Mylan CEO Using New Math; End for Land’s End CEO; Mousy Talk on Twitter

Miss-stated…

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Let’s give it up for Mylan CEO Heather Bresch for providing us with some fiscal humor today. In case you missed it, she told Congress last week that poor little Mylan only makes $50 on each EpiPen 2 pack for which it charges $600. But the darndest thing happened. It seems that, for some strange reason, when Mylan calculated its sales and profit figures to present to Congress, the pharmaceutical company applied a statutory U.S. tax rate of 37.5%. Which is so weird because Mylan re-domiciled in the Netherlands in order to pay less taxes. In fact, last year Mylan paid a rate of 7.4%. And that’s even weirder because at that rate, Mylan’s profits come in closer to $160 per pack. The company sells over 4 million packs a year. If that’s not a $240 million arithmetic discrepancy, then I don’t know what is. Several members of Congress had strong opinions on Ms. Bresch’s capacity for honesty and presumably, math.  Representative Buddy Carter (R-GA), who as luck would have it is also a pharmacist in real life, called Mylan’s creative pricing a “shell game.” Shares of Mylan dropped a smudge.  Oh well.

Vattene!

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After less than two years on the job, Lands’ End CEO Federica Marchionni is out effective immediately. The now-ex CEO, who held posts at Dolce and Gabbana and Ferrari, just couldn’t seem to bring a luxurious vibe to a very middle America brand. Go figure. To be fair, the Wisconsin-based company is giving her credit for helping Lands’ End sow the seeds towards becoming a global lifestyle brand.  Which is incredibly heart-warming.  She probably didn’t help her cause when she interviewed Gloria Steinem for the company’s Spring catalog. At first she ticked off the anti-abortionists just for featuring the iconic yet controversial figure. After all, the company does sell a lot of uniforms to Catholic schools.  I’m pretty sure there’s a joke in there, but I’m not inclined to look for it. Then she managed to tick off the pro-choicers when she apologized to the anti-abortion activists for writing about Steinem in the first place. You can’t win, I tell you.  In the end, however, it did all come down to money, and Ms. Marchionni didn’t really make any for the company. Lands’ End sales were down 7% last year while shares were down 33% for the year. To add insult to fiscal injury, shares are down again today 11%, perhaps because the company now finds itself looking for its third CEO in just over two years.

Tweet tweet, squeak squeak…

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Could Twitter be going to the rodents? That might not be such a bad thing if word on the street – Wall Street, that is – is true.  Rumor has it that Disney is making a play for the social media company along with Google and Salesforce. Shares have been going up on the news since Friday and those shares need all the help they can get as Twitter continues its struggle to increase revenue. But the House of Mouse rumblings seem to have the most traction with talk that the company is currently working on a potential bid for Twitter. Interestingly enough, Twitter CEO Jack Dorsey sits on the Disney board so an acquisition isn’t so far-fetched. And since Disney’s biggest biz, cable television, has been losing ground to online streaming services, Disney Chief Bob Iger has been investing heavily in tech, thereby making a Twitter acquisition a very logical move. Twitter itself is looking to evolve into a bona fide media company, already offering live streaming NFL Thursday Night Football and the Presidential debates that air tonight. That focus will fit in nicely at Disney. Twitter’s hoping an acquisition deal will put the company’s value at a meaty $30 billion.  And who doesn’t like the sound of $30 billion?

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Banks Behaving Badly; More Karma Headed Towards EpiPen Maker; Shamu Entertainer Ditches Dividend

D’oh!

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There are few things life more stupid than pissing off Senator Elizabeth Warren (D-MA). Yet Wells Fargo CEO John Stumpf managed to do just that with his prepared, yet sometimes absurd remarks that were carefully crafted for his much deserved beating by the Senate.  That beating came after the bank had to cough up a $185 million fine because employees opened up more than two million unauthorized checking accounts and credit cards. Senator Warren said, among many other colorful things, that Stumpf demonstrated “gutless leadership” and called for him to be personally criminally investigated by both the Department of Justice and the SEC. Yowza. Stumpf did attempt to explain that Price Waterhouse Coopers was brought in to review the accounts in 2015. The problem is that Senator Sherrod Brown (D-OH)  wondered very loudly why Wells Fargo didn’t do that immediately after a scathing L.A. Times article came out exposing the scandal way back in 2013.  In the meantime, Carrie Tolstedt, who headed the retail banking business that oversaw the fraudulent accounts, retired in July with $125 million from a previous stock compensation. Of course, the bank’s top executives attempted to point the finger at lower level employees who made between $35,000 – $60,000 a year. Wells Fargo fired 5,300 employees in the last few years for improper conduct tied to the fraudulent accounts. Senator Bob Menendez (D-NJ) made sure to ask Mr. Stumpf how much he took home last year: $19.3 billion was the answer. John Stumpf is still very much gainfully employed and is apparently “deeply sorry.”

Give a shot…

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West Virginia joins the list of states gunning for Mylan ever since the company hiked the price of their life-saving EpiPen drug to $600 for a 2-pack. Mylan argues that it recoups less than half of that $600 Epipen price tag yet the drug accounts for 40% of the company’s operating profits. The state’s attorney general, Patrick Morrisey is going after the drug-maker, filing a petition to find out information that might just lead to some very unpleasant Medicaid fraud charges for Mylan. The subpoena could determine whether Mylan underpaid on rebates so that it could participate in the state’s Medicaid program. And while Mylan has yet to comment, its CEO Heather Bresch has a very unpleasant date planned for Wednesday with the House Committee on Oversight and Government Reform. You might have heard that her father is Senator Joe Manchin (D-W.VA) Awkward. Also problematic, in terms of West Virginia’s Antitrust Act, is how Mylan sued Teva Pharmaceuticals for patent infringement when the latter wanted to make a considerably cheaper, generic version. The two companies settled but in the meantime, blame it on the FDA for not yet approving the generic version. This latest investigation, by the way, is completely separate from New Attorney General Eric Schneiderman’s investigation.

Nothing to sea here folks….

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More rough waters for SeaWorld Entertainment (SEAS) as the theme park company hit a new low today of $11.77. While it did rebound a bit, the company still plans to issue its last dividend – 10 cents a share – on October 7, which is down from the 21 cents it had previously issued. But after that, the dividend will be put on hold…indefinitely. Instead, SeaWorld will use that money to buy back shares as the company stares at a future without killer whales in captivity.  Starting next year, SeaWorld in San Diego will bid a salty farewell to its Orca shows, with San Antonio and Orlando following suit in 2019. The brutal publicity from the 2013 Orca documentary, Blackfish, has put a significant damper on earnings and attendance at the theme parks, with visitors down 8% to about 6 million for the year. Interestingly, SeaWorld thinks the drop in attendance has more to do with other factors like Tropical Storm Colin and a shift in holidays. Whatever the real reason is, the fact remains that revenue was down 5% to $371 million from last year’s $392 million for the same period.  Add to that a drop in profit of $5.8 million from $17.8 for the same quarter last year and you’ve got yourself a hot fiscal mess.