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 user 2004-01-31 at 11:43:00 am Views: 99
  • #4893
    The 101 Dumbest Moments in Business
    Our fourth annual review of the most shameful, dishonest, and just Plain Stupid moments of the past year.
    3 Don’t hate the player. Hate the game.
    In September, retail chain Urban Outfitters begins peddling Ghettopoly, a monopoly knockoff. The top hat, shoe, and car are replaced with a machine gun, marijuana leaf, basketball, and rock of crack cocaine. Reacting to protests, Urban Outfitters pulls the game from its stores.
    4 The next day, Count Chocula drops by to pick up an application.
    Dairy Queen franchisee W.A. Enterprises is docked $700,000 by a jury in Richmond, Va., after DQ employee Ayman Ahmed Hasaballa allegedly slides into a booth next to a female customer, pulls down her sweater, bites her breast, and says, “I am like Dracula.” The jury holds the company responsible because it didn’t fire Hasaballa six months earlier after he allegedly attacked a female co-worker.
    6 The company places the blame on junior analyst Mary Jane Bogart, a chronic underachiever who never has the straight dope and often fails to weed out her own mistakes.
    Research firm Nielsen/NetRatings issues a report describing a website called the Blunt Truth as “an educational resource for marijuana.” It’s actually an online game site in which teens reveal secrets to one another anonymously.
     7 The annual Pearl Harbor Day bash, however, is a real blast.
    In August, online “social planning destination” Evite sends an apology to its users for having cited Yom Kippur, the Jewish day of atonement, as a “reason to party” in an earlier e-mail newsletter.
     8 Just to be on the safe side, let’s also lose the jack, the fuel pump, and the four-stroke engine.
    In Canada, General Motors is forced to come up with a new name for its Buick LaCrosse sedan after discovering that crosse is a slang term for masturbation in Quebec.
    9 It then opens a new store in La Crosse, Wis.
    In April, Swedish furniture giant Ikea explains that a children’s bunk bed called the Gutvik is named for “a tiny town in Sweden.” Announcing that bit of etymology becomes necessary when Germans point out that, in their neck of the woods, the word sounds like a phrase that means “good f***.” Ikea yanks the Gutvik from its catalogs in Germany.
     10 Buick LaCrosse buyers were sorely disappointed.
    In November, Chrysler announces that it will sponsor the Lingerie Bowl, a football game to be played by female models airing as a pay-per-view special during halftime of the Super Bowl. After the carmaker comes under fire for the sexist nature of the event, CEO Dieter Zetsche quickly distances himself from the spectacle, claiming he had no knowledge that it was in the works. The company reportedly pressures the event’s producers to change the players’ uniforms, demanding that participants wear sports bras and volleyball shorts; then, a week later, it drops the event altogether. 
      11 Mommy, can I have something to drink with my cheesesteak?
    Fast-food sandwich chain Quiznos launches its new Philly cheesesteak with a TV commercial featuring two businessmen eating lunch alfresco. One’s a smart Quiznos customer; the other, a non-Q loser. “Were you raised by wolves?” asks appalled Guy No. 1. Yes, indeed—and he still calls the wolf den home. Cut to a shot of Guy No. 2 lying on the ground and suckling a mama wolf’s teat.
     12 It could be worse. At least they’re not selling wolf milk.
    In July, a McDonald’s outlet in Chicago’s Field Museum is closed by health inspectors who discover that the food preparation area is backed up with raw sewage and that employees have changed the expiration dates on 200 cartons of milk.
    13 Minor attractions include the raw sewage station and the expiration-date changing area.
    In an effort to improve its public image, 120 McDonald’s restaurants in England open their kitchens to tourists in October. Says a company press release, “Major attractions include the French Fry station and the Big Mac preparation area.”
    15 By the way, those Do-Not-Call people called again, wondering if you did not want them to call.
    In February, Seattle-based software firm Spam Arrest starts spamming people who correspond with current customers. The come-on? “Enjoy a spam-free inbox.”
    18 We won’t even mention the one they were planning to shoot in Tiananmen Square.
    In December, Toyota apologizes for its advertising in the Beijing-based monthly magazine Auto Fan. One ad depicts a Land Cruiser towing a truck that resembles a Chinese military vehicle, thus insulting China’s ever-sensitive army. The other ad shows a stone lion—a traditional Chinese symbol of power—bowing down to Toyota’s Prado, a word rendered in Chinese as badao, or “domineering.”
