The Hightower Report
Reliant CEO Finds Religion; Edison Has the Vapors
Reliant CEO Finds Religion
Like an evangelist exhorting the sinners at a brush arbor revival to come forward, confess their sins, and seek absolution, the Federal Energy Regulatory Commission has been calling on energy trading corporations to confess, under oath, whether they have been doing any of the down-and-dirty deals that the devilish Enron got caught making.
And, oh, there's been quite a rush to that altar. The latest is Reliant Energy Inc. of Houston, an Enron neighbor who now tearfully concedes that, yes, it too has strayed from the straight and narrow, worshipping the god of mammon over the righteous path.
Reliant's sin? It engaged in a bit of bookkeeping fakery called "round-trip trades." The game here is to sell megawatts of power to another company and -- Hocus-Pocus! -- buy them back all at once, which jacks up your revenue picture, even though nothing happened -- no power moved, no money actually changed hands. It's designed to fool investors and artificially inflate the company's stock price. It's pure flim-flam.
Of course, Reliant's CEO, Steve Letbetter, says this is merely the work of a couple of lower-level corporate miscreants who are long gone, and that he personally knew nothing -- nothing! -- of this malfeasance ... even though he admits that 20% of his corporation's business last year came from these phantom trades. Hello. One-fifth of your corporate revenues are fake, and the CEO doesn't take notice?
Edison Has the Vapors
Edison Schools Inc. has become the Blanche Dubois of the movement to corporatize America's public schools. Blanche was the fragile character in A Streetcar Named Desire who said, "I've always depended on the kindness of strangers."
In the mid-Nineties, Edison was a cocky company. Its executives were blustering that America's public schools needed less "public" and more "corporate" -- more of the managerial know-how and bottom-line business efficiency that an outfit like theirs could deliver. Give us your educational money, they told school districts, and we'll, by God give you back academic excellence, plus we'll pay a sweet profit to our investors. Edison quickly became the largest commercial operator of our public schools.
But running schools turns out to be a bit harder than the corporatizers figured. Edison has not outperformed publicly managed schools, even though it has gotten more money per student for its schools, and it has never made a profit. Indeed, like Dubois, Edison has always relied on the kindness of strangers -- or, in its case, relied on bedazzled investors who've been kind enough to overlook hundreds of millions of dollars in losses, skyrocketing overhead, and shady insider dealings.
Now, The New York Times reports that Edison is in a most fragile state. It's scrambling to come up with the $40 million it needs by this fall just to keep open the 136 schools that it's under contract to run. Raising this cash is a shaky proposition, for Edison is already mired in heavy debt, and its administrative expenses are soaring at its posh Fifth Avenue headquarters in Manhattan. Edison's stock price has plummeted from $35 a share just over a year ago to under $2 a share today.
So much for corporate efficiency and management know-how.
Keep the Light Shining
Every now and then, a light bulb goes off in someone's mind and they shout, "Eureka!" But in the mind of Dr. Hugh Francis Hicks, the light bulb went off and he shouted, "Light Bulb!"
I never knew Dr. Hicks, who died recently, but there's a special spot in my heart for the iconoclasts, backyard inventors, oddballs, and others like him who march to their own drummers ... and make our world a whole lot more interesting place to be. After all, I choose to live in a town whose unofficial bumper sticker is: "Keep Austin Weird."
Hicks lived in Baltimore, but Austinites would've appreciated him, for he pursued his dream -- which was to have one of every kind of light bulb ever made. Keep it weird, man, keep it weird.
How weird? His mother says that as a baby, Hugh was bored with the toys in his crib, so one day she tossed an old light bulb in there ... and he loved it! As a boy, he began collecting bulbs. Some collect comics, stamps, whatever -- for Hugh, it was bulbs.
He grew up to become a dentist, but still ... there were the bulbs. In the basement beneath his periodontics office in Baltimore grew a private museum of what the esteemed Smithsonian Institution now declares to be one of the three most important light bulb collections in the whole U.S. of A.
Hugh's museum has bulbs that Thomas Edison himself held in his hands more than 100 years ago. It has a 50,000-watt bulb from LaGuardia Airport's control tower and one bulb so tiny it takes a microscope to see it. It has a headlamp from Hitler's Mercedes-Benz and a dashboard bulb from the Enola Gay. It has 60,000 light bulbs. He charged no admission to the 6,000 or so visitors who came there each year, and he even served them cookies. It wasn't about money for Dr. Hicks, it was about love.
The family is keeping his museum open, and I, for one, intend to visit it ... just for the spirit of it all. To go, call 410/752-8586.
Jim Hightower is a speaker and author. To subscribe to his monthly newsletter, The Hightower Lowdown, call toll free 866/271-4900. To order his books or schedule him for a speech, visit www.jimhightower.com.