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How To Talk To Wall Street: Like 2 Year-Olds

 The folks at Yum! Brands [Yes!  That’s! the! name! of! the! company!] have
been knocking the cover off the ball for so long they ought to be excused for
whiffing once in a while, as happened this week when poultry supply miscues in
China caught up with the company’s wildly successful Chinese KFC restaurant
business—a business that happens to drive half the company’s total profits—causing a 25% drop in comp store sales.
 Now we have no doubt those Chinese KFCs will
recover.  Neither does the company.  But to hammer that message into the brains of
Wall Street’s Finest, the company used a technique that gets a little tiresome,
especially when one is subjected to it for an entire earnings call: they
treated Wall Street’s Finest like 2 year-olds.
 How? 
Well, by EMPHASIZING every other WORD in the PREPARED SCRIPT,
particularly ADJECTIVES like STRONG and GROWING, not to mention GREAT, which
was used nine times in various forms during the call, including three times in
three consecutive sentences:
 “From day one, we have always had a strategy
to earn our right to own. And where we want to put Company equity is where we
have
great returns. We continue to have great
returns in China and three-year cash-on-cash returns even in tier 1 cities, 3
to 4 years now. So across the board, we have outstanding returns in China. We
have
great operating capability and we expect to be
predominantly, predominantly equity in China.”—David Novak, Yum! Brands CEO.
 Such browbeating works, of course.  (Only 3 of the 29 analysts following the
company downgraded the stock subsequent to the earnings miss and guide-down,
while one upgraded the stock.)
  Readers who think the title of this piece an
exaggeration would do well to listen to a replay of the Yum! earnings call for
themselves—or, better yet, listen to the Spectrum Brands call held earlier this
evening.
 Spectrum, purveyor of Rayovac batteries,
Remington shaving gear and other second-tier brands, was recently given the big
boo-yah by a member of the Barron’s Roundtable, mainly for a seemingly
well-timed acquisition of hardware and home improvement products from Stanley
Black & Decker—products that should get a lift from the housing boom now
underway in America.
 You would think Spectrum, with a friendly
Barron’s mention and a big acquisition under its belt would be content with
sticking to the hard, cold facts of the business…but no, the CEO and then the CFO read from their script
like, well, like they were reading to 2 year-olds.
 The laugh-out-loud part came when the CFO—who
employed a lot of non-GAAP numbers—bragged about the gross margin after
stripping out the newly acquired business by emphasizing an extra
fifty-basis-points in the adjusted, theoretical, yadda-yadda number as if it represented the discovery of the Higgs boson:
  “I am pleased to note that the gross profit margin in the
first quarter of fiscal 2013 was 34% for Spectrum Brands legacy business, and
was actually 34.
5% on a constant currency basis.”—Tony Genito, Spectrum
Brands CFO.
 No doubt Wall Street’s Finest will dutifully
report on the
thirty-four-point-FIVE percent theoretical gross margin with great
enthusiasm, and plug it into the models on which their lives seem to depend.
 We prefer Tesla’s quarterly earnings (or lack
thereof, if you have a cynical view of that company’s business model) calls, in
which founder Elon Musk limits his script to this:
 “All
right, I think we can go right into questions. So, let’s go ahead and start
addressing the questions.”
 Maybe Wall Street’s Finest couldn’t handle
that.  But we’d like to think they could.
Jeff Matthews
Author “Warren Buffett’s Successor: Who It Is And Why It Matters”
(eBooks on Investing, 2013)    $2.99
Kindle Version 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.
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The Model T iPhone

