company an enormous leg up when its competitors have had their legs cut out from underneath them. Just ask Steve Odland, Eric. Jeff MatthewsI Am Not Making This Up © 2010 NotMakingThisUp, LLC The content contained in this blog represents only the opinions of Mr. Matthews.Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. Also, this blog is not a solicitation of business by Mr. Matthews: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.

The most incomprehensible treatise on business monopolies that we have read since…well, ever, appears in today’s online Wall Street Journal. The treatise appears not, however, courtesy of an English professor—as one suspects when reading the half-baked argument that appears to originate more from a deep-seated distrust of the Internet and its most successful progeny, including Google and Facebook, than from an understanding of monopolies—but, as we find at the end of the column, “a professor at Columbia Law School.” And a tenured professor at that. For the moment we will leave aside the supreme irony that a tenured professor—i.e. a teacher who has been granted a monopoly on his or her area of expertise within a specific institution—hereby seeks to define the current leaders among the extremely competitive meritocracy otherwise known as Silicon Valley as “New Monopolists,” and reprint gist of the article itself: In the Grip of the New Monopolists Do away with Google? Break up Facebook? We can’t imagine life without them—and that’s the problem By Tim Wu How hard would it be to go a week without Google? Or, to up the ante, without Facebook, Amazon, Skype, Twitter, Apple, eBay and Google? It wouldn’t be impossible, but for even a moderate Internet user, it would be a real pain. Forgoing Google and Amazon is just inconvenient; forgoing Facebook or Twitter means giving up whole categories of activity. For most of us, avoiding the Internet’s dominant firms would be a lot harder than bypassing Starbucks, Wal-Mart or other companies that dominate some corner of what was once called the real world. The Internet has long been held up as a model for what the free market is supposed to look like—competition in its purest form. So why does it look increasingly like a Monopoly board? Most of the major sectors today are controlled by one dominant company or an oligopoly. Google “owns” search; Facebook, social networking; eBay rules auctions; Apple dominates online content delivery; Amazon, retail; and so on. Let’s start with the obvious howler—that “Google ‘owns’ search.” While it is undisputable that Google dominates search, Google had, at last count—as anybody with a computer and an internet connection can find—66.1% of the U.S. search market, with Microsoft, Yahoo, Ask and AOL splitting the remaining 34%. As anybody with a computer and an internet connection can find the definition of a monopoly, and as that definition includes “Exclusive control of a commodity or service in a particular market”; “the exclusive possession or control of something”; and “the market condition that exists when there is only one seller,” it is exceedingly clear to anyone with a computer and an internet connection that Google’s two-thirds share of the search market does not constitute a “monopoly.” After all, nobody has to use Google to search for something online. They can use Bing, or Yahoo!, or AOL, or Safari…. It’s just that Google works better for most people in this part of the world. (In China, on the other hand, Baidu is the preferred search tool, with 73% of the searches, while Google—the “New Monopolist”—straggles behind with 25%.) Indeed, Google does not have “exclusive control” of search any more than Facebook has “exclusive control” of social networking: the professor seems to forget that people network socially every day—via MySpace, or Google Chat, or AOL Instant Message, or Twitter. Why, people even network socially by telephone and standing in line at the Safeway, for that matter. How is it, again, that Facebook has a “monopoly” on our social networking? But our tenured professor doesn’t leave well enough alone and end his missive on this somewhat frightening—for a Law School professor—perspective on what constitutes a “monopoly.” He instead aims his case to at even higher level—or lower level, as the case may be—by first arguing that monopolies would be okay if they could be “somehow restricted to, say, 10 years,” and then missing exactly the point of this entire exercise in brutal free-market competitiveness—i.e. that Google and Facebook and the rest are only as good as their technology platform, and that they will die when their advantages no longer attract the free choice of consumers: We wouldn’t fret over monopoly so much if it came with a term limit. If Facebook’s rule over social networking were somehow restricted to, say, 10 years—or better, ended the moment the firm lost its technical superiority—the very idea of monopoly might seem almost wholesome. The problem is that dominant firms are like congressional incumbents and African dictators: They rarely give up even when they are clearly past their prime. Facing decline, they do everything possible to stay in power. And that’s when the rest of us suffer. African dictators and congressional incumbents do not get booted out of power when their “technical superiority” is lost: