Up Front
Edited by Sheridan Prasso
Talk Show
"I'm 64 and pretty well wiped out [financially] anyway. I might as well go down in flames." -- Ted Turner, explaining his offer to go to Iraq as a correspondent for CNN
STREET TALK
Analysts: A Hole in the Chinese Wall
When the $1.4 billion Wall Street research settlement is inked in April, will it mean the end of analysts advising investment bankers on deals? Not likely. The new rules are meant to insulate research analysts from the pressures of investment bankers, prohibiting them from such things as accompanying bankers on company visits to garner new business.
But BusinessWeek has learned from regulators that there's likely to be a huge loophole: Analysts can still have contact with those bankers and advise them on potential deals, although the contact must be supervised.
Regulators and the securities industry agree that only analysts can prevent greedy bankers from bringing dud deals to market. But as long as analysts' opinions about companies can be touted by bankers, the analysts could still feel pressured to be less than honest. "The general feeling has been that a Chinese wall should be put in place that doesn't get knocked down for any reason," says Patrick McGurn, senior vice-president at Institutional Shareholder Services. "This opens room for abuse." Investors have certainly had enough of that.
By Emily Thornton, with Heather Timmons
WILD BLUE YONDER
Business Jets Hit a Headwind
Just a year ago, business jets were still flying high. Even the September 11 terror attacks prompted new sales as companies concerned about time and security justified purchasing a $20 million to $45 million business jet for their senior execs.
Now, such sales are taking a dive. Deliveries in 2002 totaled $11 billion, down about 15% from 2001, according to industry reports. And they'll likely be flat or worse this year. Gulfstream and Dassault Aviation were the most recent jetmakers to lower their delivery forecasts. Gulfstream, a division of General Dynamics (GD
), now says it will deliver 77 business jets this year -- 8 fewer than planned. Dassault says production could drop to 4 aircraft a month next year, down from 5 a month this year. "These are very difficult times for business aviation manufacturers," acknowledges Edward Bolen, president of the General Aviation Manufacturers Assn.
And it could get worse. Some analysts predict sales next year could decline 40% from their 1999 peak and spur a consolidation among the five big manufacturers. Until better economic times can ignite new jet sales, it's going to be a bumpy ride for the ultimate corporate status symbol.
By Stanley Holmes
FAST-FOOD NATION
The Rise and Fall of the French Fry
Long before the french-fly flap and the renaming to "Freedom fries" at restaurants and the U.S. Congress, it turns out that many people already had stopped eating so many of them.
The culprits: the dollar menu promoted by fast-food giant McDonald's (MCD
) and Burger King's 99 cents menu. Turns out that French-fry consumption plummeted 10% between December, 2001, and December, 2002, because people chose to buy burgers for $1 (or 99 cents) and opted out of the more expensive combo meal, which typically comes with fries and a drink. "This is the first significant decline we've ever seen," says Harry Balzer, vice-president of market research firm NPD Group, which follows eating patterns.
French-fry consumption had grown steadily over the past decade, hitting a peak in 2001, when 17% of all restaurant orders included fries. Neither fast-food chain would comment on whether their pricing strategies are undercutting their fry sales. Nor would they comment on whether they're considering changing the name of their French fries to "Freedom fries," too.
By Pallavi Gogoi
THE LIST
MBA WATCH
Gambits of Guerrilla Grads
Consider the plight of today's graduating MBAs: record levels of debt, starting salaries that have slid 15% or more, and fierce competition for scarce jobs -- not only with fellow students but also with the still-unemployed of the Class of 2002.
Such harsh reality is forcing MBAs-to-be to ditch the old white-glove approach to interviewing in favor of a little street-smart hustle. Students are employing such strategies as doing their own company case studies and brandishing them at job interviews. David Fein, a second-year student at the University of Chicago Graduate School of Business, for example, took to the suburbs to study Toys 'R' Us (TOY
) and two competitors. He analyzed product placement, store layouts, and circulars. He queried store managers and even Wall Street analysts. "If you're really interested in a company, you have to demonstrate a passion," he says. The result: a coveted spot in the Toys 'R' Us leadership development program.
Students also are pulling together studies in which they act as corporate historian, relating their skills to the company's history and how they would fit in, career-service directors say. Another tactic is cyberspace sleuthing: using search engines to probe the backgrounds of interviewers for a connection -- a hobby, hometown, or former employer in common.
Despite talk of a recovery, it looks as though the fat days won't be back anytime soon. No question, those marketing courses should come in handy as MBAs face a tough final assignment: selling themselves.
By Jennifer Merritt
TELECOM TALES
A Wireless Word from On High
With war looming and economies stagnating, it's easy to see how people might welcome a little spiritual advice. So the Vatican has come up with a new way to provide it. Via Italy's largest mobile-phone operator, Telecom Italia Mobile (TI
), it's using text-messaging to send daily doses of churchly wisdom.
The Prayer-A-Day service, launched last month, zaps passages from the Gospel and excerpts from the Pope's homilies to clients' cell phones each morning. The goal is to bring the Church's message to a wider audience and to young people, says TIM CEO Marco De Benedetti. Now available in Italian, the service will soon be offered in the other four official languages of the Vatican (English, French, German, and Spanish). If it's deemed a success at home, TIM hopes to enlist other mobile providers to offer Prayer-A-Day in other countries.
So far, TIM says it has sent out more than 500,000 messages at 17 cents each, but it won't say how many people receive daily service. At least one young person is a fan. "I do volunteer work with the elderly," says Eleonora Perna, 22, a political science student at the University of Rome. "They love it when I read the messages out loud." Amen.
By Monica Larner
SILICON CULTURE
The Montana Gold Rush of 2003
Just how desperate are laid-off high-tech workers in Silicon Valley? Pretty darn so, gauging by the response to a help-wanted ad in the San Francisco Chronicle by a tiny software company in Bozeman, Mont. RightNow Technologies, which hosts call-center software for big companies, got more than 260 résumés in the two weeks following its mid-January ad.
Execs at RightNow, who plan to hire 75 people this year, were stunned. Never during the height of the boom would hundreds of folks have been lining up to move to Montana for such a small company. "Well, we do have some terrific skiing," says CEO Greg Gianforte. Not to mention a few jobs.
By Jim Kerstetter
THE BIG PICTURE
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Copyright 2003, by The McGraw-Hill Companies Inc. All rights reserved.
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