Sure, the The Dark Knight is a near definite Oscar winner. But it also may be a key to boosting Time Warner’s earnings and future stock performance.

Back in July I wrote a web story for Crain’s that the film’s record success in the box office had brightened Time Warner’s profit expectations enough for the company to potentially meet its full-year forecast.

At the time UBS AG analyst Michael Morris said the movie had done well enough to give Time Warner similar returns to the total $891 million made by Spiderman 3.

The Dark Knight exceeded those projections reaching $1 billion in box office sales last month.

That gave the Warner Bros’ parent company a much needed boost.

Time Warner reported better than expected third-quarter earnings in November. Yet the media giant cut it’s full-year forecast due to severance charges at Time Inc. publishing and restructuring charges at New Line Cinema, Reuters reported on Nov. 5.

Now they are planning to re-release their big hit in January.

I haven’t checked Mike Morris’ recent projections, but it will be interesting to see the financial results and how much they influence Time Warner’s outlook.

The company’s stock, which took a plunge at the end up September, bottoming at $7 a share on Nov. 20 has started to regain its momentum since. Perhaps The Dark Knight will keep Time Warner shares from falling again — at least throughout the film’s DVD and Blu-Ray release.

The problem with Capitalism is that when it doesn’t work, everybody expects a quick fix.

My original thought in September was that the U.S. government should never bail out financial institutions, especially using taxpayer money.

But the Treasury can’t undo what’s been done, they can only consider what TARP is actually doing to relieve a one-year-old recession and a tumorous financial crisis.

If you ask me — and I’m sure if asked Adam Smith — Corporate America needs to lean from its mistakes and accept that a free-market economy has its pros and cons. The more we soften the collapse of embattled corporations, the less likely those business will ever make genuine changes in how they run their operations or how they cut corners to make a bigger profit.

And the more our government tries to clean up the mess, the more likely future generations of American consumers, businesses, banks and investors will make the same mistakes.

The intervention between JP Morgan and Bear Sterns was tolerable. It was less a bailout in my view than an aggressive push. But it also flipped open a Pandora’s Box.

TARP is becoming a well-recognized mistake and any similar initiatives given to the auto industry would show equally lame results. Yet the Big Three have their open palms out now.

Goldman is sinking. Citi is imploding. And U.S. taxpayers are out $700 billion. Why would Ford, GM and Chrysler prove any different?

Here’s a solution: Take all that bailout money, put it towards education and start teaching finance and economics to kids in elementary school. Make it part of the core curricculum in all public and private schools all the way up to high school.

Good bye for now.

Wall Street makes more than almost any other industry as a whole, and the average salary doesn’t do enough to reflect the extremes.

I agree that $360,000 isn’t an exorbitant amount. But what’s the median and mode? I definitely know what the highs are: $1 million, $2 million, $3 million…

And a name like Felix Rohatyn shouldn’t be placed together with Richard Fuld’s, even if they both worked for Lehman Brothers.

Those who can serve our economy beyond serving themselves should be rewarded for their efforts, especially when they take immense pay cuts to do so — Henry Paulson excluded.

But CEOs like Fuld, who made $750,000 with a cash bonus of $4.2 million in 2007, have long been overpaid. So have most of the other top-tier executives and financial officers at banks and brokerage firms.

I’m not implying America should go Socialist. But part of deleveraging is getting used to less money.

Considering the past year’s events, giving Wall Street any bonus at all is a slap in the face to those who have worked just as hard and can barely afford to send their kids to college.

When I think about the journalists and teachers who need to find other jobs to live within their means, and the doctors who make less to work outside private insurance — people who are just as fundamental to preserving our country’s health and integrity — I am forever reminded that Wall Street makes enough off salary.

But as a believer in free market economies, I also believe that salaries, stock options and other rewards should be determined by the markets. Unfortunately, ours is tied down for the moment.

