Up Front
Edited by Sheridan Prasso
News Flash
Another recession special: The New Yorker Hotel offers a room discount of $10 or $20 if the Dow closes down 50 or 100 points, a guaranteed "room on a high floor with open windows" if the Dow drops more than 500 points--and free breakfast or a cocktail if it closes up 200 points.
THE BIG PICTURE
BROWNOUT BLUES
California's Most Wanted Honchos
It may be humid in Houston, but it's even stickier in California if you're a Texas energy exec. Enron Chairman Kenneth Lay indefinitely postponed an Aug. 7 speech to Town Hall Los Angeles, a civics organization. The reason? Enron confirms it feared Lay would be arrested if he set foot on California soil. Enron (ENE
) has been cited for contempt by a California Senate committee investigating charges of electricity price gouging. Enron refuses to provide what it calls classified documents unless a judge ensures they'll remain confidential. "The Senate is looking for a political scapegoat, and we can't trust the situation," says an Enron spokeswoman.
Lay isn't the only Texan to cancel California. Reliant Energy (REI
) Chairman R. Steve Letbetter skipped a July 18 speech to the same group. Reliant was also cited by the Senate. A Reliant spokesman says Letbetter had more urgent business in Houston.
Of course, Lay may also have been trying to avoid the fate of his CEO, Jeffrey Skilling. In San Francisco on June 21 (pre-citation), an electricity activist hit Skilling with a cream pie.
By Christopher Palmeri
WORKFORCE WOES
When Loyalty Erodes, So Do Profits
Here's food for thought in these downsizing times: A new book finds that Corporate America doesn't grasp the relevance of employee loyalty to success. And its actions have alienated employees, who in turn alienate customers--and that hurts profits and growth. Frederick Reichheld, author of Loyalty Rules!: How Today's Leaders Build Lasting Relationships, due out in September from Harvard University Press, finds that "revolving-door defections" have a clearly defined impact on profits. He studied nearly 100 companies in a dozen industries. One of his studies, from 1996, finds 5% swings in retention rates resulting in 25% to 100% swings in earnings--in both directions.
Today, the typical company is lucky if 50% of its employees believe it deserves their loyalty, according to a study of 2,000 employees that Reichheld did for Bain & Co. this year. As a result, Reichheld says, U.S. corporations lose half their customers in five years, half their employees in four, and half their investors in less than one. By fostering loyalty, companies can boost productivity, customer retention and referrals, and attract talented staff. "It's more important in a down market," he says.
By Mara Der Hovanesian
B-SCHOOL NOTES
Big Ex-Techies on Campus
Scorned by many twenty-somethings in the years of anything-goes venture funding, business schools are getting a second look. This year alone, 367 Internet companies have gone belly-up. And many of the nearly 83,000 dot-commers laid off as a result plan to wait out the summer with extended vacations--and then go to business school in the fall.
Applications at top B-schools, including Harvard and the University of Virginia, are up an average of 5% to 20% this year after comparable declines last year. At UVA's Darden School, the class is actually overbooked by 25 people. Usually, just one or two extras were on the list. Stanford Graduate School of Business has logged a 120% increase in applicants from high-tech fields.
The University of California-Los Angeles' Anderson School has also seen many more dot-commers and tech folks in its last admissions round. "The last month, we've been getting calls from people who've been laid off asking if there's any way that they can still get into the fall class," says Admissions Director Linda Baldwin. The answer is no.
By Jennifer Merritt
THE LIST
Perks for Ex-Presidents
Your tax dollars pay the bills of former Presidents, covering the costs
of office space and staff, not to mention their post-Presidential salaries.
Here's who spends what:
OFFICE
PRESIDENT SALARY LOCATION/RENT EXPENSES*
BILL CLINTON $150,000** New York $265,000
$354,000
GEORGE BUSH $96,000 Houston $135,000
$169,000
RONALD REAGAN $96,000 Los Angeles*** $99,000
$177,000
JIMMY CARTER $96,000 Atlanta $142,000
$102,000
GERALD FORD $96,000 Rancho $75,000
Mirage, Calif.
$110,000
* Staff, printing, postage, telephone, utilities, supplies, equipment
** Salary reverts to $96,000 30 months after leaving office
*** Plans to scale down office in September, 2001
Data: GSA fiscal year 2002 budget allowances
TRENDLETS
Numerical Superiority
Digits are popping up everywhere teens are--not just in instant-messaging shorthand (where "see you later" becomes "cul8r") but on T-shirts, in the names of hot bands (Matchbox Twenty, 112, D12, Sum 41, 98, Eve6), on messenger bags, and emblazoned across various fashion items for the youth market.
So companies such as Old Navy and Abercrombie & Fitch have gone big into numbers with clothes aimed at the tweenage demographic. Youngsters are flocking to buy their number-emblazoned T-shirts, sweatshirts, and pants modeled after '70s collegiate sports uniforms. They're "a strong part of our business," agrees an Old Navy spokesman.
Why numbers, why now? Image-savvy youth, it seems, are sick of logos and brands splashed across their chests, says Janine Lopiano, whose Sputnik group tracks teen trends. A fascination with digits comes from the popularity of "e-mail speak," cell phones and text messaging, in which thoughts are converted into numbers on a dialpad. Plus, there's the age-old baffle-the-parents appeal, adds Bruce Tait of Fallon Brand Consulting. "By using numbers and symbols," he says, "you create intrigue."
Few urban teens can resist. Outside MTV's New York studios, Jessica Badolato, 14, is wearing a tank top emblazoned with the number 81. She doesn't know why. "I guess we just like numbers," she says, citing blink-182 as a favorite band.
Moms and dads: Consider this the "411" on this teenage fad.
By Julia Cosgrove
PRODUCT PEEK
Palm Ware for Cheap
If you've never heard of Cosmi, don't feel bad. While it's among the top 10 software makers in the U.S. in terms of unit sales, it doesn't get much attention. Revenue at the privately held company was estimated at just $25 million last year. Besides, CEO George Johnson doesn't like to spend on marketing when he could be investing in new products. His tiny operation, which has been around since 1982, has one of the industry's fattest catalogs. Programs, from games and educational packages to legal and finance guides, mostly carry el cheapo price tags of just $10 or $15.
Now Cosmi is coming out with budget programs for Palm, Visor, and other handhelds. At $14.95 apiece, they include a Travel Companion with hotel phone numbers around the world, a currency converter, and a phrase translator for several languages. There's also a financial tools manager, a database, and a Professional Invoices & Estimates. They're in computer and office-supply stores under the SwiftWare brand.
Cosmi, with its other brand name, Starshine, is twinkling with profits. It's been in the black for 47 consecutive quarters.
By Otis Port
As the Downturn Turns
How do you comfort sagging spirits in Silicon Valley? With Recession Camp. Since its first event in early July, about 15 pink-slipped dot-commers have been gathering for the day outings--long hikes, lingering lunches, rounds of golf, horseback riding, and baseball games--with fees covering only actual costs.
Recession Camp was founded by Andrew Brenner, downsized from a wireless company in June, and Michael Feldman, CEO of a startup that closed in February. "It always helps when you can see someone else experience the same kind of pain," says local employment coach Caity McCardell. Feldman thinks it may be even more simple. "It does help to find others like you," he says. "But we also don't want to forget the healing power of getting a good tan."
By Blair Tindall
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Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.
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