News
Dumbest Moments in Business 2009
By: cnn.comPosted On: 07/02/2009 10:13 A
1. GM Partners With Segway
It became clear this spring that General Motors was going to have to get smaller to survive, but this was ridiculous. A week after President Obama gave the company a 60 day deadline to avoid bankruptcy, GM took time out from its turnaround efforts to unveil the PUMA, a two-seat vehicle being developed with Segway that looked more like a rickshaw than a car.
The vehicle, capable of going only 35 mph and traveling 35 miles between charges, got lots of attention, but did little to change popular opinion about the company that had ridden large SUVs to the cusp of failure. On June 1, GM filed for bankruptcy.
2. Tropicana's Botched Redesign
Tropicana drinkers, it turns out, are as passionate about packaging as they are about pulp. That's why they rebelled when parent company PepsiCo and consultancy Arnell overhauled the juice line's packaging in January as part of a $35 million branding campaign called "Squeeze."
Tropicana fans said the simplicity of the new design reminded them of store-brand generics. And who wants to be mistaken for a generic consumer?
Within a month, the public's flogging by e-mail, phone, and blogs forced PepsiCo to bring back the old straw-in-an-orange cartons. Other parts of the campaign remain, but PepsiCo will probably think twice before it tries updating this icon again.
3. KFC Runs Out of Chicken
KFC, owned by Yum! Brands, angered millions of customers when a free-chicken promotion in May backfired. The chain recruited Oprah Winfrey to help sell a healthier grilled chicken alternative, but when the talk show host told viewers that anyone who downloaded a coupon within a two-day period would be eligible for a complimentary two-piece grilled chicken meal, patrons clamoring for free chicken overwhelmed KFC restaurants.
The chain gave away 4 million meals before it began refusing coupon-holders, some of whom protested in the blogosphere and staged sit-ins in stores. At least two have sued. KFC, which is trying to shake its fast food image and has even started calling itself KGC -- as in Kentucky Grilled Chicken -- in some commercials, has issued rain checks.
"We apologize to any customers who were inconvenienced and we remain committed to providing a free Kentucky Grilled Chicken meal plus a medium soft drink to those who submitted valid coupons," said KFC spokesman Rick Maynard.
4. John Thain's $35,000 'Commode on Legs'
When Bank of America agreed to buy struggling broker Merrill Lynch, BofA chief Ken Lewis promised to take his customary ax to costs. He soon found targets aplenty, thanks to Merrill CEO John Thain.
Just weeks after BofA completed the Merrill deal in January, with the help of $138 billion in taxpayer-funded promises, it emerged that Thain had spent $1.2 million on a makeover of his Lower Manhattan office -- including an $87,000 area rug and a $35,000 "commode on legs."
Thain later said he'd reimburse the company, but by then he was out the mahogany-paneled door.
5. SEC Bars Madoff...Just in Time!
All hail the Securities and Exchange Commission, the newest inductee in the Fat-Lot-of-Good-That-Does-Us Hall of Fame.
A mere nine years after SEC staffers started getting hit over the head with red flags about Bernard Madoff's fishy finances, the commission finally got around to taking decisive action: In mid-June, the commission barred the Ponzi-schemer from the securities business.
Of course, this investor protection came only after Madoff stole more than $13 billion, pleaded guilty to multiple felonies and went to jail. With regulators like that, who needs regulators?
6. Not-So-Stressful Stress Tests
Phew: On May 8, the government revealed the results of the `stress tests' and we learned that the nation's biggest banks were in okay shape to handle "adverse" scenarios -- like, say, 8.9% unemployment. Thank heavens for that, because just one day later the Labor Department reported that the unemployment rate hit -- you guessed it -- 8.9%.
Nearly two months later we're at 9.4%...and counting.
7. Yankees' $200,000 Seats
The New York Yankees opened a new $1.3 billion ballpark in 2009, and were hoping to cover some of the cost with pricey $2,500 tickets, sold in season packages for $200,000.
The Yanks didn't get enough takers, and after a month of empty prime seats dominating the television coverage, the team was forced into an unprecedented and embarrassing mid-season cut.
Now the seats are a bargain...at just $1,250.
8. U.S. Debt is 'Safe.' Seriously. Stop Laughing
Following a speech at Peking University on his first trip to China as Treasury Secretary, Tim Geithner was asked to share his thoughts about the safety of Chinese investments in the United States. They are "VERY safe," he quickly asserted.
At which point the audience burst out laughing. Apparently, the audience was amused not only by the answer's substance, but by the flat "don't worry your little young heads about it" certainty with which Geithner insisted that China's U.S. debt holdings were A-OK. Because as even a group of Chinese college kids understood, that's just not as clear as the Treasury Secretary insisted it was.
9. Geithner gives few details, tanks the market
In February, President Obama used his first White House press conference to alert the public to a momentous event. "Tomorrow, my Treasury Secretary, Tim Geithner, will be announcing some very clear and specific plans for how we are going to start loosening up credit once again," he said.
But when Geithner appeared at Treasury the next day, on Feb. 10, he offered few plans of any sort, let alone clear and specific ones, which helps to explain the stock market's 5% plunge that day. Since then Geithner has loosened up, with the help of a media trainer -- and the market has bounced back. Coincidence?
10. Obama's spending cuts...a ways to go
You're eight months behind on your $500,000 mortgage, your bank is demanding a meeting, and you respond by telling them there's nothing to worry about. Why not? Because you just saved $40 by canceling your newspaper subscription.
That, essentially, is the kind of fast budget talk President Obama trotted out in April when he made a big to-do out of instructing his cabinet to cut $100 million from their budgets.
$100 million may sound like a big number, but the cut would only reduce the United States' projected $1.8 trillion budget deficit by 0.005% -- less than what you'd save for your mortgage by giving up the daily paper.
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