Up Front
Edited by Sheridan Prasso
Talk Show
"Experts say gas may go to $3 per gallon this summer. So your SUV will stand for 'standing utility vehicle."' -- Jay Leno, The Tonight Show
THE BIG PICTURE
THE FUDGE FACTOR
Are We Seeing the Economy Straight?
Economists and investors always look for the crystal ball that can predict the next recession or recovery. But indicators go in and out of fashion like children's toys, and what Wall Street is playing with these days is the yield curve. It measures interest rates on Treasury bills and bonds. And it's flipped upward in the direction of economic recovery, suggesting "we're getting to the end" of the downturn, says David Wyss, chief economist at Standard & Poor's DRI.
But based on recent history, it may not be a good idea to trust it. While the curve was a great forecaster back in the '60s, '70s and '80s, it has wrongly indicated the health of the U.S. economy several times since then. Ahead of the 1990 recession, the curve indicated the economy should be growing. Instead, it declined. The curve was also unreliable in predicting the great '90s boom.
So why use it? Says Monika Piazzesi, finance professor at UCLA: "It's not a sure bet, but it's the best forecaster we have."
By Charles J. Whalen
THE FUDGE FACTOR
HALLS OF IVY
Professor Gore Makes the Grade
Al Gore may not have been able to drive home the Presidency, but he's become a pro as a college professor this term. When not teaching civics back in his home state, Tennessee, he was drawing star power to his class at Columbia University's Graduate School of Journalism.
News Corp. Chairman Rupert Murdoch, Fed Chair Alan Greenspan, and Late Show host David Letterman all appeared before Professor Gore's class of aspiring scribes. Once a reporter himself, Gore instigated debates about media credibility and conflicts with corporate interests.
Greenspan, talking about financial journalism's impact on markets, explained why he holds so few press conferences: His testimony before Congress is a good substitute because members of Congress "ask better questions," he said. Murdoch, discussing how corporate ownership shapes news, said newspapers have a responsibility to take strong stances on issues.
Students were surprised by Gore's teaching abilities and charmed by his humor. "He's funny, personable, and self-deprecating," says grad student Lenora Chu, "not at all the way the media portrayed him." Gore held his last class on May 2, but Columbia officials say they have not yet discussed having him back next fall.
By Brian P. Murphy
GRAPE EXPECTATIONS
Another Vineyard on the Barbie
Really enjoyed your last Australian Shiraz? Why not buy a winery Down Under and line up a steady supply? With the Aussie dollar down to around 50 cents U.S., only pennies above its all-time low in April, Australia is running a half-off sale. And a bunch of Australian wineries are ripe for the picking.
With good reason: Australian wine is in a class with French and Californian, and the country is on its way to becoming the world's fastest-growing wine exporter by volume. Exports grow 30% annually, and revenue growth averages 20%.
With that in mind, California vintner Kendall-Jackson has been in talks about linking with BRL Hardy, one of Australia's largest wineries. And Robert Mondavi has formed a joint venture with Australia's Rosemount Estates which in February merged with local vintner Southcorp to become the largest premium wine company in the world. Euros are flocking Down Under, too: LVMH Moet-Hennessy Louis Vuitton in January acquired small winery Mount Adam. Britain's Diageo also has been scouting around.
Australia's vineyards are a steal compared with those in California's Napa and Sonoma counties, where prices run $64,800 to $101,200 per acre. Vineyards in South Australia's Barossa Valley, where family-owned d'Arenberg still uses 19th-century presses for its award-winning reds, cost a mere $13,400 to $20,200 per acre, according to Salomon Smith Barney. That's put Australia "on the radar" of international investors, says Albert Hung of Tower Asset Management in Sydney.
Better act quick: The Aussie dollar won't stay in the cellar forever.
