5. Repros Reproach
Markets were closed last Friday in honor of Good Friday. Luckily for us, Repros Therapeutics CEO Joe Podolski generously provided more than enough dumbness last Thursday to tide us through the long holiday weekend.
On a conference call last Thursday morning, Podolski told analysts that his experimental testosterone drug Androxal helped gay Cubans have more sex. The gay Cubans entered the clinical trial with low testosterone, according to Podolski, yet after taking Androxal, their testosterone levels soared, leading to lots and lots and lots of sex.
Seriously, we're not joking. We may kid about a lot of things, but gay Cuban sex is not one of them.
Anyway, Podolski said the gay Cuban men had so much sex that it caused their sperm counts to drop precipitously. But he urged the crowd not to blame the plunge on Androxal. Podolski maintained instead that the lower sperm counts were the result of the gay Cubans having so much sex that their ammunition ran low.
What more can we say Dumbest fans? Res ipsa loquitur .
And if that wasn't enough, TheStreet's Adam Feuerstein reported that at another point during the conference call, Podolski disclosed that a nurse at one of the Androxal clinical trial sites fabricated baseline sperm counts for patients. When Repros discovered the data fraud, the company changed the fishy numbers and everything turned out fine.
A second phase III study of Androxal is under way with enrollment expect to wrap in May. Podolski insisted the data announced Thursday should convince investors that the second study will also be positive.
Repros bulls are probably looking forward to the next report and not just for its racy content. Shares of the stock spiked nearly 80% on Podolski's pronouncements despite the trial's inconsistencies and the missing Androxal data.
Then again, fundamentals aren't really a factor when it comes to Repros stock. Nearly half the company's shares have been sold short, opening up the possibility for the bulls to once again squeeze the bears where it hurts.
And that can't be good for their sperm counts either.
4. Apple's Apology
Look. We admit Tim Cook is in a no-win position following in the footsteps of tech legend Steve Jobs. But that doesn't mean Apple's CEO has to continually act like such a loser, now does it?
Cook apologized to Chinese consumers Monday for his company's iPhone warranty policies. Prior to Cook's kowtowing, the technology giant suffered two weeks of repeated beatings in the state-run media about its after-sales service. Government-controlled media outlets including China Central Television (CCTV) and the People's Daily newspaper chastised Apple for its "arrogance," saying its current one-year service plan was far less comprehensive than those it offers in smaller markets.
"We are aware that owing to insufficient external communication, some consider Apple's attitude to be arrogant, inattentive or indifferent to consumer feedback," Cook said in a letter written in Chinese on the company's local Web site. "We express our sincere apologies for causing consumers any misgivings or misunderstanding."
It's about time Tim! CCTV went on-air with its charges on March 15th. Why on earth did it take you till April Fools Day to concede you acted like a fool in your second largest market? Have you not noticed the parade of apologies by the folks at Yum! Brands and Wal-Mart following their Chinese product problems?
Come on buddy. Everybody knows by now that you better be quick to be contrite in China. Why didn't you?
And yes, we understand that this whole kerfuffle is less about a faulty product than a Politburo power trip. There is enough freedom of speech squeaking through the cracks over there for us to realize that this is not a true consumer revolt.
We know this because as long as it took Tim to draft his apology, that's how fast the Chinese government magnanimously accepted it. On Tuesday, the Foreign Ministry praised Apple for "conscientiously" responding to so-called consumer demands saying, "We approve of what Apple said."
Let's be serious folks, these guys don't want to give up their iPads over a silly warrantee issue. Not in the least! And especially not after they just downloaded Taylor Swift's new album on iTunes.
Still, even if Cook put this episode behind him and learned a valuable lesson in the process about responding quicker to Chinese authorities, he may be running out of time with an entirely different set of overlords.
On Tuesday, Goldman Sachs yanked the technology giant from its Americas Conviction List, saying that it doubted the company's ability to hit consensus estimates for the next two quarters. Goldman maintained its buy on the stock, but lowered its 12 month price target to $575 from $660 previously.
Whether or not that was a veiled shot at Cook's competence, we don't know. But Tim may want to start cooking up an apology just in case.
It's all he's got going for him right now.
3. Ralph's Throne Game
Will some poor Furniture Brands International shareholder please kick the chair out from under CEO Ralph Scozzafava? There is no good reason for him to sit so comfortably while his company and the rest of the furniture industry struggle to get a leg up.
After threatening to slash roughly $1.7 million in public funding for the state's biannual High Point furniture market, North Carolina Gov. Pat McCrory changed his mind Tuesday. The governor reportedly restored the funds after learning that the struggling furniture industry was too tapped out to make up the deficit.
Well, everybody except King Ralph that is. He's got plenty of cash to kick in, but he'd rather send his signature instead.
You see, a day before the governor performed his about face, 40 furniture company presidents and CEOs -- including Scozzafava -- sent a letter to North Carolina legislative leaders begging them not to cut funds for the market. The executives explained to the lawmakers that the economic value of the two events is comparable to "hosting two Super Bowls in North Carolina every year" since they generate about $40 million in tax receipts vs. the state's investment of roughly $2 million.
Despite the fact that McCrory caved, we still cannot get over the irony that the furniture industry is groveling for subsidies to save itself -- and Furniture Brands is bleeding red ink -- even while Ralph is giving himself a raise.