 I distinctly recall seeing for the first time—this
goes way back, kids—something on a car dashboard that wasn’t your basic
odometer, or gas tank indicator, or engine light or battery gauge: it was a
little outline of the car doors, with lights that went on when a door was open.
 It seemed, at the time, extremely silly—sort
of like when somebody first stuck a camera on a cell phone—because, after all,
who needed to know when a door was open?
 Turned out young parents did.  They loved it because they never had to worry about whether their toddler or car seat-strapped baby was going to fall out.  And it helped sell cars.
 That feature happened to be on a Subaru,
and while it seems quaint given that nowadays you can see almost anything on
your dashboard except the future, it was very near the beginning of the
Japanese assault on the US car industry.
 And those little door lights came to mind
while listening to the Apple call last night—specifically, when the subject of
the iPhone’s screen size, which is one reason the iPhone is losing share to
Samsung’s large-screen Galaxy, came up.
 Asked by one of Wall Street’s Finest whether
“there’s a long term case for a larger screen size?” Tim Cook said:
 The iPhone 5 offers,
as you know, a new 4-inch Retina display, which is the most advanced display in
the industry, and no one comes close to matching the level of quality as the
Retina display. It also provides a larger screen size for iPhone customers
without sacrificing the one-handed ease of use that our customers love. So
we’ve put a lot of thinking into screen size, and believe we picked the right
one.
 In other words, he said, “We don’t think so.”
 Now that’s perfectly fine.  Since joining Apple, and well before he even became
Steve Jobs’ successor, Cook’s been helping bring about a revolution in the way
millions of people go about their lives every day.  So who’s to argue with Tim Cook?
 But it called to mind Henry Ford, who likewise
brought about a revolution in the way millions of human beings went about their
lives nearly a century ago, when he offered his Model T in “any color so long
as it is black.
 Because, at some point, people want something different.
Jeff Matthews
Author “Warren Buffett’s Successor: Who It Is And Why It Matters”
(eBooks on Investing, 2013)    $2.99
Kindle Version 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.
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The Most Interesting Comment We’ve Heard All Day

 Verizon had their earnings call this
morning.
  And since they sell a lot of
iPhones (among other things), it was worth listening to for a whole host of
reasons—not least of which was to hear whether the issue of cell phone
subsidies would come up.
 Low and behold, it did:
 Now having said that, on the subsidy side of the
house, you can see that the price of the handsets continued to decline. We now
have the Windows platform in our mix, and we saw some steady, albeit slow,
increase in some of the uptake of that platform. But as we get more and more
platforms in the mix — and now we have RIM out there again — there is going
to the incremental competition, there will be subsidy reduction, as there was
in the basic phone history in the ecosystem.
—Verizon CFO Frank Shammo, January 19, 2013

 There.  They said it.
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.
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The Score Today: Apple 280, Microsoft 38

 Some people like to think Bill Gates will be the
successor to Warren Buffett as CEO of Berkshire Hathaway, if and when Warren Buffett
ever leaves that post.
  [Buffett will never “leave” in the
conventional sense of retiring; he’ll work until his mind, or his body, or
both, give out and no sooner—ed
.]

 We take the other side of that trade in
Warren Buffett’s Successor: Who It Is and Why It Matters,” just released via
Kindle.  [It’s a short book: you can read it during the half-hour’s worth of
commercial breaks that occur in the last 3 minutes of the average NBA game—ed.

 The reasons Gates will not succeed Buffett,
despite being one of Buffett’s best friends as well as a longtime Berkshire
board member, are numerous and compelling, and we won’t repeat them here.  [Thank goodness—ed.]
 But there’s a very good reason Bill Gates is
not going to succeed Warren Buffett at Berkshire Hathaway that is not in the
book, and it has to do with the increasingly visible disintegration of the
so-called “Wintel” duopoly that spelled mega profits for many years at Gates’
baby.
 That disintegration is occurring—slowly but
surely—even as you read this virtual column, and it is visible in stores across
America.
 Just today we visited a prosperous mall in a
prosperous city in America—a mall filled with post-Christmas holiday shoppers
taking advantage of the post-Christmas sales that make this one of the busiest
shopping days of the year.
 And at a little after noon, we
counted a grand total of 38 shoppers at the Microsoft store…and
280 customers at the Apple store.
 Both retail spaces have about the same footprint, and
both occupy good, highly visible, high-traffic locations.  Also, we used the same method at each, counting everyone not wearing a
corporate t-shirt as a customer
—men, women, toddlers and even babies in strollers.
 Granted, it was a bit harder to count at the
Apple store than the Microsoft store, because there were shoppers coming and going at
the Apple store…while at the Microsoft store there weren’t many people coming or going, and there was only one person
actually buying something at the counter.
 
