1st - (on a serious note) S&P finally got around to downgrading some of the bond insurers - which MIGHT cause a domino effect - if you want to read something that should scare the bejesus out of you, take 3 minutes and click here -> Financial Day of Reckoning Approaches
2nd - (on a lighter note) I guess Sallie Mae (which we've spoken about in the past as the credit contagion moves from suprime to auto and student loans) CEO had a rough day explaining how tough things are going.
- First, Sallie Mae (SLM) CEO Albert Lord told investors in a pretty defensive conference call that an increase in borrowing costs would hurt the company's profit growth.
- In one particularly hostile exchange, Lord said he "didn't know" the answer to the question what SLM stock is worth.
- "We're trying to put together projections together here, Al," one questioner said. "We're trying to figure out what your stock is going to be worth and you've got to give us some guidance." "You should give Steve [McGarry, Managing Director of Investor Relations] a call," Lord said. "But you're the CEO," the questioner objected. "That's right. I'm the CEO," Lord replied. "Next question."
- Let's cut to the chase. We're no public relations expert, but here's a tip: It's probably not a good idea to close out a particularly testy investor call by saying, "Steve, let's go, there's no questions, let's get the f*ck outta here." But hey, that's just us.
- Check it out at the 26:40 mark via the mp3 file here.
Folks, it's getting testy out there!
3rd, and even more entertaining in how it was written was this continued theme of food inflation. Apparently General Mills (GIS) passed along higher wheat prices in their cereal by lowering prices on their cereal boxes.... huh? Well they made the boxes smaller, and hence you get less cereal. And the boxes (volume) shrunk more than the price shrunk - and tada they passed along an increased cost and made the customer think he/she saved money. Sneaky!
However, the commentary below is hilarious - sounds like Abbott & Costello's Whose on First!
The move by General Mills back in June to raise the price of its cereal while decreasing the box size so that customers would hopefully be fooled by the cost increase, prompted a mixed response from Wall Street analysts. Some applauded the move, upgrading the stock from "Earnest" to "Sneaky", while other Wall Street analysts found the whole thing confusing.
Minyanville obtained a transcript from a portion of that previous analyst call.
Analyst: So let me see if I understand this. The price of your cereal is going up?
General Mills Spokesperson: That's correct.
Analyst: But the price per box is actually going down?
General Mills Spokesperson: Correct.
Analyst: So then how is the price going up?
General Mills Spokesperson: Because we're making the box smaller.
Analyst: Ok, but you just said the price of each box is going to be less.
General Mills Spokesperson: Yes, that's true.
Analyst: So then you're actually lowering prices.
General Mills Spokesperson: No, we're raising prices.
Analyst: How?
General Mills Spokesperson: Look, you're an analyst, you work with numbers.
Analyst: Right. Ok. I got it.
General Mills Spokesperson: Next question.
Analyst: Uh, actually, I don't get it. How can you raise the price by lowering the price?
General Mills Spokesperson: Because we're decreasing the size of the box.
Analyst: Ok, but you're charging less for each box.
General Mills Spokesperson: Yes. Because we're decreasing the size.
Analyst: Ah, I get it. So then the price is really the same, you're just making the box smaller which makes the price look lower.
General Mills Spokesperson: No, no, no! Listen. We're raising the price of our cereal.
Analyst: But -
General Mills Spokesperson: Shut up! Now listen, we're raising the price of our cereal.
Analyst: (Silence).
General Mills Spokesperson: Say it.
Analyst: We're raising the price of our cereal.
General Mills Spokesperson: Good. We're raising the price of our cereal... while simultaneously making the box smaller. Go on, say it.
Analyst: While simultaneously making the box smaller...
General Mills Spokesperson: But... and this is the important part... but we're raising the price more than we're decreasing the size of the box... go on...
Analyst: But we're raising the price more than we're decreasing the size of the box.
General Mills Spokesperson: So...
Analyst: So...
General Mills Spokesperson: That...
Analyst: That...
General Mills Spokesperson: Come on...
Analyst: Come -
General Mills Spokesperson: No, I mean, come on and follow the thought. So that...
Analyst: Oh. So that...
General Mills Spokesperson: The...
Analyst: The... price is lower?
General Mills Spokesperson: No! So that the customer...
Analyst: So that the customer...
General Mills Spokesperson: Will.
Analyst: Will.
General Mills Spokesperson: Oh good Lord. So that the customer will think the price has gone down when it's really gone up!
Analyst: Oh.
General Mills Spokesperson: See? Price increase. Smaller box. Larger price increase than smaller box.
Analyst: Right. I still don't get it.
General Mills Spokesperson: You know what? Just forget it.
Analyst: I'm going to have to downgrade your stock, you know.
General Mills Spokesperson: Good. Good. You do that.
Analyst: I will.
General Mills Spokesperson: I don't even want you to rate our stock positive.
Analyst: Good, because I won't.
General Mills Spokesperson: It would be an insult to the company for you to rate it positive.
Analyst: I'm downgrading your stock to "Mean."
