tv Prime Interest RT November 4, 2013 4:30pm-5:01pm EST
for a no holds barred look global financial headlines tune into kinds a report on our. ten so there i marinate and this is boom bust here are some of the stories we're tracking for you today. first up senator rand paul pledges to block janet yellen is confirmation as bad chairwoman with out of vote on his bill to audit the fed we'll tell you all about it coming up later on in the show and there are some big time c.e.o. drama over a blackberry as a deal to buy the seed company has gone through and later on we sit down with the jump at mcdonald's the financial journalist with the inside scoop on one of the world's most secretive businesses that's right we're talking about mckinsey and company the consulting firm has had a hand in everything from and wrong to the latest presidential election. and
finally with all hit with all this action i bet it makeshift but i want to lie down and take a nap and that might be the best thing for you to do in today's big deal will explain why that might actually improve your productivity at work but now let's get to that. janet yellen president obama's nominee to replace ben bernanke the fed chair has started meeting with senators ahead of her nov fourteenth senate banking committee hearing however there is one senator she is going to have
a tough tough time getting on her side and that would be mr round paul the kentucky senator says so blocky on his nomination unless senate majority leader harry reid holds a vote on his bill designed to audit the federal reserve now senator paul recently spoke to bloomberg about how successful he believes this gambit will be. janet yellen has been in favor of transparency at the fed that's all we're asking for is an open audit a year after the fact how about yellen per se will that nomination be approved this year will you be able to hold that we have filibuster in the old days you can place a hold on and keep it forever even if i stand on the floor and filibuster in a personal fashion i go and hold it for two days so she's going to be confirmed in all likelihood yes but i want to draw attention. there now you heard it yourself from the fed agitator himself in all likelihood will soon see yellen as top dog at the federal reserve elsewhere big u.s. banks are breathing a sigh of relief following a recent rally in the price of treasuries which brought the yield on the back down
two point six percent for meals around three percent earlier this year now the spike in treasury yields back in june was a result of the fed simply murmuring the word taper causing banks to suffer billions of dollars of paper losses but things are looking sunny again as big banks recovered eight billion dollars an unrealized gains so for all you investors out there the drama endured over the past few months seems to be settling down but don't get too comfortable because taper talks are bound to happen at some point in the near future and larry ellison is the third richest man in america and the highest paid c.e.o. of any public company in the entire world but oracle shareholders are trying to change all that now for a second consecutive year the majority of oracle shareholders voted down ellison's almost eighty million dollars compensation package and a non-binding resolution at the annual shareholders meeting now the shareholders agreement well that is that the technology company's stock has plateaued especially
relative to competitors like microsoft which has seen growth while smaller upstart companies have beaten into oracle's market shares as well now fifty five fifty seven percent of shareholders voted against the say on pay measure sounds like a close one right well mr ellison owns a quarter of the company's shares so if you take out his and the rest of the company's directors votes of a full eighty five percent of shared votes against the pay package that seems a little concerning now despite concerns about executive pay shareholders still they still reelected oracle directors that's kind of incredible debate is sure to rage on over this c.e.o. and what c.e.o.'s oh. their shareholders well there you have it there's are some of the headlines we're tracking for you today one as always we'll be keeping you posted on all the latest of them.
say good bye to the c.e.o. of blackberry monday morning the company announced for steven heinz departure now this comes as takeover talks from blackberry largest shareholder fairfax financial holdings fell through and instead of fairfax buying and taking it private the mobile communications company announced it would receive one billion dollars from fairfax and other institutional investors wall street isn't having any of it black berry shares they plunged sixteen percent on the news that the buyout crumbles and the smartphone maker used to be the top dog but he fell in popularity to competitors like apple and samsung sales of the latest black berry phone or the keyboard free z ten were dismal at best and the company had to write down nearly one billion dollars in inventory so what happened a blackberry and what's next to discuss i am now joined by kyle harrington founder of harrington capital management kyle how you doing today well and how are you good
good now first and foremost why did blackberry seem blackberrys takeover by fairfax fall through what's the what's the details behind them well i think that there's hesitation from fairfax would be my suspicion of the difficulty of taking blackberry private and then figuring out valuation and long term. liquidation of the company so i think in this situation what they've done is they've basically put forth a one billion dollar loan at a six percent interest rate which is a reasonable interest rate in this environment and then their share their convertible debentures would be convertible into the equity of the company going forward and i would suspect that in the public markets right now. before the fairfax jumped into the mix there were other private equity firms like suburban that were very interested in this company so i think they're going to take a position in the company earn an interest rate and then i think look at some of
