Up Front
Edited by Sheridan Prasso
Talk Show
"Starbucks is now offering an Enron latte. You just skim the cream right off the top." -- Jay Leno, The Tonight Show
BEAN COUNTERS
Kenneth Lay, Accounting Expert
Once upon a time, Enron (ENE
) CEO Ken Lay was an adviser on accounting. At the height of the technology boom, the Securities & Exchange Commission wondered whether companies should be divulging more information about intangible assets--such as brand names or Web traffic--that don't show up on financial statements. So it commissioned Yale School of Management Dean Jeffrey Garten, who is also a BusinessWeek columnist. He set up a task force of 14 experts, including venture capitalist John Doerr, Goldman Sachs tech analyst Richard Sherlund, economist Joseph Stiglitz--and Lay.
The panel released its findings in May, 2001. It stopped short of requiring more disclosure, and recommended more study. BusinessWeek spoke with several panelists who don't recall Lay playing a big role in the discussions. "I didn't even realize Ken Lay was on the commission," says one panelist. Garten would not comment. Lay, through a spokeswoman, said only that he agreed with the commission's recommendations. As with many reports in Washington, this one sank without a trace.
By Kimberly Weisul and Mike McNamee
STATELY MATTERS
Building a Buzz for the Beehive State
Utah Governor Mike Leavitt went whole hog to lure the Winter Olympics to Salt Lake City. Now he wants to capitalize on it to lure businesses, too. Leavitt spent three weeks in January following the Olympic torch relay to cities such as Seattle and San Jose, hosting parties for companies he hopes will bring in new investment. And perhaps to help change the state's conservative image, he staged a Los Angeles event at the House of Blues nightclub. Leavitt, a Mormon, even sprung for an open bar.
During the Games, Utah is providing free tickets to 200 CEOs and venture capitalists. Then, after the Games end on Feb. 24, Leavitt will kick off what he calls a "1,000-day plan" for his last three years in office, with corporate recruiting missions to various cities.
Leavitt also plans to make Utah attractive to high-tech talent by spending more than $42 million on scholarships, teacher incentives, and new facilities at Utah universities. He cites the invention of technologies such as the TV by Utah natives who moved elsewhere. "Too often...the jobs went someplace else," Leavitt said in a recent address. "We will change that."
By Christopher Palmeri and Arlene Weintraub
THE LIST
Before You Ditch That Old PC
Thought you deleted those sensitive files? So did Enron (ENE
) employees and even operatives for Osama bin Laden. But all kinds of documents can lurk in your hard drive even after hitting "Delete." File-wiper software promises to erase them for good.
BCWIPE
Jetico.com says its program meets Defense Dept. specs (which call for files to be overwritten seven times with random data set). Cost: $29.95.
DESTROY-IT!
Business Logic Corp. (blcorp.com). Offers "bulletproof file shredding." $29.95.
DATAERASER
Ontrack.com. Personal version, $29.95; professional version, $500--which can be configured to overwrite files up to 99 times.
EVIDENCE ELIMINATOR
From evidence-eliminator.com. Claims to defeat the same forensic software used by the U.S. Secret Service, Customs, and the LAPD; $149.95.
Data: Texas Lawyer, product Web sites
COIN OF THE REALM
China's Year of the Euro?
Could the euro get a boost from China? Ahead of Chinese New Year, which begins Feb. 12, trend-setters in Beijing and other Chinese cities have been stuffing the red envelopes traditionally given to children with euro coins purchased in China's thriving coin-and-stamp bazaars. Even though the country has strict currency controls, vendors sidestep them by packaging euros as collectable gift sets. Trader Xu Kai at Beijing's Yimeijia market has been selling 200 to 300 sets a day. Says another trader: "It's new in China, so it's special and fun for the kids."
But there may be more afoot than New Year's packets. Officials at China's central bank, The People's Bank of China, have said they plan to buy more euros, which would reduce China's dependency on U.S. dollar reserves. Currency traders in London and Frankfurt have been buzzing with rumors that it's starting. Certainly, the euro could use the help. It hit a year-low of 85.6 cents on Feb. 1. But at the Yimeijia market, where gift sets start at $7, a euro costs a minimum of $1.68. That should bring smiles at the European Central Bank.
