Given the previous post, it’s at least amusing to notice that Business 2.0’s “Apple 2.0” blog has now posted about first-weekend iPhone sales, and yet the author somehow manages not to mention his own post from Saturday on the same subject, the one that has numbers he invented out of whole cloth.
Commenter “Rezzz” was not so forgetful:
“What happened to ‘tens of thousands’?”
They did sell tens of thousands. Looks like somewhere between 100 – 150 tens of thousands.
Meanwhile, DeWitt brought in a couple of millions hits to this website with that headline. Enjoy your bonus, dude.
It was perhaps unfair for us to refer to Apple 2.0 blogger Philip Elmer-DeWitt as “Elmer Bulwer-Lytton,” but MDJ had spent time on this blog in May and was not impressed. From coverage in MDJ 2007.05.02, available to MWJ readers in the secure RSS feed, discussing the stock options backdating brouhaha of the time, just after noting that the SEC conducted a large investigation and determined that Jobs was not to blame for backdating:
Don’t expect any of this to stop those who take great pleasure in seeing Jobs suffer. The “Apple 2.0” blog, an effort of Business 2.0 magazine, recently noted that nearly six years ago, Fortune called Steve Jobs’s compensation “highway robbery,” prompting protests from Jobs who noted that all of his options were underwater, and therefore not worth US$872 million. Jobs wrote, “They are worth zero.”
The blog brings this up because the author of that piece from June 2001, Joe Nocera, dredged it up for last Saturday’s New York Times, and you could cut the schadenfreude with a knife. Nocera wrote, “What a delicious surprise to discover that Mr. Jobs, who had ostentatiously taken only US$1 in salary since returning to Apple in 1997, had a stock option package bigger than any ever bestowed on such well-known greed heads as Sanford I. Weill of Citigroup or Michael D. Eisner of Disney.”
According to Nocera, Jobs had options worth US$872 million at the time of the story, which made his public acceptance of a US$1 salary hypocritical, and its exposé “delicious.” Nocera wrote that Jobs “railed” about the unfair cover story, offering to sell his options to Fortune for half of their supposed US$872 million value. Jobs pointed out that since the options were underwater, “They were worth zero.” Nocera smugly adds, “That is not how options are valued, but never mind.”
Actually, you should mind, because the article in Fortune was a complete hack job, one covered in MDJ 2001.06.15. The cover said Jobs’s options were worth US$872 million, but the story inside said Fortune valued Jobs’s options at US$381 million: “We have valued his monstrous options grant at one-third the exercise price of the shares options. And, of course, we’ve included the US$90 million Gulfstream the Apple board gave him.”
Not only did Fortune publish two estimates of Jobs’s option worth on the same page that differed by half a billion dollars, Jobs was right. As MDJ has noted since at least 2001, Jobs’s options were not standard options. They could not be sold or traded, so they had no value to anyone but him. A block of options that big on the open market might reasonably be valued as worth hundreds of millions of dollars, but since they couldn’t be sold on the open market, they were worth a total of US$0 until Apple’s stock price rose above the option price.
It matters not how venomous or sarcastic Nocera gets in his smug condemnation, for the value that Fortune set was wrong in 2001 and it’s wrong now. Nocera doesn’t seem to care, though, as long as he can keep selling the same article to the mass media. As Upton Sinclair once said, “It is difficult to get a man to understand something when his job depends on not understanding it.”
Oh, here are some other details that the “Apple 2.0” blog didn’t tell you in flogging this story. First, blogger Philip Elmer-DeWitt is actually the executive editor of Business 2.0 magazine, which, like Fortune is published by Time, Inc. Before joining Business 2.0, Elmer-DeWitt worked for Time for 27 years, where his work included a not-so-flattering 1998 mini-profile of Steve Jobs, and where he was science editor when sister publication Fortune ran the originally incorrect story.
Elmer-DeWitt sees his blog as a counterpoint to “fan blogs,” because he says he is “someone who loves MACs and can bring a journalist’s skepticism.” (Yes, that’s his spelling of “Macs.”) It’s too bad that Elmer-DeWitt didn’t let readers invoke their own skepticism by alerting them to the fact that he was praising a former colleague’s attempt to rehabilitate a discredited story for his own company’s publication.
Perhaps that’s because Elmer-DeWitt just got a check from Business 2.0 “in the area of US$2000 to US$2500” for writing the number-two Business 2.0 blog in the first calendar quarter of 2007. That’s a lot of incentive to get readers, especially for a blog that spends much of its time repeating rumors and mocking fan sites that don’t share Elmer-DeWitt’s “journalist’s skepticism.” So, just to recap – claiming that underwater options that can’t be sold at all are worth hundreds of millions of dollars for six years despite plain facts is applying journalistic skepticism, but earning US$8000 to US$10,000 per year to repost items from Wired, AppleInsider, and MacDailyNews is blogging “outside the reality distortion field.” You make the call.
It’s unclear how well the whole “we’re experts” thing is working out for Business 2.0 – just before that issue of MDJ went to press, we learned that Business 2.0 lost every production file for its June 2007 issue on 23 April when its editorial system crashed, and only then did the magazine learn that its backup server hadn’t been backing anything up for at least days. They lost everything – the only way they were able to get the magazine out was that it was a monthly (not a weekly), and they had a week to reconstruct all of the art and layouts. The text of all the articles was only saved because they’d sent it to the lawyers for approval.
As the article notes, this is the magazine that annually publishes “The 101 Dumbest Moments in Business.” Perhaps some of this explain why the News Corp-owned New York Post reported last week that the magazine “is a long way from seeing any of the investments pay off,” and may wind up being folded into Fortune magazine – the same one whose completely incorrect stories about Steve Jobs got stroked by Elmer-DeWitt recently.
Maybe they’d save some money if they paid the bloggers for quality instead of traffic, as Rezzz implied.