Up Front
Edited by Sheridan Prasso
Talk Show
"Nobody can ignore the wishes of one-fifth of the world's population." -- Wang Hui, Beijing Olympic bid official, on news that China is a front-runner to host the 2008 Games
THE BIG PICTURE
GUESSING GAMES
Trying to Time the Microsoft Verdict
What's one of the hottest games in Washington these days? Guessing when the D.C. Circuit Court of Appeals will rule in the Microsoft case. One contingent thinks the court will act soon--right after oral arguments end on May 17. It sees the Justice Dept.'s earlier attempt to appeal straight to the Supreme Court as pressuring the appellates to move. Others hold that the court will rule near the June 7 anniversary of Judge Thomas Penfield Jackson's order splitting the company in two. Particularly if it reverses Jackson, the anniversary might be hard to resist.
Then again, those who follow the court closest place their bets on later in June. It's a highly complex case, notes Microsoft attorney Carter Phillips, and involves seven judges, rather than the customary three. "It's feasible right now, but I'd be surprised," he says. "That would be an extraordinary effort."
One thing most agree on, though: One or two earlier findings may be overturned. And early July is the absolute latest. That's when the clerks start heading off to other jobs, and judges go off on summer junkets--er, um, seminars.
By Dan Carney
WILD BLUE YONDER
A New Lease on Life for the B2 Bomber?
B2 or not B2, that is the question. And it's definitely on the lips of defense manufacturer Northrop Grumman. The B2 is its out-of-production stealth bomber, developed more than 20 years ago. The plane performed well in Kosovo but was shelved in 1999. With the Pentagon starting to shift its preparedness away from Europe and more toward Asia, where long distances make bombers a better bet than fighters, Northrop Grumman is offering to reopen its B2 production line in Palmdale, Calif. Industry sources say its influential backers include Deputy Defense Secretary Paul Wolfowitz.
The idea has a surprising opponent, however: longtime Northrop Grumman executive James G. Roche, President Bush's pick as Air Force Secretary. He fears the planes are obsolete and wants the Air Force to start developing a new bomber instead, according to the sources.
But more B2s could be turned out far faster than a bomber that's not yet on the drawing board. And while the B2s would run about $1.5 billion each, the cost of developing a new bomber with advanced electronics and stealth could be, well, stratospheric. In the end, the question is whether the Pentagon needs outdated planes sooner rather than a high-tech successor later. The decision, which is ultimately up to Bush and his defense chief Donald Rumsfeld, will probably come later this year.
By Stan Crock
THE RAG TRADE
A Hard Bargain at Lands' End?
After nearly 40 years at the helm, Chairman Gary Comer has, it seems, put the Lands' End casual wear catalog retailer he founded up for sale. Sears Roebuck looked into acquiring it last fall, according to sources close to the situation, but it hasn't made an offer. Neither has Wal-Mart Stores or May Department Stores, which, the sources say, also had a look last year. While none of the companies would confirm discussions, it's clear that Comer, now 73, is looking for an exit strategy.
But why no one wants to go beyond a first date isn't so apparent. Lands' End has a profitable e-commerce operation, where sales rose 58%, to $218 million, last year. But the slowing prospects for e-retail may have tarnished its appeal. Or maybe Comer, who controls 55%, may want too high a price. Sources say he's looking for $50 to $70 a share. (Shares currently trade around $34, the same level as three years ago, even though last year's earnings fell 28% on overall sales of $1.46 billion.)
Meantime, there's some internal turmoil. Five Lands' End execs and four board members have left in the past year, indicating disagreement over the company's direction. But CEO David Dyer denies deeper problems: "Change is something you have to go through." Still, the biggest change will be yet to come, when Lands' End is finally sold.
By Robert Berner
THE LIST
Is the Economy Bottoming Out?
Some top execs think so. Here are some of their recent comments:
SCOTT McNEALY, CEO, Sun Microsystems, Apr. 19
"I see a bottom every time I change my 1-year-old's diaper. That's the only sure bottom I know. Anyone who is trying to predict doesn't know."