 But the ratio wouldn’t change much if we
missed a couple or double-counted a couple here and there: Apple had roughly 7-times
the customer appeal of Microsoft on one of the busiest shopping days of the year.  It was almost painful to walk out of the Microsoft store without buying something, because the employees were doing their best to be friendly and engaging. 
[He is not being ironic here—ed]
 “So what?” Microsoftians will say [grumpily—ed].  “Microsoft is a business software
company.  They make way more money on
server software and office software than on Windows for consumers.”
 And that’s all quite true.  More than half Microsoft’s revenues are
business/server/tools sales, and whatever Apple is doing to Microsoft’s
consumer franchise won’t show up in those businesses for years, maybe decades
to come.
 But it’s still worth pointing out, as we’ve
been doing over the years [here, here and here
—ed.], that whatever Steve Ballmer has been doing at Microsoft
since he took over the day-to-day business from Bill Gates in 2000—including
iPhone “funeral processions” and other silly marketing tricks—it has not
stopped Apple from winning a very competitive game in the free market.
 Indeed, by our count, Apple was winning that consumer game by
about 280 to 38 over Microsoft today.
 And what with Google going after the business apps market, Amazon Web
Services becoming the go-to cloud for today’s startups, and the iPad making its
way into every “C-Suite” in the corporate world, we’ll bet the scoring only
gets tougher for Microsoft from here.
 Which is one more reason Bill Gates isn’t
going to run Berkshire Hathaway any time soon: he has 441 million shares of
Microsoft at risk, and some time in the not-to-distant future we bet he’ll be CEO
of Microsoft for the second time before he’s CEO of Berkshire Hathaway for the
first.
Jeff Matthews
Author “Warren Buffett’s Successor: Who It Is And Why It Matters”
(eBooks on Investing, 2013)    $2.99
Kindle Version 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.
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Psst! Wanna Bum Steer?!

 The original title of this piece was “No ‘Star’ For the Star-Tribune,” but that seemed a little obscure,
because what this virtual column is really about is not so much the Minneapolis
Star-Tribune—a newspaper that, like all newspapers, has seen its glory days
come and go.

 Rather, it is about the ability of somebody with an agenda (the agenda, in
this case, seeming to be the promotion of Best Buy founder Richard Schultz’s dream of
recapturing his baby) by getting stuff planted in the mainstream media pretty much
any time he or she wants to, regardless of its merit.
 At least that’s how it appears to us based on
the repeated speculation—Speculation With A Capital “S,” since none of it has proven
accurate, in the sense of actually happening so far—that has appeared in
the paper about Schultz’s purported plans ever since he got kicked off the Best
Buy board last spring.
 Exhibit A is the Star-Tribune report that
appeared last Thursday morning as follows:
 Best Buy Co. founder Richard Schulze will make
a fully financed offer to purchase the consumer electronics giant by the end of
the week, possibly on Friday, the Star Tribune has learned.
 Schulze will submit a formal proposal to the
board of directors before a “hard” deadline of Sunday, said one
source. The offer is expected to be at least $5 billion to $6 billion.
—Thomas Lee, Minneapolis
Star-Tribune 12/13/12
 That breathless bit of “news” was picked up
immediately on CNBC, Bloomberg and elsewhere, sending Best Buy’s share price soaring
two points, or 15%, on unusually heavy volume of 44 million shares, by day’s
end.
 Unfortunately, the very next morning reality
smacked the stock in the head with a 2-by-4 when Best Buy announced it was
giving Schultz somewhat more time to make a bid than the above-reported “end of
the week” (they postponed it to after the holiday season), causing the stock to
drop right back down to where it had started the day before the 15% spike.
 Here’s how the Star-Tribune managed to both
backpedal on its Thursday morning scoop and
suggest better things to come:
 Best Buy Co. and its founder, Richard Schulze,
have agreed to push back the deadline for Schulze to make an offer to buy the
company, leading some analysts to speculate that Best Buy is more willing to
make a deal.
—Thomas Lee, Minneapolis
Star-Tribune 12/14/12
 So the shmucks who on had
bought millions of shares of Best Buy as high as $14.48 after reading the Star-Tribune (or the news outlets that picked up the story) Thursday morning lost $2 a
share before they had time to spit out their coffee after reading the Star-Tribune Friday morning, when
the stock opened for trading at $12.46.
 Now, that was not the first time the
Star-Tribune had passed along what turned out to be a bum steer relating to Best
Buy. 
 Since at least last April the paper has been
quoting “sources,” “a source,” “one source,” “two sources” or “an analyst” in
stories surrounding the potential for a Best Buy takeover, or a Dick
Schultz-led leveraged buyout, or both.
 And, as of this writing, not only has neither a takeover or leveraged buyout occurred, one has not even been announced.
 What follows is a timeline, with the pertinent
quotes along with the closing price of Best Buy shares the day the article
appeared. 
 We
highlight in bold
particularly juicy or over-the-top statements, such as
“There are people swarming all over this,” “It’s not going to take long,” and “Richard Schultz will make a fully financed offer,” statements for which the average
Star-Tribune reader should be forgiven for assuming they meant something good was
going to happen to Best Buy’s share price, and soon.

