101 Dumbest Moments in Business
The boors, buffoons, and blunderers of 2006, starring Disney, McDonald's and Microsoft; Larry Ellison, Paris Hilton, and Steve Wynn; and Wal-Mart, Wal-Mart, Wal-Mart, Wal-Mart, Wal-Mart, and Wal-Mart.
1. GRAND PRIZE WINNER, DUMBEST MOMENT OF 2006
Another Brick in the Wal Because if there's anything America loves, it's a politician.
In an attempt to put a smiley face on its tarnished image, Wal-Mart (Charts) hires heavy-hitting public relations firm Edelman, which sets about using tactics derived from political races to reverse public perceptions of the giant retailer. Dubbing its campaign "Candidate Wal-Mart," the firm trumpets all manner of new Wal-Mart initiatives: improved employee health-care benefits, higher starting pay levels, new stores in downtrodden neighborhoods, reasonably priced organic foods, and a flat $4 fee for hundreds of generic prescription drugs. As a result, candidate Wal-Mart quickly becomes, well, the most popular politician since Spiro Agnew. By year's end Wal-Mart suffers its first quarterly profit drop in a decade, sees same-store sales decline in November's run-up to the crucial holiday shopping season, and suffers a series of public relations gaffes so stunning that it lands six spots in this year's edition of the 101 Dumbest Moments.
In July, bankrupt Northwest Airlines begins laying off thousands of ground workers, but not before issuing some of them a handy guide, "101 Ways to Save Money." The advice includes dumpster diving ("Don't be shy about pulling something you like out of the trash"), making your own baby food, shredding old newspapers for use as cat litter, and taking walks in the woods as a low-cost dating alternative.
In August, McDonald's (Charts) runs a promotional contest in Japan in which it gives away 10,000 Mickey D's-branded MP3 players. The gadgets come preloaded with 10 songs - and, in some cases, a version of the QQPass family of Trojan horse viruses, which, when uploaded to a PC, seeks to capture passwords, user names, and other data and then forward them to hackers.
As part of a cross promotion with the NBC TV show The Apprentice, GM (Charts) launches a contest to promote its Chevy Tahoe SUV. At Chevyapprentice.com, viewers are given video and music clips with which to create their own 30-second commercials. Among the new Tahoe ads that soon proliferate across the Web are ones with taglines like "Yesterday's technology today" and "Global warming isn't a pretty SUV ad it's a frightening reality."
Amid efforts by Kazakhstan to prove it's not the backward land portrayed in the movie Borat, the nation's central bank misspells the Kazakh word for "bank" on its 2,000- and 5,000-tenge notes.
After striking a deal to sell Picasso's "Le Rêve" ("The Dream") for a record $139 million, casino mogul Steve Wynn decides to show the masterwork to a group of visitors in his Las Vegas office. As he gestures, Wynn hits the painting with his elbow, causing what's later reported as "a distinct ripping sound." Wynn cancels the sale and spends $85,000 to have the painting restored.
News carriers and retailers in Worcester, Mass., get an unexpected bonus with their usual shipment of the Telegram & Gazette: the credit and debit card numbers of 240,000 subscribers to the paper and its sister publication the Boston Globe, both owned by the New York Times Co. The security breach is the result of a recycling program in which paper from the Telegram & Gazette's business office is reused to wrap bundles of newspapers.
"Help us find Hoffa ... and enjoy fares from just $39 each way." Marketing copy for Spirit Airlines's "Hunt for Hoffa" game, in which visitors to the carrier's website are asked to dig for the remains of the missing union leader. Besieged by complaints, the airline drops the promotion.
A computer glitch in the tax rolls of Porter County, Ind., causes the valuation of a house in the city of Valparaiso to shoot up from $122,000 to $400 million boosting its annual property taxes from $1,500 to $8 million. Though the county's IT director spots the mistake and alerts the auditor's office, the wrong number nonetheless ends up being used in budget calculations, resulting in a $900,000 shortfall for the city and a $200,000 gap for its schools.
During a routine service call in June, a Comcast (Charts) cable repairman falls asleep on the couch of customer Brian Finkelstein. Finkelstein's ensuing video, complete with soundtrack ("I Need Some Sleep," by the Eels) and commentary on the company's poor equipment, high prices, and lousy customer service, quickly becomes a viral hit on the Web. Comcast apologizes and fires the nodding worker - who was stuck on hold for more than an hour while calling in to the company for assistance.
