Thursday, January 04, 2007

Waves of Warning 14


[ Viewable in PDF format at: Blizzards.pdf ]

The line of cars stretched unbroken and unmoving down 7th Avenue. Cheryl Corlund sensed something wrong and looked up from her briefing
book. Across from her in the limo was June Wilson, leafing through Wavelife’s latest internal financials, completely immersed in data and unaware
of time or space. Corlund glanced at her watch and at the traffic ahead of them. At this rate they would be late, and she did not want to start her pitch by
apologizing for anything, even if it was a blizzard.

She looked out the window and saw the snowfall abating somewhat. That did it. She looked at her shoes, and then at Wilson’s.

“June, June! Give me your shoes.”

The analyst looked up and it took her a second to process what she’d heard.

“You aren’t going to - - -“

“Just give me your shoes.”

She took off her Guccis and put on Wilson’s fur-lined snow boots. She pulled a snow hood up out of her parka and cinched it down around her head.
The limo inched forward, but Corlund’s mind was made up in more ways than one. She was ready to deal with New York on its own terms, a state of mind
that gave rise to the thought of pulling the plug on the Wavelife surf team.

“And use the extra time to run through a valuation if we decreased marketing’s surf team budget by ninety percent,” she paused and opened the
door, “And make it across the board: salaries, travel, contests, everything.” The driver looked in his mirror and couldn’t believe what he was seeing.
He jumped out and came around the back of the limo but there was nothing he could do except get out of her way.

Wavelife’s CEO walked down the middle of the street between the line of cars until she got her bearings. She was in the heart of the garment district, and
she knew all the shortcuts. She cut between two taxies and ducked into a doorway to enter the huge open assembly floor of a big women’s wear label.
She walked briskly through the aisles of Puerto Rican women concentrating at their industrial sewing machines. She avoided the glassed-in offices inhabited
by old garmentos yelling at each other in their usual conversational tone. She dodged open bins filled with assembled garments and made a mental note to
call Wavelife’s design team. It looked like preppy was coming back. At the far end of the floor she pushed through two scarred and battered double doors into
the cold of the loading dock. She walked down the concrete steps just as a truck backed in.

“Hold it Mack! Hey, lady, what the hell youse doin’?”

Corlund was not about to stop for any chitchat with the warehouse crew.
The shortcut had saved her two blocks and she didn’t have a minute to lose.
She glanced at her watch and smiled. She lowered her shoulder and headed
into the storm, becoming more invigorated with every step. She didn’t mind
dealing with a blizzard in New York. She could have cared less that she wasn’t
safe in first class at thirty thousand feet or poolside dozing in the warm winter
sun in Newport Beach. She was exactly where she wanted to be, and a brisk
walk through the garment district in a blinding snow storm was a good time to
remind herself of the facts of life on her way to Wall Street.

There was no more room to grow in the surf industry because the action
sports apparel business is notoriously volatile in the young male segment.
Our early investors made money thanks to creativity, innovation, and
offering customers new choices. We hit a peak in the department stores, and
did it again with the big box retailers.

But now creativity and innovation don’t mean a thing. Bargain hunters
have put us in the off-price outlets. Our shareholders made a lot of money for
a long time. They bought in low and sold out high, and while we were climbing
all the time, it was easy to find new investors.

But now our return on capital is turning negative, and that’s the only
thing of consequence to the analysts. Our sales numbers are up, and we’re the
undisputed leader of the surf industry. But margins are down, revenue growth
has stalled, and that’s the only thing that matters on the Street.

Being on top means nothing in a world where greed is everything. No
matter how well we’ve done, they always wanted more, and when they didn’t
get it, our stock went south.

So I have to change everything. I have to start over. And I’m going to do it
on my terms, not theirs.

Corlund turned a corner and saw her destination through the heavy
snowfall where she would tell a panoramic story of her plans to use Wavelife’s
current plateau as a launchpad for herself and a few backers.

* * *

“Cheryl! Come in, come in! I’m happy to see you! Isn’t this weather the
worst! When I didn’t hear from you I thought something must have happened!”
Ben Jeffries was a people person because it was good for business. The
people who made money with him didn’t know, and probably wouldn’t have
cared, his heart was alone and aloof and his being the gregarious sort was just
a cunning and shrewd strategy.

“Why would I call? We said ten o’clock, and here I am.”

She extended her hand to Jeffries. Her manners were impeccable, as she
knew they had to be.

Sit down, sit down! I’m afraid the gang will be a little late, what with this
storm and all.”

“Well Ben, if a California girl can make it through a blizzard, I guess you
New Yorkers are getting soft!”

