Thursday, February 28, 2008

Book of Depressing Lists

Financial flops put Memphis banks on a key list of leading laggards.

Posted By on Thu, Feb 28, 2008 at 4:00 AM

I'm looking at lists of big companies, and what they say about the Memphis economy is not good, particularly if you are an investor.

The first one is The Wall Street Journal's annual list of "The Best and Worst Performers of the WSJ 1,000" public companies in 75 industries over the past year and the past decade. The list includes "leaders and laggards."

The second list is the Memphis Business Journal's 2008 Book of Lists of the 50 largest public companies in Memphis. Several names from this list are also on The Wall Street Journal's list, and, unfortunately, most of them are laggards.

And not just ordinary laggards, either. Leading laggards, you might say.

Memphis-based companies such as First Horizon National Bank (-55 percent), FedEx (-17.7 percent), and International Paper (-2.4 percent) were losing investments in 2007. So were other companies with a lot of employees and offices in Greater Memphis, such as Regions Financial (-34.7 percent), Tenet Healthcare (-27 percent), Boyd Gaming (-23 percent), and Medtronic (-5 percent).

All of those are among the 20 largest public companies in Memphis and have at least 1,300 local employees. The second tier, ranked 21-50, didn't do much better. It includes UPS (-3 percent), Target (-11.8 percent), Home Depot (-31 percent), Williams-Sonoma (-16 percent), Macy's (-31 percent), SunTrust Banks (-24 percent), and E.W. Scripps (-9 percent).

Wal-Mart (+4.4 percent), AutoZone (+3.8 percent), Harrah's Entertainment (+9 percent), and Nike (+31 percent) managed gains, as did the Dow Jones Industrial Average (+8.9 percent) and Standard & Poor's 500 (+5.5 percent).

Some of the best known Memphis companies, such as Northwest Airlines (number 14 on the MBJ list), didn't even make the Journal rankings because their market value doesn't put them in the top 1,000. And the news from Northwest is likely to get worse, at least for Memphis, if it merges with Delta and consolidates operations in Atlanta or eliminates the Memphis hub.

Lists are a dime a dozen and often silly these days — fattest city, dumbest city, coolest city, etc. But these two lists matter. First Horizon and Regions (parent of Morgan Keegan), which were near the bottom of the bottom industry group — banks — employ more than 4,700 people and are the bastions of the Memphis skyline. Their fall was so bad in 2007 that it made their 10-year return negative. The same is true of International Paper, a Fortune 500 company and the city's biggest corporate catch of the last 20 years. In other words, if you bought $10,000 worth of their stock in 1998, you now have less than $10,000.

First Horizon and Regions made bad investments related to real estate and subprime mortgages and booked huge losses last year. They didn't just lag the market, they lagged their peer group of banks by a wide margin. And they did it with a base in the Southeast, which has enjoyed a boom in real estate, population, and automobile manufacturing over the last generation. You have to wonder how much longer they can remain independent — or how low the price will go before someone acquires them.

Last Saturday, The New York Times used Memphis as the poster child for a long story about the mortgage crisis. The story said there hasn't been so much "nervousness" on the part of homeowners since the Depression.

The long view is better in other sectors. FedEx, with an estimated 30,000 local employees, has a 10-year average return of 11.7 percent. The second largest private employer in Greater Memphis is Wal-Mart, with 6,000 employees and a 10-year average return of 10 percent. But nobody thinks of Bentonville-based Wal-Mart as a Memphis company. Harrah's, which moved its headquarters from Memphis to Las Vegas, has averaged 18 percent a year for the last 10 years. But most of its regional employees are at the casinos in Tunica. AutoZone, which may be the last bright light on the Memphis skyline, has a 10-year average return of 15 percent.

What's also troubling for Memphis, however, is that it boasts almost no presence in The Wall Street Journal's "honor roll" of top performing industry groups — computer hardware, mining and minerals, oil and gas, semiconductors, aerospace, energy, and software. Only in gambling, medical supplies, and trucking can Memphis claim a significant number of jobs and growing companies.