WINNER DUMBEST MOMENT, CUSTOMER SERVICE
In August, Starbucks (Charts) directs baristas in the southeastern United States to e-mail a coupon for a free iced coffee to friends and family members. But e-mail knows no geographic boundaries and, worse, can be printed repeatedly. After the e-mail spreads to every corner of the country and is reproduced en masse, Starbucks yanks the offer, leading disgruntled customer Kelly Coakley to file a $114 million class-action lawsuit.
WINNER DUMBEST MOMENT, MARKETING
Defects in batteries made by Sony (Charts) for portable computing cause a handful of notebooks to burst into spectacularly photogenic flames. The end result is the biggest computer-related recall ever, as Dell (Charts) replaces the batteries in more than 4 million laptops. In short order, Apple (1.8 million), Lenovo/IBM (500,000), and others do the same.
Amid concern about overheating notebooks and exploding batteries, the Consumer Safety Products Commission in September issues a helpful tip on how to use a laptop: "Do not use your computer on your lap."
As it prepares to go public in May, Internet phone service provider Vonage (Charts) announces that it's setting aside shares so its customers can get a piece of the IPO action. About 9,000 Vonage users sign up, agreeing to buy 13 percent of the shares at the offering price of $17. Before Vonage can collect, however, Wall Street hangs up on the stock, with shares plunging 30 percent the first week. Vonage first implies it will let its customers off the hook and repurchase the shares from the underwriters itself. Then it reverses course and says it "reserves the right to pursue payment" from customers. The next week Vonage customers pursue some rights them-selves, filing a class-action suit alleging that the company pitched shares to customers in an attempt to offset resistance from institutional investors. By year's end, with the suit still pending, Vonage shares fall to about $7.
15. ANOTHER BRICK IN THE WAL, PART 2 Perhaps Michael Richards will be able to find work after all.
Availing itself of PR firm Edelman's deep political connections, Wal-Mart recruits civil rights leader and former U.N. ambassador Andrew Young to chair its company-funded Working Families for Wal-Mart. In an August interview with an African American newspaper in Los Angeles, Young says the mega-retailer "should" displace its urban corner-store competition. "You see, those are the people who have been overcharging us.... I think they've ripped off our communities enough. First it was Jews, then it was Koreans, and now it's Arabs."
"The idea of beating someone decorated as your boss seems very attractive." Chinese salesman Chen Liang, on the newly opened Rising Sun Anger Release Bar in Nanjing. Bar patrons are invited to rant, curse, smash drinking glasses, and even beat workers equipped with protective gear and dressed as the target of their wrath.
A jury in Fresno, Calif., awards $1.7 million in damages to Janet Orlando, who quit her job with home security company Alarm One after team-building exercises during which she and her colleagues were forced to eat baby food, wear diapers, or submit to being spanked on the butt with a rival company's yard signs.
Kindergarten teacher Denise Proell is put on notice by her employers at a church-run nursery school in Dresden, Germany, after it's revealed that she also works as a stripper. Says strip-club boss Wolle Foerster, "Denise is one of my best girls. Her garter is always stuffed with notes." Proell, who says she needed the money to pay for education classes, quits her job at the club.
The PBS Kids Sprout network fires Melanie Martinez, host of The Good Night Show, after learning she has appeared in a series of videos called Technical Virgin. The former airs bedtime stories and cartoons for an audience of 2- to 5-year-olds; the latter spoofs anti-teen-sex public service announcements by telling youngsters how to engage in sexual activity while "technically" retaining their virginity.
Los Angeles-based Fiji Water runs magazine ads for its bottled water with the headline "The Label Says Fiji Because It's Not Bottled in Cleveland." Cleveland officials retaliate by running tests revealing that Fiji bottled water contains 6.3 micrograms of arsenic per liter, while the city's tap water has none. Fiji counters by saying its own tests found less than 2 micrograms per liter.
For a Details magazine story about the most influential people in media, Federal Communications Commission chairman Kevin Martin poses for a photograph in bed literally with Alex Vogel, a tech industry lobbyist, and Eric Logan, an executive at XM Satellite Radio, which is regulated by the FCC.
In June, BusinessWeek publishes a cover with the headline "Bill Gates Gets Schooled" showing the Microsoft chairman in front of a blackboard. The magazine itself gets schooled when observers point out that Seattle Weekly used the same line and a similar image a year earlier.
Shortly after unveiling Windows Live Search, a consumer-oriented product that searches the Web, Microsoft unveils ... Windows Live Search, a business-oriented tool for searching corporate intranets. The latter product shares nothing with the former beyond its name.