We're not kidding. According to an SEC filing just last week, Scozzafava signed a fat new deal to stay on as chairman and CEO of the company through April 2016. Furniture Brands increased his base salary from $750,000 a year to $800,000 a year, effective April 1.
In case you were wondering, Scozzafava received total compensation of $1.98 million last year, up 9% from 2011 and far more than enough to singlehandedly make up for the state's High Point shortfall.
And if Ralph had the slightest bit of dignity he would have sent over his entire paycheck instead of his John Hancock. Furniture Brands lost $47.3 million last year, compared to a net loss of $43.8 million for 2011. Sales at the company fell 3% last year to $1.07 billion. The company has also reportedly been delinquent in paying vendors, even as it pads its CEO's pockets.
Meanwhile, shares of Furniture Brands closed at $1.12 on Tuesday's High Point announcement, down 87% since Scozzafava took the company's throne in January 2008.
If only North Carolina's governor could go back in time and reverse that fateful decision then maybe there would be a lot more money for everybody.
2. Dell's Drama
We honestly thought the Dell buyout drama couldn't get any nuttier after our old friend Carl Icahn entered the fray.
Oh, how wrong we were!
The PC-maker's CEO Michael Dell sent a personal memo to rally his employees and detail his vision of the company's future Monday. Since Michael is currently trying to take his company private with Silver Lake Management in a $24.4 billion deal, or $13.65 a share, the missive was filed with the SEC for the entire world to peruse.
"I am more energized for the future of Dell than ever. Together, we have built an amazing company and our best days are still ahead," wrote Michael Dell to his troops.
Of course, anybody taking the time to review the entire letter will wonder why a CEO with such a rosy outlook would be so quick to buy it below its current market value of $14.26. In fact, we can only imagine that Blackstone and Icahn, who placed respective bids of $14.25 and $15 for the company, would use Dell's letter as "Exhibit A" for their higher priced offers.
Then again, nobody knows if these counterproposals are real or simply a ploy by Dell's management to prove they are actually shopping the company, as opposed to stealing it out from under its shareholders.
Icahn, for example, most likely wants to run Dell as much as he wanted to run Yahoo! when he bought into Microsoft's failed bid for that company five years ago. Put simply: not a smidgen. Carl was chattering about a special $9 dividend last month, so he could simply be angling for some greenmail to go away, as is his wont.
As for Blackstone, well, even if Michael stays on in the wake of the private equity shop buying the company, Dell employees would be smart to quickly put down his letter and pick up their resumes. Try as Michael might to protect them, those employees will be canned like sardines as Blackstone chops that company to bits and soaks up special dividends, as is its wont.
"We see a lot of new work that needs to be done, but also an extraordinary long-term opportunity if we get it right," cheered Michael Dell on Monday.
Quite honestly, we still don't understand why Michael can't do all these "extraordinary" things as a public company. Is it that difficult to report quarterly results to shareholders and keep the government abreast of what you are doing?
Judging by Michael's less than memorable memo, it doesn't seem to be much of a bother at all.
1. Monte's Fall
Molte Grazie, Banca Monte dei Paschi di Siena! We needed a little Italian insouciance for this week's Dumbest list.
The beleaguered Italian bank casually posted on its Web site Saturday that customer deposits fell by "a few billion euros" in the wake of recently disclosed derivative losses at the lender. The startling lack of specificity led to a 3% drop in the bank's stock when it opened for trading Monday. And on Tuesday Italy's stock market regulator was forced to ban short sales of the stock after it sank an additional 12%.
Last week, Monte dei Paschi reported a higher-than-expected net loss for 2012 as a result of a rise in provisions for bad loans and 730 million euros in losses on the potentially fraudulent derivatives trades which were brought to light in February. Nevertheless, the bank, Italy's third largest, did not offer any guidance on its first quarter results.
"The illicit nature of the derivatives trades and their consequence on the bank's assets exposed the bank to reputational damage that was immediately translated into . . . the withdrawal of a few billion euros in deposits," the bank said in a document for shareholders attending its April 29 meeting.
Don't worry guys. It's like Mussolini said when he was hanging out in Loreto Square: Oggni in figura, domani in sepoltura.
Monte dei Paschi sued Nomura Holdings and Deutsche Bank on March 10th for their roles in sticking the bank with losses on structured-products deals. Nomura stated that it "acted fairly and responsibly with the client at all times, and strongly refutes any suggestion to the contrary." For its part, Deutsche Bank said "it will vigorously defend itself" and considered the claim "groundless."
As for Monte's brass, the bank's chief financial officer said after the earnings were released last Thursday that it was "quick in recovering ground in March" on lost deposits in February.
Good for you guys. Glad you saw an uptick in March. But we can almost guarantee that your nonchalant Web disclosure -- and this week's ensuing stock selloff -- will cause even more Italian depositors to give you the boot.
Congratulations to Lorraine Rothman from Staatsburg New York for winning our April Fools Quiz! Thanks to all the readers who sent their entries. Here are the answers: 1.) C, 2.) A, 3.) D, 4.) D, 5.) C, 6.) D, 7.) A, 8.) B, 9.) B, 10.) A, Bonus: D.
-- Written by Gregg Greenberg in New York City.