His smile let her know he appreciated her moxie.

“Can I get you anything, Cheryl? Coffee, tea, a shot of brandy?”

“Yes, thank you, Ben. Coffee, black with a shot of Courvoisier. Oh, and
while you’re up, will you also get me nine-hundred and seventy-two million

Jeffries looked her straight in the eye, his eyebrows lifting slightly.
“Well, nothing like a woman who knows exactly she wants!”

They both laughed. It was a good beginning.

* * *

It was past noon when Cheryl Corlund pushed her chair back from the
conference table. The men around the table moved their chairs to stand as she
rose. The meeting had gone well so far, and Corlund was confident she could
leave the room for a few minutes.

“No, please, gentlemen, be seated. I’ll be right back.”

As soon as the door closed the best-dressed man at the table got straight to
the point.

“Ben, I think we can do a bit of business here, don’t you?” said John
Vutara, leaning back in his chair and taking the reading glasses from his nose.
“Should be a piece of cake!” said Jeffries, looking at Peter Lasserman
who’d seen enough executive summaries to know this deal was within spec, so
far. It wasn’t big money, but things were a bit slow on the Street and with
Jeffries leading the charge, the downside for his company would be minimal.

“Concur,” said Lasserman, who then looked at the man sitting next to
him. But Bruce Kaufman was engrossed in a legal pad that Lasserman could
see was full of abbreviations and figures.

“Don’t you have a staff for that stuff, Bruce?”

Kaufman looked up and stared at Lasserman. “Well, I don’t like to waste
their time if things don’t add up for me. And since it is my name on the door, I
don’t have the luxury of double-talking my investors.”

Ben Jeffries quickly moved in to de-fuse the friction. “Well, I think we’ll
all do just fine here, don’t you, Bruce? Say, its lunchtime! Oh, and I hope you
guys like swordfish. Can’t get it in the restaurants anymore but I flew some in
from the West Coast. Let me call my chef and see if it’s ready.”

Cheryl Corlund walked with authority down the richly carpeted hallway.
She opened a side door into a room looking like someone had left a window
open and the blizzard had blown in. But there were no windows. It was a
blizzard of paper and data that covered the table and all four walls.

The room was filled with a dozen men and women along with sheaves of
documents, spreadsheet print-outs and laptops. June Wilson was carefully
guiding three men through Wavelife’s cost centers displayed behind her on a
huge white board covered with product icons and sales figures. A small group
was seated at one end of the table watching a powerpoint. Others were deep
into spreadsheets printed on fanfold printouts hanging from the walls. One guy
was standing in the corner waiting to feed a document into the fax machine
after it was done spewing out a stack of faxes.

Wilson saw Corlund come in and excused herself from the presentation to
the lead analysts representing Jeffries, Lasserman and Vutara. All the other
people in the room worked for them.

“Jeffries’ people seem pretty excited, though Lasserman’s wish there was
more money in it just to make things interesting.”

“Well, we’re not here to entertain them with a ‘Barbarians at the Gate’
circus. How about Vutara’s crew?”

“Steady as she goes, though they do count their pennies.”
Corlund saw the guy at the fax machine.

“I told you nothing was to leave your sight!”

June Wilson was a pro. She reacted as if Corlund’s comment had been a
snake crossing her path. She didn’t hesitate to pin its head to the ground with a
spiked heel.

“Here are the non-disclosures. That guy is faxing an order for some
Chinese takeout. I’ve got everything under control, and why aren’t Kaufman’s
people here?”

“The money isn’t big enough, so he’ll be running the numbers himself,”
admitted Corlund sheepishly while remembering that Kaufman had not signed
a non-disclosure, “I’d better get back to Ben’s office.”

“Yeah, good idea, Cheryl, and don’t forget their non-disclosures . And
wiping out surf marketing increases our return on capital by point-eight-zero -
three per share,” said Wilson with a look that almost had Corlund cowering.

“Uh, that’s great.”

“That’s better than great, Madam CEO, as I’m sure you are well aware .
Anything else you want to know Miss Big Shot?”

“Touche!” she laughed, “How much longer do you need?”

“After lunch, about another two hours should do it. Oh, and I want my
boots back. These stupid Guccis are killing me!”

Cheryl Corlund smiled as she closed the door on the boiler room and
headed back to the eagle’s aerie.

* * *

The light through the floor-to-ceiling windows was fading early thanks to
the storm blowing hard outside. It was pushing four o’clock, but Cheryl
Corlund’s clothes were still pin perfect. As for her pitch, it had been equally
expensive and decisive thanks to a mind that had only become sharper as the
meeting wore on.