In April, just nine months after a Business 2.0 cover story trumpets the wisdom of Raytheon CEO William Swanson and his folksy hit book, Swanson's Unwritten Rules of Management, a San Diego engineer makes a shocking discovery: 17 of Swanson's 33 rules are similar - and in some cases identical - to those in The Unwritten Rules of Engineering, a 1944 text by UCLA professor W.J. King. While conceding that he failed to give proper credit, Swanson insists he didn't intend to plagiarize, suggesting that old photocopied material may have wound up in his "scraps." By way of punishment, Raytheon's board freezes Swanson's salary at its 2005 level of $1.1 million and cuts his restricted stock grant by 20 percent.
In May the BBC invites IT expert Guy Kewney to its studios for an interview about Apple's iTunes Music Store. But when the cameras start rolling, BBC correspondent Karen Bowerman finds herself talking to the wrong Guy namely, Guy Goma, a computer technician who was waiting in the lobby for a job interview. Goma gamely tries his best, telling viewers that "if you can go everywhere, you're gonna see a lot of people downloading to the Internet and the website and everything they want." The job interview, alas, does not go as well: Goma fails to land the gig.
Robert and Angela Stokes sue Greyhound Bus Lines for $300,000 after an incident in which a passing bus dumps the contents of its toilet on their Ford Explorer, drenching the Ohio couple and their three children through the SUV's open sunroof.
In August, RadioShack (Charts) fires 400 staffers via e-mail. Affected employees receive a message that reads, "The work force reduction notification is currently in progress. Unfortunately your position is one that has been eliminated."
WINNER DUMBEST MOMENT, HUMAN RESOURCES
In June, National Semiconductor (Charts) boosts morale by handing every employee a 30-gigabyte iPod, for which it makes computer chips. In July, National lays off 35 employees - and demands their iPods back, claiming that the portable music players are company "equipment."
In April, while under investigation for allegedly establishing a slush fund to bribe public officials, Chung Mong-Koo, chairman of South Korea's Hyundai-Kia Motor Group, says "I am sorry" more than 30 times during a brief encounter with reporters. To make amends, Chung and son Chung Eui-Sun, president of Kia Motors, offer to donate $1 billion to charity. Spirit of giving notwithstanding, Chung Mong-Koo is jailed for two months and tried on charges of misappropriating hundreds of millions of dollars.
In the wake of the Hyundai scandal, Dallas-based private equity fund Lone Star finds itself under investigation for various financial shenanigans relating to its 2003 takeover of Korea Exchange Bank. Though Lone Star denies any wrongdoing, it nonetheless offers a public apology and announces that it will donate $100 million to charity. The mea culpa fails to impress KEB employees, who hijack Lone Star's apologetic/philanthropic press conference with a chant that translates to "Let's destroy foreign vulture funds." In November, Lone Star backs away from a deal to sell its KEB stake for a $4.5 billion profit, citing the ongoing investigation.
In April, Goldman Advertisement BV, a Dutch company controlled by businessman Rob Muller, launches Goldmansex.com, a directory of strip clubs and escort services. Goldman Sachs (Charts) claims that Goldmansex will tarnish the investment bank's white-shoe image. It manages to get the site shut down, but not before generating reams of press clips in which "Goldman Sachs" and "adult entertainment" are mentioned in close proximity.
Proving the value of expensive professional stock-market expertise, Trading-Markets a website that provides its subscribers with professional stock-market expertise for as much as $100 a month in January invites 10 Playboy models to participate in an investing contest. When results are tallied toward the end of the year, 40 percent of the bunnies deliver better returns than the S&P 500, compared with just 29 percent of actively managed mutual funds.
The Heart Attack Grill in Tempe, Ariz., introduces the Quadruple Bypass Burger, featuring 2 pounds of beef, four layers of cheese, 12 slices of bacon, and 8,000 calories. As a side dish: Flatliner Fries, cooked in lard. A Triple Bypass is also available.
Antwerp's Museum of Contemporary Art stages an exhibition by Belgian artist Jan Fabre constructed solely of meat products. The artwork, which includes a coat made of steaks and a tent made of bacon, lasts three days before turning rancid.
35. ANOTHER BRICK IN THE WAL, PART 3 Oh, you were doing it to keep your employees from improving their working conditions? Well, that's all right then.