By Mark L. Clifford and Li Yan
WRETCHED EXCESS
And Now, the $21,000 Cell Phone
The Ferrari-driving, Rolex-flashing crowd has had reason to grouse: Even the snazziest of cell phones are made from the basest materials, mostly plastic. Pure plebe-ware. But relief is on the way. By summer, Nokia's (NOK
) new subsidiary Vertu will launch luxury cell phones. Encased in platinum or 18k gold, with crystal screens and soft leather casings, the phones will sell for up to $21,000. For tightwads, $5,200 versions will be available in stainless steel.
Extravagant? Precisely. Vertu is betting that cell phones will follow the evolutionary path of the watch, from functional timepiece to gold-encased prestige item. The company will market to the moneyed elite in boutiques from Hollywood's Rodeo Drive to New York's Madison Avenue. It's all the brainchild of Nokia design chief Frank Nuovo. "Think of a Rolls-Royce," he says. "These phones will be built to last."
So the trick will be keeping up with technology. Vertu will contact clients to offer regular upgrades. But gadget freaks beware: The phones lack many features such as an Internet browser. Instead, users anxious
to book a table at Taillevent or a seat on the Concorde can push a button for multilingual help from a live human. Low tech, yes, but luxurious.
By Stephen Baker
THE MONEY GAME
Hicks Muse's Not-So-Excellent Venture
To Dallas buyout firm Hicks, Muse, Tate & Furst, $1.6 billion must seem like a paltry sum. Hicks, which made its name on such spectacular successes as Dr. Pepper and International Home Foods, had hoped to raise $4.5 billion for its latest fund. Like other buyout shops, Hicks planned to use the money to take big stakes in struggling companies, then turn the companies around and sell them at a profit. Instead, after two years, Hicks in December quietly pulled the plug on fund-raising. At just $1.6 billion, Hicks declared its fifth fund closed to investors, private equity bankers say.
True, the fund-raising environment has been lousy. But missteps tarnished the firm's image and likely played a role in its failure to get more cash. "Investors are going to think twice about any firm that has troubled portfolio companies," says Mario Giannini, president of Hamilton Lane Advisors, which helps institutions pick investments. In 1999, Hicks strayed from the food, consumer, and manufacturing companies it had successfully invested in before. It bulked up on telecoms, pouring at least $700 million into four companies that later filed for bankruptcy. Then Hicks lost $500 million when another investment, Regal Cinemas, went bankrupt, too. Hicks execs declined comment. But the firm has previously said it plans to go back to its roots.
By Kimberly Weisul
SEPTEMBER 11
A Plague of Hate Sites
Until recently, one of the biggest Internet-related worries for companies was employees who surfed the Web for cybersmut. Now, there's another concern: hate sites. The number of these venomous domains--which in the past featured gay-bashing, neo-Nazism, and misogynist rants--has doubled since September 11, to about 2,000, according to Websense, a San Diego software-monitoring company.
Growth is mainly due to a new niche: anti-Arab and anti-Muslim sites. Among them is crisis2001.com. Rich in racial epithets, it calls Islam "the scourge of the earth" and rallies to "nuke" them all. Another, you-got-mail.com, talks about "Satan's Muslims" and says it's "time to lock up the mosques and kick those dirty Muslims out." Others, such as nuke-kabul.com, are anti-Afghanistan and anti-Osama bin Laden in nature.
Employment lawyers say it's important for companies to remind workers of policies that bar viewing hate sites in the workplace. Warns Jennifer Kearns, a partner in San Francisco law firm Brobeck Phleger & Harrison: "Otherwise, you're kind of a sitting duck for a hostile- workplace suit."
By Michelle Conlin
THE BIG PICTURE
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Copyright 2002 , by The McGraw-Hill Companies Inc. All rights reserved.
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