 We also highlight a pertinent quote from an analyst who knows a thing or two about retailing that those same Star-Tribune readers ought to have paid more attention to (“I’ve
talked to several private equity firms, and no one will touch it”).

 As in the above
quotes, all articles contain the byline of one Thomas Lee:

April 18, 2012/$22
 Best Buy Co., in the midst of an investigation
of former CEO Brian Dunn, may have other trouble to fend off.
 The Minnesota-based retail giant has become an
alluring target for a private takeover, according to industry sources. The
nation’s largest consumer electronics chain generates more than $1 billion in
cash a year and has relatively little debt.
Such an effort may well
be a long shot, but over the past year, Best Buy’s stock price has lost more
than half of its value, making an acquisition less expensive to a potential
buyer.
A takeover of Best Buy
“is on a lot of people’s radar screens,” said Jeremy Brunelli, a
retail analyst with Consumer Edge Research in Stamford, Conn. “Best Buy is
an obvious candidate. There’s a definite buzz going on”….
 Investors are
contacting people with connections to Best Buy to seek their help in exploring
a buyout bid, a source with close ties to the company confirmed.
 “There are people swarming all over
this,”
said the source, who declined to name those parties.
June 8, 2012/$20
 Richard Schulze’s resignation from Best Buy’s
board Thursday sets the stage for a potentially divisive battle for the
company’s future, one that pits the founder against the very people he
recruited to lead the struggling Minnesota giant….
 Schulze, Best Buy’s largest shareholder, said
he is giving up his board seat and chairmanship early to “explore all
available options” for his 20.1 percent stake in the company. Those
options include a venture to reclaim control of the company by acquiring it
through private investment, according to two sources close to the situation. Schulze has already hired a top lawyer in
New York to assist in such an endeavor, the sources said.
June 8, 2012/$20
“I’ve talked to
several private equity firms, and no one will touch it,”
said Colin
McGranahan, a retail analyst with Sanford Bernstein & Co….
 And while $9 billion is certainly a lot of
money, it wouldn’t be anywhere near the largest private buyout of a retailer in
the United States. That distinction belongs to the $17 billion acquisition of
supermarket chain Albertsons by Cerberus Capital Management, CVS and Eden
Prairie-based Supervalu Inc. And while food retailing is a low-margin,
low-growth business, Best Buy still generates plenty of profits and cash from
consumer electronics and services.
 Schulze also has the advantage of not starting
from scratch. Thanks to his 20 percent stake, Schulze would just need private investors to contribute around $500
million to $1 billion
and the rest he could borrow from the debt markets,
according to an analyst with a major institutional investor in Best Buy. The
individual requested anonymity because he was not authorized to speak to the
news media.
June 27 ($20):
 Schulze was said to be talking with Credit
Suisse among other firms, but it was unclear if, or when, he might make a move.
 According to sources close to the situation,
Schulze would install his own management team if he regained control of the
company, in which he still holds a 21 percent stake.
August 8 ($20)
 Best
Buy Co. Inc. founder Richard Schulze has recruited four big-name private equity
firms
— KKR & Co., Leonard Green & Partners, TPG Capital and Apollo
Global Management — to help bankroll his $8.8 billion plan to buy the company,
the Star Tribune has learned.
 Collectively, the group would provide $3
billion to $4 billion to back Schulze’s bid, with the rest coming from debt
financing and Schulze’s own 21 percent stake in the Richfield-based company.
Sources close to Schulze said he may also tap a strategic investor who, for
example, might want Best Buy to sell certain products or services.
August 27 ($18)
 Now that Best Buy Co. will let founder Richard
Schulze peek at its books, Schulze will likely present a formal buyout offer to
the board of directors in early September.
 “It’s
not going to take long,”
said a source close to Schulze, who requested
anonymity because of the sensitive nature of the negotiations.
 On Monday, Best Buy and Schulze said they
struck a deal that allows Schulze to review the company’s financial records and