Former Wal-Mart vice chairman Thomas Coughlin - whose compensation from salary, bonuses, and stock grants totaled several million dollars per year - is discovered to have cooked up fraudulent expense invoices in a scam to siphon off $500,000 over the course of seven years. Coughlin, who reportedly told enabling subordinates that he was using the funds for a secret antiunion initiative, pleads guilty and is sentenced to more than two years of home confinement.
In June the school district of Catawba County, N.C., files for an injunction to prevent Google from displaying students' names, test scores, and Social Security numbers - information picked up through a routine crawl of the Web. The district claims that the data is password-protected; Google (Charts) points out that it can't crawl password-protected web-pages. Judge Richard D. Boner nonetheless grants the injunction, and Google removes the pages.
Thomsonfly, a British charter airline, strands more than 150 passengers on the tarmac at Doncaster Robin Hood Airport after the pilot loses his mobile phone in the cockpit. Because he's not allowed to take off with his phone turned on, he summons mechanics to tear up the cockpit floor. The phone is eventually found, but not before the flight is canceled.
In November, erstwhile Philippines first lady and shoe fetishist Imelda Marcos announces plans to launch a line of low-priced fashion jewelry called the Imelda Collection.
In September, Greece announces that its gross domestic product since 2000 has been revised upward by an unheard-of 25 percent. The secret to its newfound wealth? A change in bookkeeping that adds in the nation's robust black-market industries such as prostitution and money laundering. But becoming "richer" turns out not to be as good as it sounds: The revised GDP figures cost the Greek government as much as $600 million annually in European Union funds earmarked to help poorer nations.
In August, Natural Selection Foods, a grower whose produce is sold nationwide under well-known brand names such as Dole and Ready Pac, distributes bagged spinach contaminated with E. coli. After hundreds fall sick, Natural Selection announces it will lay off 164 workers in the face of a 70 percent drop in revenue.
Dodging investors angry over the pay received by Home Depot (Charts) chairman and CEO Robert Nardelli, who took home at least $120 million over five years as the company's stock price dropped 12 percent, Home Depot's board fails to show up at its annual shareholders meeting. The session is presided over solely by Nardelli, who sidesteps all questions ("This is not the forum in which we would address your comment") and cuts the meeting short after half an hour. The event's negative fall-out, highlighted by demonstrators wearing chicken costumes and orange Home Depot aprons, leads Nardelli to announce days later that, for next year's meeting, "we will return to our traditional format ... with the board of directors in attendance." Nardelli resigns in early January, walking away with another $210 million in severance.
WINNER DUMBEST MOMENT, INVESTOR RELATIONS
"You have business students saying, 'All I'm doing is emulating the behavior I'll need when I get out in the real world.'" - Rutgers University professor Donald McCabe, lead author of a study that found MBA candidates the most likely to cheat among North American graduate students. Fifty-six percent admitted to copying others' work, plagiarizing, or sneaking notes into exams.
"I was just really hungry, and I wanted to have an In-N-Out burger." Carl's Jr./Hardee's pitchwoman Paris Hilton, explaining the circumstances that led to her arrest on charges of drunk driving in September.
Mike Smith, mayor of New Lenox, Ill., pays a $1,462 tab at a strip club with his official village credit card. By way of explanation, he says none of the other attendees had the means to pay the bill.
The bodies of Raymond and Monique Martinot, pioneers of the cryonics movement - which seeks to freeze the newly dead in the hopes that future scientists will be able to revive them thaw after a freezer malfunction. Son Rémy has them cremated.
In the midst of corporate America's scandal du jour - the backdating of stock options to enrich company executives - the Wall Street Journal discovers that William McGuire, CEO of UnitedHealth Group (Charts), received options on dates coinciding with the company's lowest share prices of 1997, 1999, and 2000. After a company inquiry finds backdating to have been "likely" (the odds of this happening by chance are around 1 in 200 million), McGuire steps down and agrees to give up about $200 million in proceeds.
In an effort to top UnitedHealth in the annals of backdating, executives at Comverse Technology are alleged not only to have backdated their own options but to have invented fake employees to receive grants as well. In a 35-count federal indictment, prosecutors claim that CEO Jacob Alexander used a slush fund under the name I.M. Fanton to make awards as he saw fit. Alexander flees the country but is taken into custody in Namibia after a six-week international manhunt.
Not to be outdone by UnitedHealth and Comverse, cable-TV operator Cablevision Systems admits in a regulatory filing that it granted stock options to a corpse. The company awarded the rights to purchase thousands of shares to former vice chairman Marc Lustgarten, despite the fact that he died in 1999;the options included provisions that allowed them to pass to his estate.