      19 He was never a big fan of business class.
    As American Airlines teeters on the brink of bankruptcy in April, CEO Donald Carty goes to the unions, hat in hand, begging $1.8 billion in wage concessions from its 110,000 workers. Yet even as he’s preaching his stirring, we’re-all-in-this-together line, the company quietly files an SEC report outlining a luscious, salary-tripling bonus scheme and a bankruptcy-proof, $41 million pension plan for its top 45 executives. “It’s the equivalent of an obscene gesture from management,” says union leader John Ward. Salvaging the labor deal and likely staving off Chapter 11 in the process, AA’s board kills the bonuses, and Carty resigns in disgrace.
    20 Hmmm. Maybe you should’ve gotten the hint by the 3,168,453rd time we closed one of your pop-ups without reading it.
    After years of bombarding Web surfers with annoying pop-up ads, wireless camera maker X10 files for bankruptcy in October, listing debts of more than $10 million. Among the parties stiffed: AOL, Google, Yahoo, and, which won $4 million in a lawsuit against X10 shortly before the bankruptcy filing.
     22 Have you tried our new signature scent, Desperation?
    In November, after several would-be employees serve it with racial-discrimination lawsuits, retailer Abercrombie & Fitch faces trouble on a second front: Focus on the Family and other conservative groups call for a boycott of the store. The reason: The cover of its Christmas 2003 magalog promises “Group Sex and More.” Abercrombie orders employees to remove all copies of the $6 publication at the height of the Christmas season, saying it needs the shelf space to launch a new perfume.
     24 Larry Ellison really wanted the job, but in the end the choice was obvious.
    In August, McDonald’s promotes mascot Ronald McDonald to the post of “chief happiness officer.”
    25 In other news, the company announces that Mr. Schwab has been appointed to the post of chief happiness officer.
    In the midst of an advertising campaign to persuade investors to trust the company with their retirement savings, Charles Schwab axes 401(k) matching dollars for its own employees.
    26 Next time, try lifestyle-oriented and emotional and cool and creditworthy and … oh, hell, we give up.
    After marketing its sporty Eclipse coupe to 20-something slacker types through a mix of ultrahip ads and zero-percent financing, Mitsubishi Motors announces a $469 million loss from loan defaults. New CEO Rolf Eckrodt says the company’s mistake was “aiming at customers interested in products which are lifestyle-oriented and emotional and cool.” The fix? Aiming at customers with money. The move looks good on paper—just not the paper on which the company’s books are kept. After tightening up credit requirements, Eclipse sales fall by 48 percent, forcing Mitsubishi to spend another $432 million to clear out unsold inventory.
     27-29 AOL: Back on top?
    Part 1 We’re the toast of the town! AOL runs an ad in the New York Post touting the release of a new version of the service. It reads, “You Didn’t Think We’d Launch Something Like This in Boise, Did You?” After Idaho governor Dirk Kempthorne writes a letter of complaint, AOL charges ahead with plans for another gala launch event … in Boise.

    Part 2 We’ve got our finger on the pulse of America! AOL spends a reported $35 million on an ad campaign featuring Sharon Stone, apparently fresh from a romp in bed with the service’s “running man” icon. Matters of taste aside, critics loudly wonder about the choice of an actress whose career peaked a decade ago. CEO Jonathan Miller’s explanation: “The AOL brand was perceived as not sophisticated and not necessarily in tune with the times.”

    Part 3 Well … at least our own company still loves us! In September, less than three years after AOL “acquired” Time Warner, the board of AOL Time Warner decides to drop AOL from the company’s name and change its ticker symbol from AOL back to the original TWX.

     32 Save-a-Flush (Plan B): Make people crap in their pants.
    British utility Yorkshire Water sparks an anthrax panic in the spring with a mass mailing that includes an unmarked envelope of white crystalline grains. Yorkshire Water explains that the packets of silica sand—which expands in water—are supposed to be placed in toilet tanks as part of its “Save-a-Flush” campaign.
      33-35 Microsoft: In the crapper?
    Part 1 The PC in the WC. On April 30, Microsoft U.K. issues a press release touting a new product called the iLoo, an Internet-enabled toilet equipped with a Wi-Fi broadband connection, a plasma flat screen, a waterproof keyboard, and sponsored toilet paper festooned with Web addresses. According to the release, the iLoo will “allow instant logging on.”

    Part 2 Johnny on the spot. Twelve days later, after much snickering in morning newspapers and on late-night talk shows, Microsoft flacks back in Redmond come up with a clever strategy for damage control. The iLoo, says spokeswoman Kathy Gill, was merely an “April Fool-like joke.”