The top-performing industry group for the past five years is travel and tourism. Memphis is betting heavily on Graceland, FedExForum, the airport, Bass Pro, and Beale Street. Not exactly Dell, Nissan, Toyota, Apple, and Schering-Plough.

Thursday, February 21, 2008

Intolerable or Inevitable?

MCS board member and superintendent split over school violence.

Posted By on Thu, Feb 21, 2008 at 4:00 AM

Last week, Memphis school board member Kenneth Whalum Jr. read the riot act. This week, interim superintendent Dan Ward read the manual.

Whalum says Memphis City Schools should be closed immediately until metal detectors are put in place to keep guns out. Is he overreacting to a shooting at Mitchell High School, which is part of a system with 115,000 students?

Ward says schools already have metal detectors, more are on the way, and schools are reasonably safe. Is he underreacting to a system that tolerates violence, gangs, classroom disruption, and low academic performance?

Whalum, the son of former city councilman Kenneth Whalum Sr., is agitated, full of fire, and doesn't give "a flying flip" what others think of his impatience. Ward is calm and reassuring about "initiatives" and "prevention strategies."

Whalum is the coach who gets in your face to get you fired up for the fourth quarter. Ward is the kindly guidance counselor who says everything is going to be all right, just do better, and gives you another chance.

School board chairman Tomeka Hart is Whalum's nemesis and Ward's ally. Hart is an attorney, MCS graduate, and natural leader who will be a force in Memphis politics for years to come. Whalum is a preacher, MCS graduate, and natural leader who is going to be a force in Memphis politics for years to come. Hart sees the cup as half-full, Whalum as half-empty.

Last week, Whalum said "my heart sank when I saw a smiling Tomeka Hart" on the news last week in the wake of the shooting at Mitchell.

On Monday night at the school board meeting, Whalum was absent when Ward presented his safety plan and Hart praised it, while chiding The Commercial Appeal for a headline suggesting Mitchell and Hamilton high schools are "tilting toward chaos."

"One incident is not an indication that this school is tilting toward chaos," said Hart, although the story said the shooter was arrested for a school fight a year ago.

Hart said "there are far too many people who do not understand" that MCS already has security measures. Ward then proceeded, at length, to list them.

The litany includes in-school suspension, out-of-school suspension, expulsion, alternative schools, police officers in the schools, controlled access, and 25 guns seized since September. MCS will add 15 X-ray machines, 23 security officers, more gun screens in some schools, and accept Mayor Willie Herenton's offer of 67 additional officers redeployed from the Memphis Police Department. Ward will order more audits. He'll remind principals to be accountable. He asked "the shrill voices of calamity" to pipe down — an apparent reference to Whalum — and said "this is not the time for divisive rhetoric and mixed signals to our children."

Ward and Herenton disagree about the school system's relationship with the police department. Ward says it "works extremely well." But Herenton and police director Larry Godwin said at a press conference last week that "we have a problem at the school level," communication is poor, and some principals don't trust the police.

Monday's school board meeting was neither packed nor heated. The board meetings that draw the biggest crowds are the ones that address dress codes, corporal punishment, or school closings and zoning. It is a platitude to say guns and gangs are everyone's problem, but they are more of a problem for some schools than others. Again and again, Hart would call the name of a citizen who signed up to speak and the citizen would fail to appear. About 10 people did speak on the issue of guns and violence.

"Remember, there are 100,000 students out there who didn't do anything wrong," said Charles Scott, president of the Memphis Council of PTAs.

"We will not rest until corporal punishment and prayer are put back in our high school," said Kimberly Cofield of Concerned Parents of Mitchell High School.

Police should look at gangs as terrorist organizations, said James Sawyer.

Board member Sharon Webb, whose district includes Mitchell, said the school had $4 million worth of college scholarship offers, although the 2007 Annual Scholarship Report says the amount offered was $1,526,488.