German utility EnBW admits that its employees lost the keys to the most highly secure areas of its nuclear plant in Philippsburg. After months of fruitless searching, the company announces plans to change the locks.
Mick Woods purchases a package of cooked ham made by British food processor H.R. Hargreaves & Son. After reviewing the complete list of ingredients, which includes "dog s**t," he loses his appetite. Hargreaves fires the employee responsible for the prank and begins a recall of the mislabeled packages.
WINNER DUMBEST MOMENT, QUALITY CONTROL
Owner's manuals in more than a million Honda vehicles list a toll-free number to help drivers reach the National Highway Traffic Safety Administration. Unfortunately, Honda incorrectly prints the area code as 800 rather than 888, leading callers to a recorded message in which a woman's sultry voice encourages them to "call 1-800-918-TALK for just 99 cents per minute."
In June, Harvard University scraps plans for the Ellison Institute for World Health after Oracle CEO Larry Ellison reneges on a $115 million donation promised to the school 10 months earlier. Oracle spokesman Bob Wynne says Ellison decided to withdraw his pledge as the result of the resignation of Harvard president Lawrence Summers, but he vows that Ellison will announce plans for a donation to another organization within a few weeks. Ellison has yet to announce such plans.
53. Oh, bother!
Disney rejects the request of grieving British parents to put an image of Winnie the Pooh on their child's gravestone. After outraged stonemason Aaron Clarke goes public, telling reporters he's been warned by Disney that carving the image of Pooh would amount to breach of copyright, Disney relents and agrees to let the parents use the bear.
54. ANOTHER BRICK IN THE WAL, PART 4 We hear Lonelygirl15 is a huge fan of Sam's Club.
In September a folksy new blog called Wal-Marting Across America pops up on the Internet. The blog documents the purportedly spontaneous discoveries of RV-traveling megastore megafans Jim and Laura as they pull over to chat with happy Wal-Mart employees, like the guy whose company health insurance saved his son's life, or the woman who worked her way up from cashier to corporate manager. Unfortunately, it neglects to mention that Wal-Mart arranged Jim and Laura's itinerary, paid for the RV, and compensated them for the blog entries. Exposed by BusinessWeek.com, the stunt is especially bad news for Edelman, since it violates ethical guidelines it helped to write for the nascent Word of Mouth Marketing Association.
Survivor winner Richard Hatch is sentenced to 51 months in prison after being convicted of tax evasion. Says prosecutor Eileen O'Connor, "Our nation's federal tax system is not a reality show to be outwitted. It is a reality, period."
In June, AOL customer Vincent Ferrari calls to cancel his membership. The call lasts 21 minutes, highlighted by a conversation with a "retention consultant" named John who doggedly tries to retain Ferrari's business even though he specifically asks to cancel 18 times. "You're going to let me speak," John says. "If not, we can just argue all day. I really don't care." Ferrari posts a recording of the call on his blog; it soon spreads across the Web. AOL then announces a "streamlined" protocol that nonetheless calls for pitching would-be cancelers at least two offers.
In an "attempt to reach out to the academic community with new research tools," AOL releases the search queries of 657,000 users. Though AOL insists that the data contains no personally identifiable information, the New York Times and other news outlets promptly identify a number of specific users, including searcher No. 4417749, soon-to-be-ex-AOL-subscriber Thelma Arnold of Lilburn, Ga., whose queries include "womens underwear" and "dog that urinates on everything." The gaffe leads to the resignation of AOL's chief technology officer and a half-billion-dollar class-action lawsuit.
WINNER DUMBEST MOMENT, DATA SECURITY
58. You too, YouTube
"Your practice of inducing users to violate their contractual agreement with YouTube constitutes a tortious interference of a business relationship." - From a cease-and-desist letter sent by attorneys for YouTube, a video-sharing site whose huge popularity stems largely from being a repository for copyrighted material, to TechCrunch blogger Michael Arrington, accusing him of copyright infringement. Arrington, who created software that allows users to save YouTube videos to their hard drives, pulls the offending app from his site.
Eric Govan, PR manager for the NBA's Golden State Warriors, sends an e-mail titled "Ghetto Prom" - featuring photos of black people in formal attire and commentary denigrating the outfits to the team's entire media distribution list. Govan is summarily fired.
In June, Egokast.com begins selling its eponymous product, a $289 video belt buckle. The 3.5-inch wearable LCD plays four hours of high-resolution "ego-expressive egokasts," allowing users to play their own creations or choose from more than 500 downloadable "egovideos," including selections titled "Dancer," "Vegas," and "Kissface."