    Part 3 Something doesn’t smell right. The next day, realizing that nobody’s buying the April-Fool’s-joke-29-days-after-April-Fool’s-Day explanation, Microsoft calls back reporters and admits that it had told an iLulu: The project was indeed real but has subsequently been killed. “We jumped the gun basically yesterday in confirming that it was a hoax,” says MSN group product manager Lisa Gurry. “In fact, it was not.

     36 Think they’ll buy the April Fool’s joke thing again? Nah, better go with the bit about the top-secret location.
    Michael Hanscom, a temp worker at Microsoft’s in-house print shop, is fired after posting to his blog a photo that showed workers at the facility taking delivery of several Apple G5 computers. His supervisor insists that Hanscom was fired not for showing the company relying on the product of its chief rival, but for revealing the location of one of its shipping and receiving departments.
    38 Whizzinators don’t cheat on drug tests. People cheat on drug tests.
    Over the course of six months, the sheriff’s department in Lubbock County, Texas, catches five suspects attempting to fool urinalysis using the Whizzinator, an artificial penis that dispenses fake pee. Says a straight-faced Dennis Catalano, the owner of the company that makes the device and also sells dried urine, “How people choose to use it is beyond our control.”
    39 They thought about changing their name, but, sadly, Whizzinator was already taken.
    U.K. energy company Powergen finds itself so often confused with a similarly named Italian battery maker that it issues a statement disavowing any connection between the two enterprises. It’s not so much the Italian company that the Brits want to distance themselves from as its Web address:
    47 And now, an entirely convincing verbatim quote from a network public relations department.
    CBS will not broadcast THE REAGANS on November 16 and 18. This decision is based solely on our reaction to seeing the final film, not the controversy that erupted around a draft of the script.”
      49 Meanwhile, a jilted yen sobs quietly at home.
    In Moscow, authorities ban a poster promoting Russia’s Finance magazine. Says publisher Igor Maltsev, “I thought the currencies were dancing.”
    51 I say, Nigel, you look like you’re freezing your bum off.
    In January, British radio station BRMB is fined £15,000 for holding a contest in which entrants are challenged to see who can sit on a block of ice the longest, with the winner getting free concert tickets. The station got the idea from a New Zealand website, but unlike the Kiwis, the Brits use dry ice, which, at -109 degrees Fahrenheit, is unkind to human flesh. Three participants are hospitalized.
    52 They’re doing what? Gosh, we had no … um, make that very little idea.
    In December, Putnam Investments drops the $41 million pension plan of Boilermakers Local Lodge No. 5 as a client. Regulators allege that Putnam first spotted the boilermakers breaking market-timing rules in its funds more than three years ago, but didn’t stop them from making trades until September, when investigations of the mutual-fund industry hit the news. Members of the union made as much as $4 million through rapid-fire trades. Putnam fires CEO Lawrence Lasser and 15 other employees, while pension managers and investors pull more than $13 billion out of Putnam funds in the span of a month.
     53 Paid, no doubt, from a slush fund.
    The gangbusters success of Frozen Coke—a Slurpee-like concoction sold by Coca-Cola at Burger King restaurants—proves to be a sham in March, when it’s revealed that the successful tests were the result of Coke paying $10,000 to buy up Frozen Coke combo meals. By way of apology, Coke offers to pay as much as $21.1 million to Burger King and the affected restaurants.
    57 That’ll just about cover the payments on a Mitsubishi Eclipse.
    Cunning Stunts, a London-based marketing firm, begins offering local university students £88.20 a week for the right to plaster logos smack between their hairlines and eyebrows. The “foreheads” program signs up more than 500 students in the first four months.
    58 The sound of one firm blaspheming.
    In August, online CRM company produces posters promoting a San Francisco appearance of the Dalai Lama featuring the slogan “There is no software on the path to enlightenment.” After Buddhist groups complain, CEO Marc Benioff apologizes, yanks the posters, and makes a $100,000 donation to the American Himalayan Foundation.
    61 Soon to be replaced by “You can’t take it to the grave, so you might as well buy a damn watch.”
    In August, Timex decides to replace “It takes a licking and keeps on ticking,” one of the world’s most recognizable tag lines, with the utterly depressing “Life is ticking.”
     62 America’s bottom line keeps on growing. Red Lobster’s, alas, does not.
    In June, seafood restaurant chain Red Lobster unveils its new promotion: the bottomless bucket of crab. It works—though apparently too well. In September, Red Lobster’s owner, Darden Restaurants, announces lower-than-expected earnings, blaming a 5 percent drop in profits on the “bottomless” promotion. Chastened Darden CEO Joe Lee explains what came back to bite him: “It wasn’t the second helping on all-you-can-eat, but the third.”