formally form a buyout group, which has 60 days to present a proposal to the
board.
 The company is currently setting up a
“data room,” where Schulze and his investors can examine Best Buy’s
financial records. After that, he will
make an offer “within days to a week,” the source said.
November 6 ($15)
 An initial offer will
likely come next week
after CEO Hubert Joly
presents his strategy to investors in New York, according to a source close to
Schulze. Of the eight potential investors that expressed interest in financing
Schulze’s bid, the final buyout group will probably include one to three
investors, the source said, who added
Schulze’s team has already completed a preliminary business plan….
 The source close to Schulze said he was
originally prepared to offer $25 a share. But given Best Buy’s declining market
value of late, Schulze might initially offer $18 to $19 a share, which the
board will reject, he said.
“I guarantee they
will say no,” the source said.
 Schulze could then make a second offer in
January for $21 or $22 a share, the source said.
 “If
you want the killer blow, you have to be close”
to Schulze’s original
range, he said.
December 13 ($12.18 to 14.12)
 Best
Buy Co. founder Richard Schulze will make a fully financed offer to purchase
the consumer electronics giant by the end of the week,
possibly on Friday,
the Star Tribune has learned.
 Schulze will submit a formal proposal to the
board of directors before a “hard” deadline of Sunday, said one
source. The offer is expected to be at least $5 billion to $6 billion.
“This is going down to the wire,” the source said.
 Over the past weekend, Schulze and his team
secured agreements to finance the deal from bankers and private equity
investors, which includes Cerberus, Leonard Greene & Partner and the Texas
Pacific Group, the source said. Schulze will meet with his top advisers,
including former CEO Brad Anderson and former president Al Lenzmeier, in
Minnesota on Thursday and Friday as they prepare to move forward.
 Best Buy declined to comment on Wednesday.
 Founded by Schulze as a single store in St.
Paul in 1966, Best Buy has grown into a global retail powerhouse with more than
$50 billion in annual sales and more than 100,000 employees.
 While it remains unclear how much Schulze will
offer for the company, investors expect the bid to be much lower than the range
of $24 to $26 per share that Schulze first outlined over the summer. Since late
June, Best Buy stock has fallen 45 percent, closing Wednesday at $12.20 per
share.
 The recent stock plunge surprised Schulze so
much that he requested a 30-day extension from the original deadline of
mid-November to see how Best Buy’s holiday numbers would hold up, sources said.
 At this point, institutional investors and
analysts speculate that shareholders would be open to selling their stake to
Schulze, although they would prefer at least $17 per share, a 40 percent premium
over the company’s current stock price.
December 13 ($12.18 to $14.12)
 Over the past weekend, Schulze and his team secured agreements to finance a buyout deal from
bankers and private equity investors
, which include Cerberus, Leonard
Greene & Partners and the Texas Pacific Group, according to a source close
to Schulze. On Thursday, Schulze met with his top advisers, including former
Best Buy CEO Brad Anderson and former president Al Lenzmeier, in Minnesota as
they prepare to move forward, the source said.
 Talk on Thursday quickly turned to two
questions: How much will Schulze offer investors and will Best Buy’s board of
directors accept or reject? Under the original negotiating terms between
Schulze and Best Buy, Schulze can make a second offer in January if the board
rejects his initial bid.
 Some institutional investors have said they
would sell their stakes for as little as $16 to $19 a share. But other analysts
suspect Schulze will need at least $20 a share.
December 14 ($14.12 to
$12.05)
Best Buy Co. and its
founder, Richard Schulze, have agreed to push back the deadline for Schulze to
make an offer to buy the company, leading some analysts to speculate that Best
Buy is more willing to make a deal.
Warren Buffett
has been buying up a lot of newspapers lately. 
We’re not sure if this kind of track record would make his cut.
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.
Categories
Uncategorized

Shazam! From the Boss to the King to John & Paul (But Not George or Ringo), Not to Mention Jessica & Nick, 2012 Edition