In June, research firm VisitorVille Intelligence reveals that two out of every three Microsoft employees it tracked use Google, not MSN, when conducting searches on the Internet.
British multimedia publisher DDS Media is forced to scrap 10,000 copies of TV anchor Eamonn Holmes's spelling game after it misspells Holmes's name on the DVD.
TextTrust, a company that uses a combination of software and human editors to scour the Web for spelling errors, issues a press release on the most commonly misspelled words it has found "on the 16 million we pages it has spell-checked over the past year."
"The name was not sufficiently precise to inform a purchaser of the true nature of the food." - From a letter sent by the Powys County Council in Wales, threatening legal action against Black Mountains Smokery, maker of Welsh Dragon Sausages. The manufacturer is ordered to change the name of its product, since it does not, in fact, contain dragon meat.
The CIA advertises on Comedy Central to recruit for its National Clandestine Service. A voice-over poses the question "Are you ready for a world of ambiguity and adventure?"
Singer Jessica Simpson is sued for $100 million by Tarrant Apparel Group, which claims that she failed to promote her JS by Jessica Simpson and Princy collections. Among Tarrant's complaints: In Marie Claire, Simpson cited True Religion, not Princy, as her favorite brand of jeans.
Sony runs a billboard campaign in the Netherlands depicting a Caucasian model rudely gripping the jaw of a woman of African descent to promote its PlayStation Portable in "ceramic white." Sony initially defends the campaign, saying it was meant to "highlight the whiteness of the new model," but later apologizes.
Concerned about boardroom leaks, Hewlett-Packard starts an investigation that spins out of control, with private eyes obtaining the personal phone records of board members under false pretenses and inspecting journalists' trash in an attempt to discover the source of the leaks. The tactics ultimately lead to state and federal investigations, the grilling of top HP brass by a congressional committee, and the resignation of several top executives, including chairman Patricia Dunn, who pleads not guilty to California charges of felony fraud and identity theft.
Great Britain's Royal Mail introduces a stamp that some believe shows Santa defecating into a chimney. The Church of England protests the series of stamps not for their scatological drift, but for insufficient Christian imagery.
"There are skeptics who think it's a bunch of hooey, but I can tell you things seem to have improved since the change." Pat Patton, programming director at San Francisco TV station KRON 4, on his decision to change the station's street address from 1001 Van Ness Ave. to 1001552 after consulting with an "astronumerologist." Though Patton says morale has improved, the bottom line is another matter: In explaining the $16 million loss it posts in a later quarter, parent company Young Broadcasting says its results were "adversely affected by a slower than expected recovery in the San Francisco market."
In May, Bausch & Lomb issues a global recall of its ReNu with MoistureLoc contact-lens solution after tests show it could leave users susceptible to a potentially blinding infection.
On the morning of April 3, Amazon.com sends an e-mail headed "UCLA Wins!" to virtually everyone to whom it has ever sold a sports-related item, attempting to hawk a cap celebrating the Bruins' stirring victory in college basketball's championship game. Just one problem: The game isn't scheduled to be played until later that night. When it is, UCLA is trounced by Florida, 73-57.
WINNER DUMBEST MOMENT, E-COMMERCE
73. ANOTHER BRICK IN THE WAL, PART 5 Cutting off your nose to spite your smiley face.
In December, six weeks after hiring Interpublic Group's DraftFCB as its new advertising agency, Wal-Mart fires both Draft and Wal-Mart senior vice president Julie Roehm, who led the agency search. Roehm reportedly attended an expensive dinner paid for by Draft at a hip Manhattan restaurant, in violation of a Wal-Mart policy that prohibits employees from accepting gifts from vendors. The move is expected to delay Wal-Mart's efforts to shift from a mass advertising strategy to one that tailors pitches to specific demographic groups, seen as key to reversing its slumping sales.
At the height of college admissions season, more than 4,000 students find that their SATs have been improperly scored. The College Board blames the company it hired to tabulate the results, Pearson Educational Measurement, which is no stranger to such scandals; in 2002 it settled a large lawsuit over scoring errors that prevented hundreds of Minnesota high school seniors from graduating. Though Pearson claims to have vastly improved its quality control, it fesses up to the latest errors, blaming "abnormally high moisture" in the answer sheets.