internet-based companies do. Hence Amazon.com improved on eBay’s sales model and prospered; Google improved on Overture’s key-word bidding model and prospered; Facebook improved on MySpace’s social networking model and prospered…the list is too long even for this virtual column. Nevertheless, while this survival-of-the-fittest world is a reality that even a tenured professor should grasp, he fails to grasp it. And since the ferocious and wide-open technological meritocracy that dominates Silicon Valley today would not back up his weird theory, Our Tenured Professor must go all the way back to the telephone system founded by Alexander Graham Bell to attempt to prove his point—which he then backs up with an only slightly-more modern example from the Hollywood movie studio system of the 1930s: AT&T’s near-absolute dominion over the telephone lasted from about 1914 until the 1984 breakup, all the while delaying the advent of lower prices and innovative technologies that new entrants would eventually bring. The Hollywood studios took effective control of American film in the 1930s, and even now, weakened versions of them remain in charge. Information monopolies can have very long half-lives. AT&T, of course, is no comparison to Google, Facebook or anyone else cited by Our Tenured Professor: AT&T was a true monopoly because there was no way to make phone calls other than on an AT&T line. In other words, AT&T had 100% market share. As for the Hollywood studio analogy—well, a quick perusal of the top movies of 2010 reveals seven movie studious splitting the top ten grossing movies thus far in 2010—hardly constituting anyone being “in charge.” Thankfully, Our Tenured Professor concludes his dark, error-riddled vision with a relatively upbeat coda—albeit one that only serves to highlight the banality of his case: The Internet is still relatively young, and we remain in the golden age of these monopolists. We can also take comfort from the fact that most of the Internet’s giants profess an awareness of their awesome powers and some sense of attendant duty to the public. Perhaps if we’re vigilant, we can prolong the benign phase of their rule. But let’s not pretend that we live in anything but an age of monopolies. Indeed, the internet is young. Facebook was founded all of six years ago. Google, 12 years ago. Oh, and the dominant—one might say, monopolistic—search methodology (it was not precisely a search engine in those days) the year Google was founded happened to be Yahoo! And as of September of 2010, Yahoo!’s “monopoly” had shrunk to 16.7% thanks to nothing so enlightened as a benevolent government or “sense of attendant duty to the public.” Yahoo!’s decline was, in fact, due to fierce, ferocious, free competition in which one group of human beings dreamed up, built, executed and perfected a meaningfully better mousetrap that appealed to other human beings. That is something tenured professors, who have jobs for life and no accountability to any bottom line, don’t seem to grasp. Jeff Matthews I Am Not Making This Up © 2010 NotMakingThisUp, LLC The content contained in this blog represents only the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. Also, this blog is not a solicitation of business by Mr. Matthews: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.

We here at Not Making This Up are big fans of Alan Mulally. Mulally is the ex-Boeing genius hired to turn around Ford Motor Company three short years ago, and he is the individual responsible for the fact that Ford has not filed Chapter 11, has not taken government funds, and has not and likely will not require a rescue at the hands of American taxpayers. Mulally is responsible for Ford’s rescue because he’s the guy who decided Ford would borrow every dollar it could get its hands on while credit was easy and nobody else in Detroit could see the same writing on the wall. But if Mulally is going to turn Ford into a good business, rather than just a survivor, he’s going to have to sell cars. And if my mother’s experience is anything to judge by, Mulally has his hands full. My mother has been a Lexus driver ever since American car quality started going into slogans instead of the cars themselves. But she recently decided—like many Americans, I’d bet—that since Ford seemed to be doing a good job against all the odds, she’d help the team and buy a Ford. Now, you would think the local Ford dealer would be thrilled. After all, most businesses in Florida haven’t exactly been shooting the lights out lately, let alone car dealers. Let alone American car dealers. But this particular Ford dealer could not be bothered—or at least this particular salesman couldn’t. Instead of asking a thing about her driving habits, what she planned to do with the car, how she planned to used it, he launched straight into the Guy Question, “What are you looking for?” As if a grandmother is going to say “Well I want a turbo-charged six-cylinder twenty-five-hundred-CC engine with a Grampton Cycle Frapper and eight-way, hand-tied seats.” Then, without so much as getting her name and address as she backed slowly away from him, the salesman at the Ford dealership let her go…on down the road back to the Lexus guy. Jeff Matthews I Am Not Making This Up © 2009 NotMakingThisUp, LLC The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.