     64 We’ll wait for the bootleg Spanish translation, Desgracia.
    Shortly before Thanksgiving, aircraft manufacturer Boeing fires CFO Michael Sears and vice president Darleen A. Druyun after an internal investigation alleges that Sears personally lobbied to hire Druyun in late 2002 while she worked for the Air Force—with whom Boeing was negotiating a $21 billion contract. A week later, Boeing CEO Phil Condit resigns as well, just as book reviewers receive their copies of Soaring Through Turbulence: A New Model for Managers Who Want to Succeed in a Changing Business World, a primer on ethical business management by … now-former Boeing CFO Michael Sears.
    65 Computerworld special: Saddam’s web of Viagra-spam terror!
    In February, Computerworld publishes an article in which “Abu Mujahid,” a Pakistani operative linked to al Qaeda, claims responsibility for releasing the Slammer virus. The magazine pulls the story three hours after it’s posted online. “Mujahid” is revealed to be Brian McWilliams, a freelance writer who created a fake website to lure gullible journalists.
    66 “And, finally, your outsourcing decisions seem laughably poor.”
    In January, a PR agency hired by Seattle biotech firm Cell Therapeutics accidentally sends a brutally frank report on the company’s strengths and weaknesses to reporters and other outsiders. The flacks claim that the e-mail distribution was the work of a computer virus.
     67 Is that where we’d go to register
    In October, three and a half years after buying Network Solutions for $21 billion, VeriSign sells its dotcom-registration business for $100 million.
    69 Thank you for calling Prudential. For stock quotes, press 1. To log a complaint about market-timing trades, please hang up and wait for the dial tone.
    In October, Prudential Securities fires 10 brokers and two branch managers after an internal investigation into illegal market-timing trades. The Securities and Exchange Commission and Massachusetts officials then file charges, alleging that Prudential first learned about the trades in March 2000 and took no action for three years—despite having received as many as 30,000 complaints about the brokers’ trades.
     70 He’s got to piss away his time somehow.
    In March, Apple Computer appoints former vice president Al Gore to its board of directors. Apple CEO Steve Jobs reassuringly notes that Gore, who famously dumped his Mac for a PC in 2000, now uses a Mac again. In November, Falcon Waterfree Technologies announces that Gore has joined its advisory board. No word on whether Gore has started using Falcon’s product, a waterless urinal.
     71 Al Gore’s not interested, but we hear Gerald Ford would love to join the board.
    Despite claims that it “allows people to go farther and move more quickly anywhere they currently walk,” Segway finds few buyers for the $4,000 Human Transporter scooter in its first year on sale after it’s banned for use on sidewalks by local governments from San Francisco to Key West. In June, its “self-balancing” claims are also put to the test when photos of George W. Bush “riding” a Segway begin circulating on the Internet.
     75 OK, we promise: This absolutely, positively will be the last flatulence joke.
    In April, Kraft rolls out an ad campaign to promote its new presliced, cracker-size cheese. The slogan: “We cut the cheese so you don’t have to.”
      78 Go ahead, make my bed.
    In the midst of shrinking firearm sales, Smith & Wesson Holding Co. expands into the home decor market. A recent issue of the “Crossings” catalog features gift ideas like cowgirl pillows, silk blouses, and bedding in a “rustic yet romantic print.”
     80 Not to be outdone, American unveils Ric, Northwest launches Wes, and Continental rolls out Al.
    Two years after shutting down its money-losing Shuttle operation, United Airlines decides to get back in the low-fare game with Ted. As in, Uni-ted. Get it? Though the bankrupt airline still hasn’t made clear how it will profit despite the inflated labor costs and operational woes that doomed Shuttle, it will apparently save about 50 percent on paint for the sides of the planes.
    81 In customer satisfaction surveys, they still preferred Mainline to Ted.
    In January, Babson College student Luke Thompson creates a website for Mainline Airways, offering $89 one-way flights between Los Angeles and Honolulu. In June, after Massachusetts attorney general Thomas Reilly freezes his bank accounts, Thompson insists that he had been planning to begin flights the following month, despite not having permits, planes, pilots, or, really, any of the thousands of things necessary to operate an airline—with the lone exception of bookings. All 121 people who bought tickets get their money back, while Thompson and Mainline are fined $50,000.
    84-85 On a related note, Joseph Goebbels is found alive and working as a marketer in Hong Kong …
    In April, Coca-Cola promotes its brand in Hong Kong by selling robot figurines based on popular cartoon characters, one of which features chest plates festooned with swastikas. Coca-Cola later apologizes and pulls the figurine. Four months later, Hong Kong retailer Izzue introduces a line of Nazi-theme T-shirts and other related merchandise. Izzue later apologizes and discontinues the line.