So it went, with little agreement about the facts, the problem, and what to do about it.

Thursday, February 14, 2008

Blogs and Press Rights

A "scoop" raises questions about First Amendment protection.

Posted By on Thu, Feb 14, 2008 at 4:00 AM

How interesting that The Commercial Appeal has jumped to the defense of blogger Thaddeus Matthews, who is, according to a CA editorial, "among a growing cadre of Internet savvy communicators who are using the Internet to democratize journalism."

Such broad-mindedness! Such generosity! No doubt the CA will write the first check for the Matthews Legal Defense Fund, if and when Shelby County district attorney general Bill Gibbons subpoenas Matthews and, if he balks, asks a judge to throw him in jail for undermining the investigation of the murder of Memphis police lieutenant Ed Vidulich.

If Matthews decides to stonewall rather than give up the name of the person who gave him a transcript of an initial interview with suspect Dexter Cox, maybe CA editorial writers will join him at 201 Poplar in the name of the First Amendment. And if, a year or two from now, Cox gets out of jail because a judge or jury reluctantly decides that his case was hopelessly contaminated in the first 48 hours, maybe they'll give him a job. Otherwise, they're just blowing high-toned smoke.

This embrace of freelance bloggers, mind you, comes from the same newspaper that has cut back on reporters and offered its salaried staff part-time jobs as delivery persons in the brave new world of daily print journalism.

Matthews is the main author and founder of thaddeusmatthews.com. See for yourself what Cox said about Vidulich in his statement to detectives. The CA didn't print the "sexually explicit" details, and I won't either. The cops say initial statements from suspects in murder investigations are sometimes true and sometimes lies and often a mixture of the two, and I believe them. Before there is a formal charge and indictments that will stand up in court, there are more interviews, more witnesses, and more gathering of evidence.

Criminal defense lawyers get paid to shoot holes in weak cases. Arrest tickets, indictments, and trials are public, but much of the investigation process is not. Gibbons and police director Larry Godwin have argued that the initial interview of Cox by detectives is not public information and that its release could jeopardize the case. The CA says Matthews was "using a common journalistic tool."

Oh? I can't recall another prominent Memphis murder case where someone leaked an initial statement and it got such widespread media attention. It may have happened, but I don't recall it in 25 years. I know this much. Reporters write many versions or "drafts" of their stories before submitting them to editors, who refine them some more. I don't know any reporter who would defend the First Amendment right of a blogger to publish their notes or first draft of a story if it was taken off their computer (as is quite possible) and forwarded to someone else. It's hard enough to get mainstream papers to comment on their published stories, internal policies, and business operations. Not an exact parallel to the Vidulich case but close enough.

The same courtesy should be extended to the cops, so they can catch bad guys and lock them up. Kinky stuff happens. Cops break the law. Innocent people get questioned, charged, and convicted. The process is imperfect, but it's better than no process at all. You publish anonymous accusations and unsupported claims at your peril. You only have to be wrong in a big way or libel someone once to lose your credibility and even your job in the stodgy, old-fashioned world of "established media" that the stalwart CA editorial writers blithely lump together with the anything-goes world of thaddeusmatthews.com.

Flawed, lazy, beaten, battered, scooped, and insular it may sometimes be, but the established media still has some merits. Rules, principles, editing, attribution, corrections, and professionalism — not to mention regular salaries — still mean something. Blogs vary in content and quality. The best ones, and sometimes the not so good ones, are tirelessly updated, provocative, and sometimes freshly reported. They're here to stay. It's hard to tell who is real and who isn't, but some tipsters apparently are more comfortable dealing with blogs than with established media and our quaint customs.

Go ahead and extend blanket protection of the First Amendment to all blogs if you want, but be prepared to write a check and go the distance at crunch time. I'll pick my friends and my battles, thanks.

Thursday, February 7, 2008

The Bass Pro Kiss-Off

More talk and less action means The Pyramid is likely to remain vacant.