He’s everywhere! He’s on Fox Business News parsing the Friday unemployment numbers with Rebecca and the Happy Hour crew! He’s in Success Magazine giving tips on, well, success! He’s in the Salt Lake Tribune dissing corporate spin doctors! The “He” is none other than Patrick Byrne—Doctor Patrick Byrne, we should say—the CEO of a public company called Overstock.com that recently reported a decline in first quarter revenues and a loss. Now, declining revenues and net losses are nothing out of the ordinary in Corporate America these days—what the recession and all. Still, a tough environment should be right in Overstock.com’s wheelhouse, with plenty of “overstocked” merchandise looking for a home, and millions of downsized consumers looking for a deal. Oddly enough, however, Overstock.com seems unable to take advantage of the same environment that is providing record sales and earnings for close-out or low-priced merchants such as Ross Stores and Family Dollar, not to mention Internet giants like Amazon.com. Still, that isn’t stopping the company’s voluble CEO from offering his opinions on everything from the better-than-expected unemployment report last Friday (Inflated by statistical adjustments, opined the Doctor) to the key to successful entrepreneurship (Are you sitting down? It is this: “find a need and fill it”). As for corporate spin-doctoring, Byrne had this to say: Overstock.com CEO Patrick Byrne suggests that rather than trying to influence the market through the timing of earnings releases, some companies use the content of their announcements to paint an overly positive picture of the results. “They’ll use all kinds of corporate pap to try and put a positive spin on their results,” he said. “They might talk about their pro-forma results and only later in the release reveal their actual results.”—Salt Lake Tribune, June 6, 2009 This from a CEO whose company that regularly reports “Adjusted EBITDA” along with “operating profit (loss)” and “net income (loss).” Possibly because, generally speaking, Adjusted EBITDA tends to be one of the few positive below-the-line numbers in the press release. This from a CEO who once proclaimed that his company had “passed through the tipping point,” and thus “we can crush” expectations, and “we are really on a roll here.” Unfortunately that was early in 2005, which would turn out to be another money-losing year for Overstock.com (and 2006 would not turn out any better: Byrne would later call it “a wipe-out year”). This from a CEO who once crowed that his company was “competitive with Blue Nile,” the well-run online engagement ring retailer, saying “we intend to dominate in the $1,000 to $5,000 range” of diamond engagement rings—something his company never came remotely close to doing. And this from a CEO who, during that “wipe-out year” of 2006 explained an operating glitch as follows: It’s funny that you ask that. We actually have a truck full of important parts trucking in through — coming in from L.A. through southern Utah, ran into a cow and tipped over the cab, and that actually, literally, has stopped the project for two weeks. But short of any more cows on the interstate, I don’t see how that gets delayed. That’s just bolting things together. For “pap” and “positive spin,” it doesn’t get much better—or more worse, depending on your point of view—than that. Jeff Matthews I Am Not Making This Up © 2009 NotMakingThisUp, LLC The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.

GM Seeks $16.6 Billion More in U.S. Aid GM said it might need as much as $100 billion in financing from the government if it were to go through the traditional bankruptcy process. Rick Wagoner, GM’s chairman and chief executive, said the bankruptcy scenarios are “risky” and “costly,” and would only be pursued as a last resort. —WSJ February 18, 2009 The most irresponsible thing you’ll read this weekend is—well, you’ve already read it, we think. That would be General Motor’s Chairman and CEO, Rick Wagoner’s threat that a GM bankruptcy would be “risky” and “costly.” Why irresponsible? Well, think about those words for a minute. Think about the fact that GM stock was above $60 a share when Wagoner was made CEO in June of 2000—last trade $1.95. Think about the fact that GM has reported losses of close to $70 billion in the last three-and-three quarters years under Mr. Wagoner’s leadership. Think about the fact that GM is a 101 year-old company which under Mr. Wagoner has accumulated negative retained earnings of $60 billion-and-climbing—meaning that in more than 100 years of operation, the company has not managed to keep a dime’s worth of retained earnings for its shareholders. And ask yourself if letting GM continue as it is could be any riskier, and any more costly, than it’s been as a public company under Mr. Wagoner. Now, we have no doubt the political money-launderers in Washington—of both parties—will agree with Mr. Wagoner, and will continue to fund GM in what essentially amounts to nothing more complicated than a continued effort to secure Michigan Electoral College votes for each party’s future Presidential bids. But that wouldn’t make the statement that a bankrupt GM would somehow be riskier, and more costly, than GM as an independent public company has been, any less irresponsible. Jeff Matthews I Am Not Making This Up © 2008 NotMakingThisUp, LLC The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.