“And you are certain your board will pose no difficulties?” asked John
Vutara, thinking about the optics of the deal.

“Since today’s exploratory talks have gone well, I strongly anticipate
getting the directors to act, and quickly.”

“Well, as you know, board cohesiveness and unanimous approval are
essential in these situations. We can’t afford any delays, or else - - - “

Vutara left the implications hanging in the air. Peter Lasserman flew them
home. “With the company in play, who knows who else will try to match our
bid. And we don’t want that, now do we?”

“Gentlemen, the directors recognize their fiduciary responsibilities to the
shareholders. This buyout is very much to that end. We will execute it quickly
and quietly.”

“That’s good enough for me. How about you, John?” Lasserman looked at
Vutara . He was taking the wire-frame glasses off his nose and putting them
carefully away in his breast pocket.

“Yes, there is nothing amiss here.”

They both looked at Cheryl Corlund, and with a slight nod of their heads
they confirmed their readiness to back her plan. All three then looked at Ben
Jeffries, but he was looking at Bruce Kaufman and didn’t like what he saw.
Kaufman was examining a painting on the wall, obviously ignoring the
exchange between Corlund and the investment bankers. Too obviously.

“Say Ben, I didn’t know you collected Pollock. A bit abstract for a guy
like you, no?”

Jeffries instantly got the message from Kaufman. He was out, and this had
all been a waste of his time.

“Well, it’s tripled since I bought it, and I’m never one to pass up a good
investment,” he said. The implication was clear, but Kaufman didn’t bite, and
that was that.

“Cheryl,” said Jeffries, turning away from Kaufman and beaming a fresh
smile across the table, “Barring any surprises from down the hall, and I’m sure
there won’t be any, you can count on us.”

“Thank you. And thank you for your time gentlemen. I know you all have
bigger fish to fry - - -“

“Or bigger waves to ride!” chuckled John Vutara.

“Or bigger waves to ride,” said Corlund. She knew any sign of wavering
or contingency plans would hurt her cause. She touched the nail in her pocket
and concluded with one last pitch.

“Gentlemen, thanks to your support, the Wavelife LBO plan will stand the
test of time and deliver substantial returns on your investment.”

“Cheryl, I think we all agree with you,” said Ben Jeffries.

Speak for yourself, Jeffries, Kaufman smirked to himself, Once these old
guys get a hint of their sexuality revitalized, they’re goners.

“Well, I’ll give you a call if I need to see all the data for myself someday,”
he said, “and but for your excellent hospitality, Ben, I might have been more
comfortable with the bean-counters down the hall. It has been a pleasure,
Cheryl, and we’ll be in touch.”

He stood up quickly, surprising Corlund and the men at the table.

Kaufman reached over to shake hands with Vutara, Lasserman and Jeffries, all
sitting within arm’s reach. But Corlund was at the far end of the table. For a
moment he hesitated, waiting for her to stand up and walk around the table to
extend her hand as is customary for a lady to do to a gentleman. She stood up,
but that’s as far as she would go. The slight was not lost on Bruce Kaufman,
though of course he didn’t let it show.

“Thanks for your time, Bruce,” she said, “I look forward to providing you
with more information as necessary.”

They both knew that was bullshit, but they both smiled anyway. Kaufman
turned and walked towards the double oak doors. Jeffries quickly stood up and
hastened to open one of them.

“Thanks for a great lunch, Ben.”

“Thanks for coming, Bruce.”

Jeffries gave him an old boy slap on the back. Kaufman returned the
gesture with a thin smile and a nod. Jeffries watched him walk down the hall
and the smile disappeared from his face. He let the door close slowly before
turning around and back into his usual beaming self.

“Say, guys, ready for a martini? How about you, Cheryl? You did very
well this afternoon.”

“Thanks Ben, but I’ve got to get going,” said Corlund with a wink, now
that she could let her guard down, “I just hope it was as good for you as it was
for me. I’ll give you a call tomorrow!”

“That’s what they all say!”

Everyone laughed loudly, and the cordial goodbyes from the three
gentlemen to Cheryl Corlund left a glow in the room that was the essence of a
good deal in the offing.



  1. Like the site and the stories. I have added a link on my own blog ( where I also write about surfing. If you want to swap links, it would be much appreciated. No worries either way. All very best, Tim Kevan

  2. Like the site and the stories. I have added a link on my own blog ( ) where I also write about surfing. If you want to swap links, it would be much appreciated. No worries either way. All very best, Tim Kevan


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