A woman whom New York police allege works as a madam says Time Warner (Charts) chief financial officer Wayne Pace was her "sugar daddy," offering her clothes, cash, and other gifts and helping her buy a $500,000 Manhattan apartment. Andreia Schwartz makes the claims in a jailhouse interview with the New York Post in which she also denies being a madam or accepting money from Pace in exchange for sex. Pace has his lawyer acknowledge that he and Schwartz were friends but denies any sort of "inappropriate relationship."
AirTran - the airline formerly known as ValuJet, which lost a DC-9 and more than 100 passengers in a 1996 accident in the Florida Everglades - suffers a computer systems failure in June during the peak travel season, leaving it unable to process passengers' reservations for the better part of a day. Unable to get boarding passes, AirTran passengers watch their planes take off without them. AirTran blames Accenture unit Navitaire, which provided the system, for the incident, not five months after singing Navitaire's praises in a press release announcing the renewal of its contract.
After Bank of America announces plans to outsource 100 tech support jobs from the San Francisco Bay Area to India, the American workers are told that they must train their own replacements in order to receive their severance payments.
WINNER DUMBEST MOMENT, OUTSOURCING
A McCain Foods french fry factory in Scarborough, England, is evacuated on two consecutive days after explosives from World War I and II battlefields turn up in separate shipments of potatoes imported from Belgium and France.
Auto dealer Mark Johnston buys a $1.7 million Mercedes-Benz AMG CLK-GTR roadster designed to travel almost 200 miles per hour. The race car sputters out in 10 blocks. After multiple repair attempts, Johnston sues DaimlerChrysler (Charts) and its subsidiaries for allegedly delivering him a lemon.
After canceling plans to publish O.J. Simpson's hypothetical double-murder confession and broadcast a two-part prime-time interview with Simpson on its Fox network, News Corp. (Charts) says it has collected all footage "in a secure, undisclosed location" to prevent its distribution. Meanwhile, a black-market trade in advance copies of If I Did It pops up on eBay and other web-sites.
With gas prices topping $3 per gallon in August, McDonald's giddily ignores the front-burner issue of fuel efficiency with its "Hummer of a Summer" promotion. Among the prizes given to kids along with their Happy Meals is a toy version of the Hummer H1, the original 10-mpg road-tank that GM finally gave up selling two months earlier.
Besieged by online-video fans who confuse its Utube.com website with YouTube, Universal Tube & Rollform Equipment sues YouTube in August after getting 68 million hits on its website, which ends up crashing, making it unavailable to customers seeking to buy its tubes and pipes.
In December, Taco Bell removes green onions from its menu, blaming the savory vegetable for sickening 71 customers. It later determines the onions were not in fact to blame, shifting responsibility to E. coli-tainted lettuce.
"People are looking at us, but it takes time for people to come in and buy." - Alexandre Maisetti, founder of French clothing company Shai, on the results of a series of online commercials featuring porn stars clad in, and later removing, the company's $100 T-shirts. Maisetti says the ads brought 2 million visitors to Shai's website within four months, but concedes that few went on to purchase apparel.
After a run-up in metal prices, the U.S. Mint announces that its cost for producing a penny has risen to 1.73 cents, while that for a nickel has grown to 8.34 cents. In addition to costing American taxpayers more than $100 million a year, the imbalance also forces the federal government to enact new regulations prohibiting the melting of coins to extract their intrinsic value.
86. ANOTHER BRICK IN THE WAL, PART 6 Don't worry, Andrew Young explained it to us. It's some sort of Jewish/Korean/Arab conspiracy.
Bringing the ever-friendly spirit of its in-store greeters online, Walmart.com offers DVD shoppers helpful recommendations for films they might be interested in purchasing. Customers looking at the website's product pages for Charlie and the Chocolate Factory and Planet of the Apes, for instance, are steered toward "similar items" such as Martin Luther King: I Have a Dream/Assassination of MLK and Unforgivable Blackness: The Rise and Fall of Jack Johnson. Wal-Mart spokes-woman Mona Williams says the company is "heartsick" over the incident but has "absolutely no evidence" that the connections were made intentionally.
"Your country has never been prouder, and neither have you!" - Sales pitch for the Patriot line of briefs from Australian underwear maker AussieBum, which features a flag motif from the nation of your choice and the company's revolutionary "Wonderjock ball/extension support technology" that, AussieBum founder Sean Ashby says, "separates and lifts, protruding everything out front instead of down toward the ground."
Mars recalls more than 1,000 M&Ms menorahs after receiving reports that five of the plastic candleholders - designed to resemble the popular candies and featuring a pair of M&Ms characters holding Stars of David - have started smoldering or burst into flames.
