CDNow made a midnight run for the border. And
this time the music e-tailer didn’t drop the chalupa. Instead, the company
scored a rich uncle in Mexico’s multibillionaire Carlos Slim Helu.
It’s a $52.8 million windfall, giving cash-strapped CDNow some wiggle room
for the next couple of quarters to get its act together. Mexico’s Mr.
Moneybags bought some 3 million shares from CDNow at $17 bucks a pop.
That’s one heck of a premium for a 10% stake in a company that’s struggling
to keep its head above $4.
But this mogul’s no stranger to rolling the dice. In fact, his track record
boasts a keen eye for fixer-uppers. Slim’s got the fattest billfold in
Latin America, and he’s ridden industrial retail conglomerate Grupo
Carso and telecomm giant Telmex all the way to
the bank.
His mantle is crowded with trophy companies he’s scooped up from the brink
of oblivion. After CompUSA was put curbside for trash day, Slim
drove by and threw the PC retailer in the trunk of his car for about $800
million. The computer store chain collected $6 billion last year, but
hemorrhaging losses capped investor enthusiasm.
That’s where Slim comes in. He’s well-known for a hands-on style that cuts
costs and reduces management hierarchies to its lowest common denominator.
So far, it’s been a recipe for success. He brought Prodigy back from the dead in mid-1997 and then nursed it back to the
number three ISP slot amidst clever anti-AOL marketing ads.
When Apple looked downright rotten in 1997, Slim
swooped in faster than Mrs. Smith, grabbing a 3% stake in the PC maker.
Days later, Steve Jobs tacked on the interim title and suddenly $20 a share
looked like a bargain. Coincidence? Hardly.
Big tobacco can’t catch a break these days, but that’s music to Slim’s
ears. He bought a seat on Philip Morris’ Board of
Directors following a $90 million stock purchase in the ailing blue chip.
While we’re on the subject of grand slams, the billionaire owns 35
Denny’s franchises in Mexico. Now if only Slim could explain to me
why the food looks so good on the menu but so bad on my plate.
He loves to re-tell a cooked-up story about how he barely knows where to
find the “on” button on his computer. But make no mistake, Slim knows his
way around the new Net economy; and he’s got a nose for finding where the
money’s at.
With every additional comeback, his legend grows. But, CDNow may yet
provide a tricky challenge. Cutting costs isn’t the only obstacle this
company faces, and it’ll remain to be seen whether Slim has enough fingers
and toes to plug the holes in this rusty bucket.
Any questions or comments, love letters or hate mail? As always, feel free
to forward them to kblack@internet.com.
Drop the Chalupa