CARLY FIORINA, CEO, Hewlett-Packard, Apr. 18
"We are talking about this quarter being a bottom."
PAUL OTELLINI, Executive VP, Intel, Apr. 17
"We believe our PC-related businesses have bottomed out and are planning for a seasonally stronger second half."
JERRY SANDERS, CEO, Advanced Micro Devices, May 2
"The communications business is not recovering yet, but the PC and computers business is now beginning a slow recovery."
Data: Compiled by the Austin American-Statesman
IMAGE BUILDING
Mississippi Covets a Neighbor's Team
Mention the State of Mississippi, and most people think cotton fields and kudzu, not wired schools, high-tech manufacturing, and professional sports.
But officials in Jackson are working hard to cultivate a more urbane image for a state that has already slipped into recession and is perennially among the poorest in the nation. With the economy making their efforts especially urgent, they've scored a few victories: Japan's Nissan Motor will build a $1 billion state-of-the-art auto plant; Governor Ronnie Musgrove has pledged to wire all public schools to the Net; and former Netscape CEO and Mississippian Jim Barksdale has given $100 million to literacy programs. Officials even managed to lure Spain's royal couple to come see Spanish artifacts in the state art museum.
But the real coup would be snatching away the New Orleans Saints from Louisiana. There's a good shot. Mississippi is promising a $400 million, 65,000-seat stadium on the Gulf Coast within 45 minutes of downtown New Orleans. "Any interest from Mississippi would be welcomed," says a Saints spokesman, "but our priority right now is to stay in Louisiana." Officials there, adamant that they not lose the team, are scrambling to the defense.
By Charles Haddad
HALLS OF IVY
Training Scribes for the Biz Beat
The '90s were a godsend to business and tech journalism. More than 100 publi-cations were launched to cover the boom. And to help meet demand for writers, J-schools had to start turning out grads as savvy in numbers as previous ones were in politics.
More students need more teachers, so there's been a spate of endowments for business-journalism professorships. Such chairs lure well-known biz writers--Sylvia Nasar of The New York Times, for one--to teach their specialties and enhance the schools' cachet. In April, media king Michael Bloomberg gave $1.5 million each to Columbia University and to Baruch College and $585,000 to the University of California at Berkeley. Missouri got a $1.1 million chair last year, and Columbia and Washington & Lee each got $1.5 million chairs in 1999. "Business journalism is hot," says Terri Thompson, director of the Knight-Bagehot fellowship at Columbia. "Journalists see it as a career track."
Next, the Reynolds Foundation may give up to $40 million in various business-writing grants, says President Steven Anderson. Enough to launch a lot more Sylvia Nasars.
By Joan Oleck
CHINA WATCH
A New Backlash against an Old Enemy
Seething resentments left over from World War II fade slowly, if ever, as Japanese companies facing rising nationalism in China are finding out. Since news broke several months ago that an accident involving a Mitsubishi whose brakes failed had left a Chinese woman in a coma, the Chinese Consumer Assn. has received an avalanche of complaints against Japanese products. Press reports have charged Japan Airlines with making Chinese passengers spend the night aboard a delayed flight and Pioneer with using inferior replacement parts in an amplifier. And that's just this year--2000 had its share of anti-Japanism, too.
It's unclear whether Japanese companies in China are any worse than others. But worried about the impact of bad press on sales, they're responding by adding repair centers, opening complaint hotlines, and recalling products. Still, the Japanese are none too happy about it. Says Pioneer Shanghai's head of after-sales service, Pan Haiming: "Exaggerated reports in the Chinese media may have left the wrong impression that Chinese users are hurt. It's unfair to us."
For those unaware of the history: Japanese soldiers killed an estimated 300,000 civilians in Nanjing in 1937 and committed numerous atrocities during a nine-year occupation.
By Alysha Webb
Footnotes
U.S. households that bought portable electric generators: in 1999, 529,000; in 2000, 730,000
Data: SIMMONS MARKET RESEARCH/PEPCO TECHNOLOGIES
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Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.
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