    87 Finally, music encryption powerful enough to stump recording-industry executives.
    After SunnComm Technologies rolls out new CD copy-protection software in September, a Princeton student figures out how to disable it. The devious hack: holding down the “Shift” key.
     89 All that time spent ghoulishly watching QVC’s Knife Hour, wasted.
    On a live QVC broadcast in September, a guest demonstrating the virtues of a 12.5-foot telescoping ladder slips and plummets to the ground. As cameras quickly cut from a shot of the demonstrator writhing in pain, studio host Lisa Robertson intones, “He’s moving, he’s OK.”
    90 A parity of itself.
    Promotional materials distributed in the fall to ad agencies for celebrity-tracking Star magazine promise an upgraded editorial product and a cover-price hike from $2.99 to $3.29, bringing the magazine into “price parody with People and Us Weekly.
     91 “Quagmire” is still available.
    A day after the U.S. invasion of Iraq, Sony files an application to trademark the term “Shock and Awe” for a videogame. Sony later pulls the filing, calling it an act of “regrettable bad judgment.”
    92 On the plus side, a whole lot of Nevada fifth-graders just aced their LSATs.
    A year after it misgrades Nevada test scores and wrongly fails 736 students, Harcourt Educational Measurement uses an incorrect grading key for proficiency tests given at more than 200 Nevada elementary schools. The company faces a fine—again—this time for as much as $483,000.
     93 You’d think his three-part series on the sub-eating executive raised by wolves might have tipped them off.
    Esteemed newspaper-of-record the New York Times confesses in May that it has polluted the record with dozens of articles written by 27-year-old hotshot reporter and indefatigable faker Jayson Blair. In a 6,500-word article, the Times details the extent of Blair’s journalistic flimflam: Not only pretending to cover stories in other cities while hanging out in his Brooklyn apartment, Blair even filed for travel expenses using receipts from neighborhood shops and restaurants. In June, as a staff mutiny simmers, two of Blair’s chief enablers, top editors Howell Raines and Gerald Boyd, walk the plank. Blair later gets a book deal; the Times gets an ombudsman.
     94 Sure, that oughta cut down on the looky-loo traffic.
    As part of its effort to supplant traditional printed real-estate advertising magazines, online home-finding service sends a series of postcards to real-estate agents to drum up listings. The postcards feature pictures of naked men and women at their computers, presumably perusing in the buff.
    95 Make that 86 passengers and one lucky photographer from
    In May, Castaways Travel’s first naked flight from Miami to Cancún departs with 87 passengers. Wisely, hot coffee and tea aren’t served.
     96 If it doesn’t work out the second time, we suggest you try real estate.
    Two Southwest Airlines pilots are fired in April for removing their clothing in the cockpit during a flight. The pilots protest their termination, claiming that just one guy took off his uniform after spilling a drink, and are later rehired.
     98 Interesting theory, Scott. Now tell us: How many calories in a nice, big serving of crow?
    In October, KFC “executive vice president for marketing and food innovation” Scott Bergren announces some innovative food-related marketing: the repositioning of fried chicken as health food in a series of new TV ads. “Consumers,” he says, “will be surprised to learn they can enjoy fried chicken as part of a healthy, balanced diet.” They are indeed surprised: After protests from consumer advocates, who note that the advertised bucket of fried chicken contains 3,090 calories, the ads are pulled.
    99 Not to fear. It’s all part of that KFC healthy lifestyles program.
    In January, the U.S. Consumer Product Safety Commission issues the following press release: “Innova Inc., Davenport, Iowa, is voluntarily recalling to replace about 8,700 Ultrex Thermal/Double Wall frying pans. The pans can explode or separate when preheated, used on high heat, or used for frying, which can pose a serious burn hazard from hot oil or food contents spilling onto consumers. Innova has received 16 reports of these frying pans exploding, including two consumers who received burns from hot oil and eight reports of property damage.”
    101 Conaway himself has never used the safe room. But Dick Grasso has been living in there since August.
    In November, Kmart creditors file a lawsuit against six of the company’s former executives, including former chairman and CEO Chuck Conaway. Among the allegations are charges that, as Kmart was sliding toward bankruptcy, Conaway billed the company $106,191 for improvements to his home—including $34,948 for a guardhouse and $3,590 for a safe room—and kept a driver on the payroll to take his children to school. The bankruptcy filing results in the closing of 600 Stores and the firing of 57,000 employees.