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…  
 
Now, on with the review!
 Merry Christmas, Happy Hanukkah 
and a Good New Year to all.
 —JM, December 6, 2012 
 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 actual musicians play musical instruments; 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-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”  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 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, 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 (Margaritaville, of course)?
 Having gotten all that off our chest, we can move on, since SiriusXM’s holiday channels added little new material to our annual survey because most of the songs are widely played everywhere else.
 Furthermore, we’ve recently 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, loopy-but-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 Armstrong’s sadly commercial attempt 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:

Hangin’ my stockin’/I can hear a knockin’
’Zat you, Santa Claus?…
One peek and I’ll try there/Uh-oh there’s an eye there

’Zat you, Santa Claus?


Please, ah please/ah pity my knees
Say that’s you Santa Claus
(That’s him alright.)

 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, 2012)    Available now at Amazon.com
© 2011 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.
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The Surface: I Came, I Saw, I Left

 I went to the Microsoft store in Times Square yesterday to see for myself the new Surface tablet with the spiffy keyboard, since
nobody I know actually has one yet.
 
 I had an open mind [“Open” in the sense that
he assumed the Surface would be unnecessarily complicated given Microsoft’s
Achilles’ Heel, which is the need to promote Windows in everything it does—ed.],
and was hoping
 that it would give me something unusual to
say: i.e. that Microsoft had finally figured out what consumers actually want.
[
Fat chance!—ed.]
 And first impressions about the store itself weren’t
bad: while small relative to the Apple mega-store on 57th Street, the
Microsoft store has most of the same touches, i.e. glass windows and long
counters with tethered products to play, and plenty of blue-shirted Microsoft
people to help. 
 Unfortunately, they do not have many customers
to help—for despite long lines at the TKTS discount booth just a couple of blocks
away, and the usual pre-holiday masses streaming by on the sidewalk right outside, there were no more than two dozen potential customers in the Microsoft
store itself, and none were lingering at the tables playing with the merchandize with
wide eyes and no sense of the time, the way they do at Apple stores.
 And playing with a Surface tablet, I found out
why: the Surface feels a bit chunky, i.e. not as smooth as an iPad, and it has more
of a toy plastic play-thing feel than a smooth, business-ready metal-thing feel.  [
He’s not much for technical jargon, is
he?—ed.] 
 But it’s not the feel that’s the problem: it’s
the way it works. 
 And the way it works is non-intuitive. Unlike your
first time with an iPad or a Galaxy, it’s hard, in a short period of time, to
figure out how to find what you might want to play; how to get out of programs
once you’ve gotten into them (weirdly, things somehow feel more like programs than apps on
the Surface); how go back to where you began; and how to look for new
stuff. 
 Certainly, you can run spreadsheets on it, and
yes you can use Word, but the cool new keyboard, being flat, is not easy to type
with.  Anyway, not many people were bothering
to even try the keyboard, once they messed around with the screen.
 I like to poke fun at Microsoft’s new product
approach by claiming they make so many versions of things there’s even a “Model
Train Enthusiasts’ Edition.” And while there was no “Model Train Enthusiasts’
Edition” of the Surface [
That he could see—ed.], it does seem like, once again,
Microsoft has been undone by its corporate culture of striving to make
everything for everybody, in one package, that promotes Windows.
 Apple’s Tim Cook has been saying for some time
he didn’t see the need to blend two form factors—notebooks and tablets—because
you’d end up with a compromised muddle.   Converging “a toaster and a refrigerator,” is
how he put it.
 He’s right. 
But that’s not just my opinion.  I
saw not one person actually purchase anything, or look like they were getting ready to purchase something, or just be really engaged in a product, in the brief time I was there.
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.
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Tap Dancing to Work: The NotMakingThisUp Book Review

 Carol Loomis is an editor at Fortune Magazine
who not only brought Warren Buffett to the attention of a wide American investing
audience through her own beautifully written articles in Fortune, but also became
the one person Buffett himself trusted to edit his now-famous annual
shareholder letters, which he writes longhand before getting her input in a
process that takes several months each year.
 