The city of Hoboken, N.J., signs a deal to have Robotic Parking operate its Garden Street Garage, tripling the number of available spaces by shuffling cars in and out through automated lifts. When Robotic hikes its monthly fees by 20 percent, however, Hoboken officials give the company the boot. One small problem: Robotic's employees are the only ones who know how to operate the system, and the company disables its software, trapping dozens of customers' cars in the garage for days. After a court order restores its control of the garage, Hoboken pays $1.9 million to another firm to install a new system.
While attempting to stave off a legal challenge to its patent on the blood thinner Plavix, Bristol-Myers Squibb (Charts) manages to sign off on fine print that gives Canadian generic drugmaker Apotex five days to flood the market with an off-brand version. By the time Bristol can get an injunction to turn off that spigot, Apotex has filled pharmacy warehouses with its lower-priced meds, costing Bristol more than $525 million in profit and CEO Peter Dolan his job.
WINNER DUMBEST MOMENT, INTELLECTUAL PROPERTY
Entrepreneurs David Singletary and Milton Greagory begin selling Crackheadz Gone Wild: New York DVDs for $10 in New York's Harlem neighborhood. "It's basically a drug-awareness video," says Singletary, a former crack dealer. The thriving business rakes in $2,500 a week at a single table across from the Apollo Theater.
"The amount of brand extension that you have done is awesome.... I felt like I was looking in through a screened mirror." Former Disney (Charts) CEO Michael Eisner, to guest Martha Stewart during a taping of his one-hour monthly CNBC talk show, "Conversations With Michael Eisner." Eisner's latest brand extension has come up a wee bit short of awesome: Its debut episode in March received a rating of zero.
After leading videogame-console startup Gizmondo to nearly $400 million in losses and a bankruptcy filing, edgy entrepreneur Stefan Eriksson wrecks his $1 million Ferrari Enzo in a crash in Malibu in February. Eriksson tests above the blood-alcohol limit but tells police that he wasn't driving, and that the driver, "Dietrich," ran into the hills after the crash. It's soon discovered that Eriksson's wrecked Enzo is actually owned by a British bank, and two more cars he claims to own, another Enzo and a Mercedes McLaren, have been reported stolen in England. Eriksson pleads no contest to embezzlement and drunk driving charges and is sentenced to three years in jail.
Cecil McLaurin Amick III, who plays the Reedy Rip'It frog mascot for the Greenville Drive minor-league baseball team, allegedly grabs the breast of a woman after an April game. Amick is suspended from his job and later pleads guilty to disorderly conduct, paying a $600 fine.
After NTT (Charts), Japan's leading telephone company, introduces a system called Net Cash to protect customers from identity theft while shopping online, a hacker steals the ID numbers from more than 80,000 accounts. The information is used to spend $28,000 of NTT customers' money.
In December, UCLA administrators confess to 800,000 staffers and current, former, and prospective students that a hacker has been accessing campus databases containing Social Security numbers and other personal information. The cost of notifying all the affected people runs to an estimated $10 million.
In June, drug caches are found in merchandise in two Home Depot stores, including two 50-pound bricks of marijuana hidden in one vanity and 3 kilograms of cocaine stashed in another.
The organizers of Imagination 69, a failed Belgian sex fair, are sued after thousands of erotic videos and books are left at the event's site near Geraardsbergen. The area is dubbed "Pornutopia" after aficionados start scouring the fields for free loot.
"Unleash the sex kitten inside ... soon you'll be flaunting it to the world and earning a fortune in Peekaboo Dance Dollars." - From a product listing by $75 billion British retailer Tesco, plugging the $100 Peekaboo Pole Dancing Kit which includes an 8.5-foot chrome pole, a "sexy dance garter," and play money for stuffing into said garter in the Toys & Games section of its website. After complaints from parent groups, Tesco decides to keep selling the item as a "fitness accessory" but agrees to remove the listing from the toy section.
Toymaker Spin Master releases the I-Tattoo, a $15 kit for kids ages 6 and up that features a "realistic, vibrating tattoo pen" and instructs youngsters to "get ready to 'get inked.'"
To compete with the spectacularly successful Bratz doll phenomenon, Hasbro (Charts) unveils plans to launch the Pussycat Dolls, aimed at girls as young as 8 years old and modeled after the risqué, burlesque-inspired pop group of the same name. (Yes, the "Don't cha wish your girlfriend was a freak like me" Pussycat Dolls.) After protests by parent groups, Hasbro nixes the line.To send a letter to the editor about this story, click here.