]]> http://blogs.journalism.cuny.edu/wallstreet/2008/11/10/another-take-on-wall-street-bonuses/feed/ 0 http://blogs.journalism.cuny.edu/wallstreet/2008/10/28/down-and-out-in-new-york-and-everywhere-else/ http://blogs.journalism.cuny.edu/wallstreet/2008/10/28/down-and-out-in-new-york-and-everywhere-else/#comments Tue, 28 Oct 2008 09:11:44 +0000 D Gigs http://blogs.journalism.cuny.edu/wallstreet/?p=242

As George Orwell put it, “It is a feeling of relief, almost of pleasure, at knowing yourself at last genuinely down and out. You have talked so often of going to the dogs – and well, here are the dogs, and you have reached them, and you can stand it. It takes off a lot of anxiety.”

If that holds any meaning to investors at home and abroad, it’s to those anxiously waiting for the bottom:

The bottom of stock markets, the bottom of housing and credit markets, the bottom of ambiguous recessions muddled by GDP reports.

Perhaps Orwell would top even Warren Buffet as an oracle.

In a recent Op-Ed piece in the New York Times, Buffet assured investors that now’s the occasion to buy American stocks. Not a bad idea, considering the Dow was at a low of 8,578 the day before his piece ran. But that suggestion looks less promising than it did two weeks ago as stock markets continue to tumble. Yesterday, the Dow closed at 8,176.

Buffet, himself, has lost $9.6 billion in equity this year, according to a recent story in the Wall Street Journal.

He did state in his call to investors, however, “Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now.”

The CEO of Berkshire Hathaway can certainly afford the gamble, despite his loss. For the rest of us, there are plenty of opportunities on the horizon to buy cheap and lend at high risk with a chance of reward, plenty of opportunities for new home seekers to go bargain hunting, and plenty of opportunities for graduates to find jobs once companies start to hire again. But not until the economy — at least ours — truly bottoms out.

It’s a matter of physics. You can’t pick something up when it’s still in the process of falling. Sure, you can try and catch it mid-fall, but that might just hurt your hands.

In the meantime, enjoy the little perks: overheated rent prices are beginning to cool down; Barack Obama stands a better chance in lieu of McCain’s displays of financial ineptitude; there are more free ATMs available for WaMu customers (maybe even ATM fees will start to decline as a result); and everyday goods and services, with a few exceptions, are getting cheaper – just wait for gas.

Some of those perks might not help lift the economy, but se la vi, the economy’s going to the dogs anyway…

John Mack “quickly signed,” the Wall Street Journal said in its coverage of the Treasury meeting with America’s top nine banking chiefs on Monday.

Maybe he did, or maybe he actually signed in alphabetical order — which would put him somewhere in the middle. “Before the meeting, John J. Mack said his bank, Morgan Stanley, did not need capital from the Treasury. It had just sealed a $9 billion deal with a large Japanese bank,” according to the New York Times account of the same event.

The details here might paint different pictures of Morgan Stanley, but the outcome is all the same. Mack and each of his peers definitively signed away on a $125 billion cash injection (executive pay caps included). Both papers clearly made that point in their coverage of the Washington gathering between the nine CEOs, Henry Paulson, Ben Bernanke and other government officials.

And the initial objections, the arguments, the speculation over who signed first vs. who signed last were all part of a great CEO bluffing game. The most eager to sign might seem least confident in the eyes of his investors, but the last to throw in his cards and take a portion of the split pot might lose his best bet.

Not even the clean John Stumpf of Wells Fargo could afford that bluff.

The reasons are countless, but in today’s news alone:

The Dow fell 733 points, bringing it down to 8,578, and all major indexes lost at least 7%.

JP Morgan’s third-quarter earnings fell 84%.

Citigroup continued its litigation against Wells Fargo for billions of dollars in damages over a lost bid for Wachovia.

And all that toxic debt is still floating around.

The credit crisis has only begun to show how bad it can get, and just like with oil reserves, nobody knows where the bottom is. The poker faces are officially off.