Sharper Image: Nerd CEOs Destroy Shareholder Value

by Johnny Debacle

Who would have thought that a chain of stores that sells overpriced esoteric technocrap (all of which include some sort of ionization feature to reduce odors) and whom I associate mentally with lifesize Boba Fett statues would be run by a complete and total nerd? WATFO? points to this SEC filing made by the Sharper Image (NYSE: SHRP) which lists that former CEO negotiated to buy from the company some of his former office decorations as part of his severance, including C3PO a C3PO sculpture and a Superman statue.

Sculptures: I would like to purchase two sculptures that decorate my former office or that the Company retails. The Company will sell me the 3CPO sculpture that was in my former office for $7,500 (which is 50% of its retail price of $15,000) and a Superman for $2,500 (which is 50% of its retail price of $5,000), for a total of $10,000, which I already have paid to the Company. I will pay the Company the cost of shipping Superman to me, within 30 days after this Agreement becomes effective. I may take the 3CPO model from the Company’s office (or have it picked up at my own expense), and the Company will ship a Superman to me.

Perks come with the territory of being CEO, but would shareholders really approve of perks if they knew that they were the kind that further nerded up their company? Nerds come in all stripes, and while some nerds add value (finance nerds like me and also those red/purple nerds which create beautiful synergy in my mouth), nerds of the 40 year old virgin ilk (cipher nerds) pull it straight off the table.

Here is a chart which scientifically demonstrates the effects of a cipher nerd on the stock price of a publicly traded company. The start of the chart is approximately the point in time just before the realization that the CEO was a cipher nerd. The rest of the chart demonstrates how the market prices such a fact.

Recommendation: Given that the Sharper Image is trading at nearly a 50% discount to it’s nerd-free valuation of $20, it looks like a buy at $9.41. The market has been slow to recognize that the taint of the nerd has been lifted and we expect the battered stock to rise up to its nerd-free valuation as the market corrects itself. Additionally, there is an activist shareholder opportunity in finding companies whose CEOs watch Battlestar Galactica or keep a twenty-sided die on their desks and then taking action to affect regime change, thus realizing significant appreciation of shareholder value.

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  1. January 3rd, 2007 | 1:12 pm

    6 sided die are potentially gamblers, of which 50% randomly create shareholder value. The true threat is the 4 sided or 20 sided die wielders.

  2. PairOfSox
    January 3rd, 2007 | 1:45 pm

    I emailed Mr. Debacle about the 20-sided die earlier. Apparently, I have a reputation on this site as a nerd, so I did not want to be the first to comment publicly. Now I don’t have to worry since A Nerd commented before this nerd.

  3. JCauto
    January 3rd, 2007 | 3:49 pm

    The true test of nerdiness is being long a 30- or 100- sider.

  4. January 3rd, 2007 | 4:03 pm

    Would a nerd really have the strength to roll a 100 sided die? A lot of sides, equals a lot of weight, if you were to make a side be flat enough and large enough to be stable.

  5. AngryAnalyst
    January 3rd, 2007 | 4:53 pm

    I think the initial remark about the six sided die was actually a thinly veiled attempt to cover Mr. Debacles true level of Nerdness.


    As Mr. Debacle is a regular contributor to Long or Short Capital we can assume he also holds a leadership role with the organization. Using the “Birds of a Feather” model Mr.Debacle’s partners are also most likely Nerds. Therefore by citing a blatantly non-Nerd six sided die in his recommendation he was able to fool you all into assuming he and his partners are not Nerds (or Cipher Nerds as stated) and thus the shareholders in Long Short Capital will not request their removal that would in turn (Per Mr. Debacles Hypothesis) create a (Cipher)Nerd-free enterprise and release value. This is obviously a situation where management and shareholder objectives are not aligned.

    Long Short Capital is obviously presently under valued under the current management. Mr. Debacle knows all to well the the multi-sided dice used in various role playing games and I suspect he is a dungeon master of the highest order.

    Reveal yourself – the truth shall set value free.

    Mr. Debacle you may not eat your cake and have it too!

  6. January 3rd, 2007 | 5:02 pm

    Ha-ha, I note that Mr Debacle has edited his report to go 20-sided. Editing post-heckle is definitely a sign of intimidation by nerd!

  7. grammar's a bitch
    January 3rd, 2007 | 8:25 pm

    Nerd CEOs may destroy shareholder value, but careless bloggers destroy languages.

  8. Zbignew Zlabatski
    January 3rd, 2007 | 9:42 pm

    Rumor has it that the SEC is pushing an amendment which states that anyone who even knows what a 4- or 20-sided die looks like is barred from holding a senior management position in a publicly traded company.

    Linking pics doesn’t work, but this seems apropos:

  9. January 4th, 2007 | 8:46 am

    I think the written English language is hardy enough to survive even JD’s most ferocious attempts to destroy it. But if it doesn’t at least we now know who to blame.