Posted By on Thu, Feb 7, 2008 at 4:00 AM

So long, Bass Pro. It was nice knowing you or not knowing you.

Unless you are under the age of 13 or senile, you know a kiss-off when you see one. And the "development agreement" for The Pyramid is a kiss-off, no question about it. More time, more public money, more escape clauses, more unexpected costs. The details are irrelevant. When you're dumped you're dumped, and you can tell by the body language and the look in the eyes. The words are just to soften the blow.

The Pyramid is a white elephant, and Bass Pro was a finicky shopper, browsing at our riverfront yard sale at a time when Wall Street is holding a 70-percent-off sale over in ammo and camo. Bass Pro's super store and headquarters was once the number-one tourist attraction in Missouri, with 3.5 million visitors. But that was in 1998, when outdoor adventure retailers with grand visions were cool and Britney Spears and Justin Timberlake were kids. Today, they're, how to say it, overexposed.

The Memphis City Council will discuss the "agreement" in two weeks. Chairman Scott McCormick, putting a good face on it, says a development agreement is further along than a nonbinding letter of intent. Bass Pro could still wind up as a Pyramid tenant, but its role as master redeveloper is highly unlikely.

Last week (see my column, "The Week That Was," on memphisflyer.com), while a city-county delegation visited Bass Pro's headquarters, I asked several people involved with The Pyramid 20 years ago what they think of its current prospects. Former city mayor Dick Hackett said Bass Pro is "a fabulous organization" and could be a great family tourism magnet, but "the real issue now is the math." Former Shelby County mayor Bill Morris prefers Greg Ericson's plan for a theme park. Former county mayor Jim Rout likes the idea of a combination of Bass Pro and Ericson's idea, but "that's easy to say but maybe difficult to work out." Harbor Town developer Henry Turley said Bass Pro "is a great fit for Memphis." Pat Kerr Tigrett, whose late husband John was the Pyramid visionary, said, "If I had my druthers, I would like something with music potential." Sports Authority veteran Pat Carter said, "Ericson's proposal offers a lot more than Bass Pro is offering." And "Smart City" blogger Tom Jones, who was involved in negotiations for The Pyramid and FedExForum as a county mayoral assistant, makes a strong case for using The Pyramid as a convention center.

Nobody in this group is throwing his or her weight around. None of them has a dog in the hunt anymore. Nobody called me to sound off. I called them. But it's pretty clear that there is nothing close to consensus among well-meaning, well-informed people who have watched downtown ebb and flow for more than 30 years.

One of the troubling things about Bass Pro and The Pyramid is that company founder and owner John Morris shows so little overt personal interest in doing a deal. City point man Robert Lipscomb said he met with him for the first time last week, after years of largely unproductive and inconclusive meetings with subordinates.

Running a half-hearted, half-baked proposal through the gauntlet of point men, the City Council, County Commission, watchdog lawyers and citizens, and two mayors is a surefire recipe for a stalemate. The history of Memphis since 1980 suggests that the way big public-private partnerships get done in downtown Memphis is by employing a ramrod. A ramrod is someone rich, influential, determined, thick-skinned, adept at using the elbows, and willing to look political decision-makers in the eye and ask for the order.

Jack Belz was the ramrod for The Peabody and Peabody Place. John and Pat Tigrett and Fred Smith were the ramrods for The Pyramid. Smith and Billy Dunavant were the ramrods for the expansion of Liberty Bowl Memorial Stadium. Turley and Belz were the ramrods for Harbor Town. Dean and Kristi Jernigan were the ramrods for AutoZone Park. Pitt Hyde, FedEx, and Jernigan were the ramrods for NBA Now and FedExForum. Take them out of the picture and those deals don't happen.

And every one of those deals has had its problems. Most did not meet expectations and attendance projections. Which is not to suggest that they failed. They were better than what we had. They were worth the gamble. But a city that has been burned, if not roasted, so many times is apt to be careful about getting burned again.

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