these other companies like to see what they do now that black berry is now open to take out other investments now how wall street has not responded well to the news this takeover falling apart what are the benefits and drawbacks of fairfax investing one billion dollars into the company rather than just taking it over. well i think that here you know fairfax gets a greater return on their investment versus just being an equity holder so they they have some security against the money that they've put up and taking it over you know is a big i mean is a is a difficult thing to do and take private and remember this company is a canadian based company so the rules will be slightly different in a takeover situation than they would be in the american marketplace and from what i understand a bit more difficulty in the regulatory environment so i think that all of that
together regulatory issues as well as compliance issues in the canadian marketplace may be lean fairfax to being more of a convertible debt holder earning an interest rate on their debt and then staying in the public marketplace now obviously like we mentioned before it was announced today that black berry c.e.o. thorsten heins will be leaving the company but mr hynes is contract included a payment to the former c.e.o. worth at least thirty three million dollars if the company was acquired or if he was fired now the question is do you think that he had the right and sense incentives to turn the company around in two thousand and thirteen after the dismal sales its latest line of phones the z ten and q ten i mean the incentives seem backwards there you're going to make a lot of money either way as there are so good luck i wanted that same idea it is exactly i mean one of the first things you learn in business school is you've got to make sure the senior management interests are aligned with you know shareholders
and you know it's a great question i you know whether he does or doesn't and he earns this pool of money i mean it's you know it can be a very simple decision so i don't think that they were aligned properly and partially and part of it i think you know answers the question of you know why black berry hasn't innovated their products as much as an apple. google has and has been a fall you know they have fallen behind pretty significantly i mean i'm still a loyal blackberry user because i like the e-mail system and i think that a lot of folks in corporate america and the government as well are still using blackberry so i think that there's still significant value there but they've fallen asleep with respect to innovation and that has a lot to do with i think the alignment of interests with respect to c. level executives i mean if you're going to get paid regardless to what happens there's not much i mean how much is than doing anything better now it's rumored that our blackberry co-founders mike as a religious and they could be mounting
a serious bid with. me. that's the new york investment firm along with qualcomm the san diego based mobile chip maker is like there is still in the market i like you said they very very they're fallen off but there are they still in the market are they players that's another great question and i think the answer to that question is yes i mean they have a loyal user base and people reno really got used to blackberry with respect to e-mail communication and so the united states government. a lot of folks in corporate america on wall street you know my area are loyal blackberry users so i think that when you look at some of these potential suitors likes of paris and some of the cove you know original founders i think what they see there is is is some value at the right price of course of course but i think that they continue to see value with respect to the customer base they just need i think to they need to get
back to the basics and innovate some more products in order to stay competitive because they've definitely fallen behind now vidar course in all of this bidding was facebook who is rumored to have taken a meeting now how likely is it do you think that facebook lobs a bid in an attempt to kind of magical goals acquisition of motorola. especially given what's happened today from a strategic perspective i don't think it would be a bad idea at all and it wouldn't surprise me a facebook in fact did that in an effort to compete with you know what google has done like i said i think that there is value there with respect to blackberry but i think management interests need to be aligned and the customer base needs to be excited a little bit more going forward with with new product innovation so it would not surprise me at all from a strategic perspective if facebook put their through their hat in the ring in an effort to acquire a blackberry kyle thank you so much for your time and insight would definitely have
to have you back on the show in the near future and that was kyle harrington founder of harrington capital management thank you very much. coming up we'll look at the invisible hand that helps make the big decisions for american businesses and we're not talking about adam smith we're talking about mckinsey and company plus lululemon is having some transparency issues and we'll discuss all of that on today's big deal stick around we'll be right back. a plus but. we're going to do the job that you know the price is the only industry specifically mentioned in the constitution and. that's because a free and open press is critical to our democracy but all those years. ago. in fact the single biggest threat facing our nation today is the corporate takeover of our government and i would simply go we've been a hydrogen right hand full of transnational corporations that will profit by
destroying what our founding fathers but once sold to us by job market and on this show we reveal the big picture of what's actually going on in the world we go beyond identifying the problem to try rational debate in a real discussion critical issues facing america if i ever feel ready to join the movement then welcome to it. i would bet that. a society that case i think corporation trying to convey to consume can do. the bank trying to get all that all about money and other bashfully fix for a politician write the laws and regulations that. somehow. there is just too much rat today's.