 Loomis has also been a close friend, not to
mention a bridge partner, of his for decades, and Buffett thinks so highly of her
integrity that he put the 2006 blockbuster announcement of his $40 billion
charitable gift to the Bill & Melinda Gates Foundation in her hands a month
before the actual press release went out, so Fortune could break the news in a
cover story.
 Oh, and she always asks the first question at
the Berkshire shareholder meeting, pulling no punches for her friend in the
process.
 So if there were one person you’d like to see
a Buffett book from, it would be Carol Loomis. 
 And although this book isn’t that book—it’s more a Fortune Magazine compilation, edited by Loomis, of pieces about Buffett by many people,
including Loomis—it still has plenty of insights from which any investor,
whether a Buffett fan or not, would benefit.
 The best, not surprisingly, come from those
closest to him…for example, Bill Gates, who, in a 1996 “book review” of Roger
Lowenstein’s excellent Buffett biography describes the intellectual spark that
bonded him to Buffett the first time they ever meet.
 For sure, Gates is not much of a reviewer—he
called Lowenstein’s book “competently written,” which is like calling Copolla’s
The Godfather “competently filmed”—but
he tells us a few very interesting things about Buffett that we haven’t already
heard a million times.
 And there are just enough of those, from Gates
and others, to make this book worth buying, and reading: the “model in his head
of the whole world” Buffett carries; the dice trick he tried to spring on Gates, who nevertheless figured out the trick; the way he structures incentive pay depending on
what drives each of Berkshire’s CEO’s businesses; and how he—an old-fashioned
knee-jerk liberal Democrat—challenges others to think about the world at large
(not just about investments).
 As for the Buffett book we’d like to see from
Carol Loomis, it’ll probably never happen, at least in Buffett’s lifetime.  But if it were, readers would be treated to
insights on Buffett one can only imagine, with the kind of sentences only Carol
can write—as these first paragraphs of one of her “Tap Dancing” contributions reminds
us:
 Just in from Omaha and making a do-it-yourself
delivery, Berkshire Hathaway chairman Warren Buffett strolled into the downtown
Manhattan offices of Harris Trust on March 5 [1995] and handed two envelopes to
a Harris officer.  In Envelope No.1 was
stock worth, gulp, $2.5 billion, Berkshire’s 20 million shares of Capital
Cities/ABC, being delivered to the company’s purchase, Walt Disney Co.
 In
Envelope No. 2, sealed and marked “Do not open until 4:30 P.M. on March 7,”
were Buffett’s wishes—kept secret from even the managements of Disney and Cap
Cities—as to how he wanted Berkshire to be paid for the contents of Envelope
No. 1…”
 Would that “Tap Dancing to Work” was a true
Carol Loomis memoir of her of decades with Warren Buffett…but as collections
go, it’s worth plenty on its own.
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
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The Question We’d Like to Have Heard Today