By Becky Gaylord
THE LIST
Where Smaller Is Better
Frequent fliers and travel pros rank small airlines first among domestic airlines. Of the biggies, only United, Continental, and Delta made the top 10. Here are the airlines, their hubs, and respondents' comments:
1. MIDWEST EXPRESS, Milwaukee
Wide seats, free champagne, warm cookies
2. JETBLUE, New York
Innovative discounts, roomy seats with personal DirecTV
3. ALASKA AIRLINES, Seattle
Well-managed, a great value
4. MIDWAY, Durham, N.C.
Lots of leg room, caring staff
5. NATIONAL, Las Vegas
Easy, nonstop flights, service is anxious to please
* Survey of 31,500 fliers rating 70 airlines
Data: Zagat Survey
HERE TODAY...
Where Have All the Pay Phones Gone?
Bad news for cell phone holdouts trying to rely on the nation's pay phones: They're rapidly becoming an endangered species. Some 15% of U.S. pay phones have disappeared in the last few years, bringing the ratio of phone-per-person to 1:130 down from 1:108. Thousands more will be zapped this year: 16,500 by Verizon (VZ
) and Sprint (FON
) alone. And BellSouth (BLS
) is abandoning the pay phone biz--leaving independents to take over or just taking out its 420,000 phones altogether.
The reason? Pay phones don't pay off. Calls are down 23% since 1998, the result of competition from cell phones. And revenues are expected to fall 2.4% this year--compounding declines of 5.3% last year and 6.4% the year before. While a phone generates $150 to $200 a month, repairs can cost up to $800, obliterating profits.
But most damaging are long-distance resellers (go-betweens often beginning with 10-10). Some don't reimburse pay-phone operators for making the connections. That can eat up half of revenues, says Vincent Sandusky of the American Public Communications Council, which represents independent pay phone owners who control a quarter of the business. "We've got a lot of companies in trouble," he says. An Apr. 5 Federal Communications Commission ruling that clarifies who pays whom may help.
It's the poor and isolated who are most affected by pay phone decline. Already on the Cherokee Indian Eastern Reservation in North Carolina, Verizon has disconnected 15% of its pay phones since October. "Many of our members are too poor to afford their own phones," says Chief Leon Jones. Wisconsin and California are the only states using surtaxes to subsidize money-losing phone service.
Adds Ted Weerts, executive director of the Travelers Aid Society in Philadelphia, soon there'll be "no way for many poor people to call their employers, doctors, children's schools." Unless somebody starts handing out cell phones that cost 35 cents.
By Ann Therese Palmer
PRODUCT PEEK
How to Jump the Line at the Movies
Looking for a way around Mr. Moviefone's annoying voice while still reserving movie tickets in advance? Moviegoers at Marcus Theatres, which operates 482 screens in the Midwest, can now pay for their tickets online using a credit card. (The 75 cents service charge is half of AOL Moviefone's.) But unlike phone or other e-ticket reservations that require in-person pickup, this one allows tickets to be printed out on a home or office printer. No waiting in line. Go right in.
National Amusements and Muvico, which together own 1,600 screens, soon will offer e-tickets after tests in Florida and Massachusetts. A bar code, scanned at the entrance, prevents counterfeiting. Predicts Bruce Olson, Marcus's president: "This is going to revolutionize the way people buy movie tickets."
Ultimately, e-tickets will save theaters serious money by reducing staff at the box office. Currently, the average staff-per-customer cost is a hefty 50 cents, says Olson. Now if only cybersolutions could shorten the soda and popcorn lines.
By Ann Therese Palmer
As the Downturn Turns
The golf industry is getting an unexpected boon from layoffs. Web sites listing golf jobs (resort superintendent, $100,000; apparel sales director $60,000, etc.) are finding their pool of candidates bolstered by the nationwide jump in job-seekers. Since its launch six months ago, golfsurfin.com has registered 12,500 users, seen its résumé bank grow to 1,700 and filled 25 jobs. Says Miami-based CEO Michael Schlesinger: "It's amazing the quality of people we're getting from the failed dot-coms or even the blue-chip companies."
By Joan Oleck
Footnotes
Polled executives who expect to invest more in stocks than they did last year: 41%; invest less than last year, 9%
DATA: 6FIGUREJOBS.COM
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Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.
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