i would rather that as questions to people in positions of power instead of speaking on their behalf and that's why you can find my show larry king now right here on our t.v. question or. considered one of the most prestigious management consultancy firms in the world mckinsey and company is not only incredibly powerful but has played a fundamental role in molding american capitalism as we know it today started in one nine hundred twenty six by accounting james mckinsey today the firm also
mckinsey better known to those in the know as the firm employees over seventeen thousand people and gross more than seven billion dollars in revenue last year now over the years the firm has had some tremendous accomplishments and equally as stunning failures but joining me now from new our new york studio to discuss is jeff macdonald financial journalist and author of the new york times best selling book at the firm the a story of mckinsey and its secret influence on american business jeff thank you for being here with us today and i want to start off how what has mackenzie shaped american capitalism as we know it today. well they've been doing it for almost a century starting with the insight that launched them which was james because he was an accountant and he actually created the idea of budgeting as a management tool you know instead of just filing your numbers and paying your taxes looking at them and using it to plan resource allocation and that's how they
got their start but these days they do everything from efficiency consulting which can involve layoffs to strategic consulting to i.t. consulting any question that the border management of a big company has about what should we do there's a good chance mckinsey is gets the call in there to help him figure it out now can you tell us a historically what are some of the most key moments mckinsey has had in shaping history. well one thing they did in the post-depression and post-war era even was to help large companies figure out how to just organize themselves it's called an m. form organizational chart but it's that thing that anyone who's worked for a company knows the sort of family tree or chart they help disseminate that. in the process helping sort of create the way that companies organize themselves another
big thing that they were involved in was the creation and dissemination of the whole idea of strategy you know most companies. spend a lot of their time just focusing on the here and now and mckinsey and a couple of their peers helped companies start to think about you know what you've got to do more than just pay attention to what you're selling in the store so you've got to think about what you're going to do with the future and how to allocate resources for that they've been instrumental in doing that too and i want to get to that how they're going to react in the future in just a bit but first i want to say statistically speaking. you know as mckinsey had more hits than misses in terms of those that they've been advising we know they were at the helm of enron. another pretty epic fail it's. absolutely you know they they were around when g.m. sort of ran into a wall in the eighty's and ron was mckinsey was on the scene jeff skilling was x. mckinsey swissair they gave some particularly dubious advice to which led to its
bankruptcy but. these guys have eighty five percent of their businesses repeat business so they clearly have some happy customers and they're pretty much in the in the corner offices of the majority of and the big companies in any economy of note in the world these guys are literally everywhere now there is notoriously secretive mckinsey as a company how were you able to gain access to such a company. you know one interesting thing about their secrecy is that as a reporter it's it's often hard to get people to say negative things about a subject you're writing about just for fear of reprisal or the fact that people just don't like to be quoted saying negative things about anybody with mckinsey it was actually the opposite because part of the deal they have with their clients is that mckinsey doesn't take credit for their ideas it's actually harder to get their
satisfied customers to talk about them because if you're the c.e.o. of some company that used them and made a great decision you're not about to turn around and say oh don't tell me you know thank mckinsey it was their idea so it was an interesting challenge but it was just like any other reporting job that you have enough lead time on your start with a few people you gather a few straws and you just see where they lead you. mckenzie offered in the end what i call limited cooperation they came around and gave me access to a few dozen senior partners current and former and. basically i got that by showing them that i was out to write a fair book and not just some sort of take down you know i want to get to this in two thousand and eleven former mckinsey managing director he was convicted of insider trading after a week in privileged information which he garnered from his position on the board at goldman sachs that he leaked that information to raj rajaratnam at the time was
head of galleon group hedge fund and at the time is one of the largest hedge funds in the world and they both spent some time present what kind of trauma if any has mackenzie really suffered as a result of this incident. you know interestingly enough the raj group duran mckenzie for nine years so it was it was a fairly mortifying experience for them but this specifics of his particular crimes had nothing to do with mckenzie he had retired from mckinsey he was selling information to roger or was even selling giving information to rajaratnam from his seat on the board of goldman so mckenzie was just sort of in his bio it had nothing to do with that case what's more interesting is another person who was giving rajaratnam information was a neil kumar who happen to be a partner at mckinsey at the time and the fascinating thing about that is the fallout from that has been almost nothing as well i talked to
a number of clients of mckinsey and they most the c.e.o.'s of large companies have a certain amount of sympathy for problems like that you know with they call it the bad apple theory you know if you're if you're of a certain size and if you're successful enough you're going to have rogues on the payroll the only question is whether it's systemic or beyond and apparently their clients don't seem to think that it was a problem with mckinsey but with that particular individual jeff thank you so much for your time that was definite donald a financial journalist and author of the new york times best selling book the firm now it's time for today's big deal. now in today's big deal lululemon athletica has made
