Up Front
Edited by Ira Sager
Talk Show
"The position of the United States of America is the Iraqis are plenty capable of running Iraq, and that's what's going to happen." -- President George W. Bush
PLANE TALK
What Boeing Might Jettison
For the past two years, many aerospace watchers have privately wondered if Boeing (BA
) would exit the commercial airplane business. Now, a survey of the industry predicts that the jetmaker will stop making passenger planes. "Ten years from now, Boeing will be making military and special aircraft, but its days of manufacturing large passenger jets will probably have come to an end," says Alan MacPherson, professor at the State University of New York at Buffalo and a co-author of the report.
Boeing officials dismiss such a claim. But the authors marshal compelling evidence: over 30,000 layoffs from the commercial unit, outsourcing of factory work to Asia and Russia, and a 60% drop in Boeing's commercial airplane backlog. What's more, Boeing is focusing on tech services and defense businesses.
Such a strategy could be positive for Boeing because those businesses have higher profit margins. But the price will be high: the likely loss of an additional 20,000 jobs, and the exit of America's No. 1 exporter.
By Stanley Holmes
SPORTS BIZ
Taking a Swing at the PGA?
While the PGA Tour has benefited from Tiger Mania, the PGA's 50-and-over league -- now known as the Champions Tour -- has struggled. With corporate sponsors like TD Waterhouse having backed out, the tour has scaled back. Now, it could be facing a competitive threat from one of its most charismatic players, Chi Chi Rodriguez.
BusinessWeek has learned that Rodriguez, 67, has begun soliciting sponsorships from the likes of Toyota (TM
) and other corporations for a new 10-event tour for seniors, which he plans to call the International Golf Tour and could launch by Thanksgiving. Rodriguez is recruiting 20 well-known senior pros whom he hopes will invest $50,000. Each pro would play the first two days of a tour with three amateurs -- chosen by the sponsor -- with the Sunday round just the pros.
Rodriguez insists he isn't trying to compete with the PGA's Champions Tour. But he readily admits that he's hoping to recapture the energy of the earliest days of the senior tour, when pros like Rodriguez and Lee Trevino kibbitzed with the galleries. "Fans aren't going to be looking at a bunch of robots," vows Rodriguez, an obvious poke at the current tour.
By Dean Foust
SILICON STRATEGIES
Taiwan's Big Blue Meanie
In the semiconductor game, contractors that make chips for other chip companies are led by Taiwan's world-class manufacturers. Last year, Taiwan Semiconductor Manufacturing Co. (TSM
) and United Microelectronics Corp. (UMC
) together did 79% of all contract work, says researcher IC Insights.
That's about to change. U.S. tech giant IBM (IBM
) is posing a serious threat to Taiwan's contract chipmakers after snatching some juicy business away from TSMC. Nvidia (NVDA
), a leading designer of graphics processors, tapped IBM to produce its next-generation chips after TSMC had trouble making Nvidia's current offering in volume, delaying its introduction. The deal could sweeten IBM's coffers by $150 million next year alone. IBM has "a long history of design expertise," says Di Ma, Nvidia's operations chief.
Now tiny East Fishkill, N.Y., 65 miles north of Manhattan, is emerging as a mecca for chip production. There, IBM has a new, $2.5 billion chip factory, devoting half its capacity to contract manufacturing. The business is rolling in: IBM also has deals with chip companies Xilinx (XLNX
), Qualcomm (QCOM
), and Advanced Micro Devices (AMD
).
By Otis Port
THE LIST
WILD BLUE YONDER
How to Rumble the Airlines
With United Airlines (UAL
) deep in bankruptcy, American Airlines (AMR
) teetering on the edge, and US Airways barely solvent, you might think things couldn't get any worse for the big carriers.
They just might -- if Oren Etzioni's software catches on. Etzioni, a computer science professor at the University of Washington, has developed a program that can save consumers big bucks by tipping them off about the best times to buy tickets. The program foils the complex pricing models used by the airlines, which often result in different passengers on the same plane paying wildly disparate prices. The technology isn't yet available to consumers, but Etzioni says he has spoken with online travel service Expedia (EXPE
) about using it on its Web site. Expedia declined comment.
The software tracks price changes and uses that history to forecast future moves. During a 41-day pilot, it examined two routes -- Los Angeles-to-Boston and Seattle-to-Washington, D.C. Prices changed up to seven times a day, and by as much as $2,000 per ticket. Using the program, 607 simulated travelers saved 6.3%, or $283,904.
Etzioni calls his software Hamlet. Why? In their search for the best price, consumers must wrestle with the question: To buy or not to buy? The answer could be bad for the airlines.
By Jane Black
GRAPE EXPECTATIONS
What Goes with Chicken Pot Pie?
Cult wines sure look a lot different than they used to. In the '90s, names such as Screaming Eagle got all the attention, with bottles that fetched $1,000 apiece. Now, the buzz is about Charles Shaw, or, thanks to its $1.99 price tag, Two Buck Chuck.
Launched in California in January, 2002, Two Buck Chuck could be the fastest-growing table wine ever, says Woodside (Calif.) wine consultant Jon Fredrikson. The drink -- available only at Trader Joe's supermarkets -- contributed half a percentage point to the 2.5% growth in the 2.5 billion cases of wine sold in the U.S. last year. Some two million cases of the vintage, from Bronco Wine in Ceres, Calif., sold in 2002. For bargain-hunters, a few bottles just won't do. "People are hauling it out in tremendous quantities," says Fredrikson.
The low price may not last. The wine is inexpensive partly because Bronco sends it directly to 160 Trader Joe's with no intermediary. A glut of grapes also helps, says Audrey Dumper, a marketing exec at Trader Joe's. But the glut of chardonnay could end this year, while the bounty in cabernet could last longer. So drink up -- on the cheap -- while you still can.
By Kimberly Weisul
CLASS NOTES
Advanced Degrees in Fighting Terror
Attention, Tom Ridge wannabes. Now, you too can have a career in homeland security. The nation's first graduate programs in national security are being offered at the University of New Haven and the Naval Postgraduate School. The first cohort of students is studying critical infrastructure protection and gets to defend a computer-modeled fictional city from terrorist attack.
The two schools have a combined enrollment of 49 in their one-year programs. That's expected to double, however, when the new class starts in January. At $17,000, the New Haven program is hardly cheap, but it's organized in partnership with the prestigious Sandia National Laboratories in Livermore, Calif. Military or government employees can choose the Naval course in Monterey, Calif., with tuition covered by the Homeland Security Dept.
Grads will have no shortage of job opportunities. Local offices of homeland security -- and the consultancies looking to serve them -- will need skilled workers, says Alan Paller, a director of the SANS Institute, an organization for computer-security professionals. "Graduates will not only have the theory, but they'll have current knowledge of what the attacks are and how to block them." And that could make duct tape look pretty feeble.
By Kimberly Weisul
THE BIG PICTURE
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Copyright 2003, by The McGraw-Hill Companies Inc. All rights reserved.
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