 When your company reports a loss per share of
$6.41, or roughly half your own stock price, thanks in good measure to the
write-off of most of the book value of a $10 billion acquisition [actually $11.1 billion by the time it closed thanks to currency moves] you made barely one year ago, you should probably let more than nine analysts ask questions on the earnings call…especially when you’re going to blame almost everybody
but your own employees for the horrible, terrible, no-good, very bad
acquisition.
 But HP management, keeping up a pattern of
playing the Wall Street fiddle about as well as a public company management can
play it, did just that, mainly by yammering for a very long period of time from
the “script” before opening the call to questions.
 Here’s how CEO Meg Whitman (not the architect
of the Autonomy acquisition, but now serving as the undertaker) spun the deal
before the Q&A:
 “Autonomy
remains a work in progress as we move this business from start up to grown up.
There is a big market opportunity for this business but operational
improvements are needed to take full advantage of these opportunities. While we
expect these efforts will improve the future of our Autonomy business, we
announced today an $8.8 billion non-cash impairment charge related to Autonomy.
Let me spend a moment giving you some detail about the situation.
 The majority of
this impairment charge is linked to serious accounting improprieties,
disclosure failures, and out right misrepresentations that occurred prior to
HP’s acquisition of Autonomy [emphasis added]
and the associated impact on the expected
financial performance of the business over the long term. The balance of the
impairment charge is linked to the recent trading value of HP stock. These
improprieties were discovered through an internal investigation after a senior
member of Autonomy’s leadership team came forward following the departure of
Mike Lynch on May 23.
 “Based
on this information, HP initiated an intense internal investigation into the
allegations, including a third party forensic review of Autonomy’s historical
financial results. HP has contacted the SEC’s Enforcement Division and the UK’s
Serious Fraud Office. We have requested that both agencies open criminal and
civil investigations into this matter. In addition, HP intends to seek regress
against various parties in the appropriate civil courts to recoup what we can
for our shareholders.
 “I
want to stress that we remain 100% committed to Autonomy and its industry
leading technology. We will continue to fully support our new and existing
customers and we believe Autonomy’s technology will play a significant role in
our growth strategy over the long term. To that end, we recently announced
Robert Youngjohns as Senior Vice President and General Manager our Autonomy IM
business unit. Robert is a seasoned software executive who was most recently
President of Microsoft North America.
 The second way HP assured itself of a Q&A
session lacking fireworks was that those nine analysts who were allowed to ask
questions are all polite sell-siders, as opposed to actual, angry HP
shareholders.  And polite sell-siders are
not going to ask the really juicy questions you’d want to hear asked.  Still, the first analyst, Ben Reitzes, of
Barclays, gave it a reasonable shot out of the gate:
Ben Reitzes
“Yes, thanks a lot. Meg, with regard to
the Autonomy situation, we understand what you’re doing in terms of going after
the folks that you feel misled you but what about internally? Whose responsible
internally for the acquisition, how are you analyzing yourself internally, the
Board, I think everybody at the Board was there when the Autonomy decision was
made except for Mr. Whitworth, so what’s the, what are you doing internally to
make sure that you have the right processes and who are you holding accountable
internally if anyone to make sure this doesn’t happen again and that maybe even
there’s some folks internally that need to be held responsible and we could see
repercussions of this in the near future. How are you looking at it internally?”
Meg Whitman
 Yes,
well first of all, the CEO at the time and the Head of Strategy who lead this
deal are both gone…[emphasis added]
With regard to the Board you’re right. Most of the Board
was here and voted for this deal and we feel terribly about that. What I will
say is the Board relied on audited financials, audited by Deloitte, not Brand X
accounting firm but Deloitte and by the way, during our very extensive due
diligence process, we hired KPMG to audit Deloitte, and neither of them saw
what we now see after someone came forward to point us in the right direction.
That said, obviously, we have not done any big acquisitions and we will review
the acquisition process.
 “What
I will say is due diligence and M&A now reports to our Chief Financial
Officer. At the time when I came to the Company I was surprised to find that
due diligence and M&A reported to strategy as opposed to the Chief
Financial Officer. I’ve never seen that before in my career and that’s a
decision I made right away before I knew any of this, so I understand your
point of view and we have made a few changes in that regard
but in the end,
you have to
rely on audited financials
[emphasis added] and we did and we will now carry on and
as you know we’ve reported this to the SEC as well as the serious fraud office
and we will take it from here.”
Ben Reitzes
 “And
in terms of internal personnel though, based on what you see right now the
organization can remain stable based on this occurrence?”
Meg Whitman
 “Yes,
it can. I mean really the two people that should have been held responsible are
gone and that’s the way I see it right now so I feel good about sort of the
stability it of leadership.”
  Longtime readers can see where we’re going
with this.
 According to HP’s CEO, there were only “two
people” in all of HP who “should have been held responsible” for the Autonomy
acquisition, which saw the evaporation in about a year of nearly all the value ascribed to what $11 billion worth of HP’s cash had been used to buy, and both
those “two people” are happily gone.
 But
if my friend, fellow blogger and ace hedge fund manager John Hempton could have
told me the Autonomy books were well and truly “dodgy” way
before today’s news, based strictly on a reading of the same “audited
financials” that HP’s CEO said today “you have to rely on”…
then where on
earth was HP’s entire senior management team, which presumably contains a few
people who know as much about how the audited financials of a software company
should look as a guy in Australia reading 10Ks and 10Qs, when this deal
was getting done? Out of the office making a Peets coffee run?

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.
Categories
Uncategorized

The Question We’d Like to Hear for H-P Today

 Now that HP has come clean and fessed up to the almost-literally-mind-boggling waste of shareholder money on the now-being-reported-to-the-Serious-Fraud-Office Autonomy acquisition, there is one question we’d like to hear asked by one, just one, of Wall Street’s Finest.
 We’ll report back some time after the call, but our hopes aren’t very high.
JM