a ten billion dollar business out of selling up with dean women's behinds brands that kind of was weird but basically signed hot pants that make their butts look better but last spring the company face sheer terror when its famous black yoga pants was recalled after customers complained they were see through. now the recall cost christine de her job and now it looks like the hot pants are again in the hot seat customers are complaining that loom movement pants are killing what's going on here is this is this part two of what we already saw with lululemon pants not being so hot well in a sense it is in the people are concerned again they're like you know the quality control here if there's killing taking place at the same time the last two lululemon big transparency scandal that we saw resulted in seventeen percent of the pants being recalled that's a huge amount what we're hearing this time is kind of a much more infrequent almost kind of story basis like a couple of people have their own personal takes they're bringing them to facebook
the financial journalist financial journalist kind of seized upon it the stock fell on friday and then has kind of stabilized once again today so are there but they're back a few minutes you can get it seems about they're back at even and it doesn't seem like it's going to have as big of an effect what happened in march actually at the end of the year may end up costing. anywhere from fifty seven to sixty seven million dollars in sales it doesn't look like this new round of healing is going to be the same thing also i would add on kind of a more personal note i would rather have pants that pill than pants that are super all together you know what i mean is special because. lumen was saying is what if you do. a test where you look in the mirror bends down and see if it's if i did then i never had to say i'm down to check out of my pants or go there and i don't think that you should have to do that and just you know if the fan it's him see that's like they just sort of like these really perverted sales people are you
better bend over and that we're down to i guess and i mean it is yeah and also you said something funny earlier we were discussing this story off camera before and for the show telling ain't that bad you can have it on your own i personally don't have a problem with killing i mean ok so listen i mean this is like seventy or eighty dollars for a pair of pants and i personally thought that was totally ridiculous still can't really afford it but in trying on a pair of lululemon pants the uplifting effect is true incredible i mean this is not i have yes you know this area this isn't real this is real and i didn't know it yet that's a reason why this is such a popular brand because it actually literally has that very uplifting effect that people are talking these are not your grandmother's leggings. leggings are. no little i mean they face competition from a variety of different retailers but is are there any today on the marketplace that are as upscale and desirable and you know kind of special underwear you know that's
. where you know actually going to be is also a status thing but the major thing that did that was really smart was that they actually gave people who were teaching the classes huge discounts so that the people who were trying to mimic their yoga instructor when they did their downward dogs also were trying to mimic what they were wearing they thought that this is what you have to wear if you really want to do the best salute to the sun so that was really really savvy and gaff is trying to create its own brand of yoga clothes that also employs this method of giving these discounts to yoga instructors what they think is it's almost going to have the same trickle down effect you know if you give. discounts maybe a lead lost to the actual yoga instructors all of their you know all of their young grasshoppers are going to come in and buy those same clothes they clearly have just posable income if they're taking these yoga classes in the first place i don't know how the most of all income i had but i certainly trying to kuwait and bought the house of michael teacher. it really is
a look so good you know you yes they're doing it now lou lemon shares they fell sharply and made these allegations on friday but they've seemed to stabilize like we mentioned before what's the future for do you think that you know their stock for us is inflated and we're just going to see this because this is like you said an extra readonly i margin there making off of probably costs very little and clearly they don't have a lot of people working on checking on the product afterwards or if they're going to hire some new people perhaps for that but it does seem like wall street to a degree has decided that this brand is stable once again they're not as concerned about the piddling as they were about the seats or you know i want to get to this really quick we don't have much time but sleeping at work it's generally looked down upon we're not allowed to do it but new research shows that naps can help workers increase their productivity during the day it can actually serve as a substitute for an adequate sleep now i got to ask you rachel napping on the job do you think it's a good thing do you think it's going to be better for society would seem so it could actually it's incredible effects people are increasing their ability to take
cognitive tests after they've taken a nap but i do think that there are i mean there's a huge issue with i fell asleep at work people would think that i was being lazy and not doing my job and would think i was a big b.s. artist if i said i'm just trying to be more productive if i go out at a rally amazing if it is a two and a half hours. i do minutes from now i sware of the sharp as a tack i feel like it's going to take a lot of rearranging how we see the workplace dynamic for that to work but i will say there are a lot of media companies like for instance huffington post they do have nap rooms and they've been mocked for it but this science team seems to support it well i'm hoping it catches on here or there to solve for now. well you can see all segments featured in today's show at youtube dot com slash boom bust r.t. we also love hearing from you so please check out our facebook page at facebook dot com slash boom bust our to and from all of us here boom bust thank you for watching c.m. are all about. wealthy
the months after announcing our strike never turned the world's attention to the place that summed up the gulag apartheid's. mission. critique should treat in store charges free. range month free. three stooges free. download free blog plug in videos for your media projects for free medio gondar to tom.
coming up on our t.v. in the nation's capital efforts are being made to make changes to expanding u.s. surveillance and protect your online privacy the new oversight board met today to discuss possible changes to the patriot act as well as to fired up dozens more to actually have the power to change n.s.a. policy details on that ahead. and a german news magazine has published a manifesto written by n.s.a. whistleblower edward snowden the former contractor is pleading for clemency from the u.s. government but white house officials have scoffed at the request for more on that coming up and in iran thousand gathered outside the former u.s. embassy the anti-american protests marks the anniversary of the one nine hundred seventy nine seizure of that former embassy in teheran more on the troubled path between the two made.