Up Front
Edited by Ira Sager
Talk Show
"I don't think anyone anticipated that the riches of Iraq would be looted by the people of Iraq." -- U.S. Brigadier General Vincent Brooks
WAL-MART NATION
Fewer Smiles in the Aisles
In ads, Wal-Mart's (WMT
) "happy face" character is always smiling. Too bad this doesn't hold true for some of the chain's employees. According to consumer research, the world's biggest retailer has seen "a very serious nosedive" during the past five years in how shoppers rate the staff on courtesy and friendliness.
Based on interviews conducted early this year by Service Industry Research Systems, scores at Wal-Mart Stores' discount and supercenter outlets have dropped more than 20% since 1999. They are now slightly below the industry average, which itself has slipped in the same period. The research outfit doesn't know what's to blame for the decline. Wal-Mart disputes the findings, saying that its own data, collected by an outside company, show customers' ranking of store friendliness is "flat or a little improved" from '98 to '02.
A dip in Wal-Mart's scores wouldn't surprise the plaintiffs' lawyers suing over unpaid worker overtime and sex discrimination, or the union organizers who have long contended that there's growing disaffection in the ranks. Wal-Mart still beats rival emporiums when it's rated on total value -- including merchandise selection, prices, and service. In these tight-fisted times, good value seems to matter more to shoppers than anything else.
By Wendy Zellner
SPORTS
Were All the Cards on the Table?
A group hired by the St. Louis Cardinals to raise funds for a new $360 million ballpark has some financial connections the team hadn't counted on.
Property Funding Group, which the Cards enlisted in November to round up nearly $60 million in private equity, was founded by, among others, M. Yaqub Mirza, who for the past year has been at the center of an FBI investigation into terrorist financing. In March, 2002, federal agents raided the SAAR Foundation and other organizations Mirza had established in Herndon, Va. Investigators allege the Islamic charities were part of a $1.7 billion financial network that funneled money to terrorist outfits.
The Cardinals say they had no clue that Mirza and Richard Gross, president of Property Funding and the registered agent for the charities, had ties to those groups. Cards President Mark Lamping says the team discovered the connection in early April -- and killed the deal on Apr. 7, before any financing was delivered. Property Funding maintains that Mirza left in December, and says it was fired just as it was completing the deal. A lawyer for Mirza, who has not been charged, did not return calls. Gross declined comment.
The park remains on track for a 2006 opening. Most of the necessary financing is in place, and sales are brisk: 50 of the stadium's 60 luxury boxes already are leased.
By Lorraine Woellert
REALTY TV
Who Wants to Work for a Millionaire
How much is an MBA worth in the cutthroat world of real estate mogul Donald Trump? Contestants on NBC's newest reality show, The Apprentice, will soon find out.
The program, which begins shooting on Sept. 14, will feature up to 20 go-getters as they vie for a job at the Trump Organization. Ideally, says producer Mark Burnett, the show will pit "sexy, young, and brilliant MBAs" against other up-and-comers whose main asset is their street smarts. Trump will personally review and fire one contestant each week. Says Trump: "You think Survivor's the jungle? Business is the real jungle."
It's unlikely these survivors will have to kill their own food. Although Burnett won't say what challenges contestants will face, he envisions sending them into sticky office situations to see which ones handle themselves best. The winner gets a one-year gig with Trump and a six-figure salary, courtesy of NBC. The losers, Trump maintains, are likely to get job offers from all the exposure. How else do you expect The Donald to spin getting fired on national TV?
By Kate Hazelwood
THE LIST
Pension Tension
Legislation being drafted in Congress could change the way companies
calculate pension reserves, narrowing shortfalls. But it won't bail
out Corporate America entirely. Here's a sampling of companies whose
funding gaps now dwarf their market value:
PENSION MARKET COMPANY
UNDERFUNDING CAPITALIZATION
GENERAL MOTORS $29.4 billion $19.7 billion
DELTA AIR LINES 4.4 billion 1.3 billion
AMR 3.4 billion 661 million
GOODYEAR TIRE 2.0 billion 857 million
& RUBBER
McDERMOTT 448 million 182 million
INTERNATIONAL
Data: Credit Suisse First Boston, Bloomberg
AFTERLIVES
The Spy Who Came in From...
Remember Craig Winn, the founder of Value America? Back in 1999, his Internet department store had a $2.4 billion market cap. Then the stock crashed, and Winn became a pinup for 1990s irrational exuberance. BusinessWeek chronicled Winn's rise and fall in May, 2000.
Now, Winn has transformed himself into a self-styled expert on terrorism. He's working on his second self-published novel, due out in three months, called Prophet of Doom, about the allegedly murderous Prophet Muhammad. That follows his first novel, Tea with Terrorists: Who They Are, Why They Kill, What Will Stop Them, with co-author Ken Power, which portrays Islam as an evil religion. Winn says that book was based on his reading of the Koran and meetings with members of al Qaeda and other terrorists, brokered by a Mossad agent. He also says the CIA briefed him about terrorist groups. The CIA and Mossad won't comment.
Not many people are buying Winn's novel. It's no better than No. 2,514 on Amazon.com. Winn says that after the BusinessWeek story ran, he wasn't getting many job offers. "I had nothing to lose," he says. "I was the perfect person to expose fundamentalist Islam because those people play really nasty."
By Brian Grow
PRODUCT PEEK
A Brillig Idea from Sun
How mad would someone have to be to build a product that goes head-to-head with Microsoft's Windows and Office PC software? Microsoft (MSFT
), after all, has nearly a 90% share of the market.
Try mad as the Mad Hatter. The engineers at Sun Microsystems (SUNW
) charged with creating a Microsoft-buster knew the wags would think they were plain loony. So they code-named their project after the addled tea party host in Alice in Wonderland.
Project Mad Hatter is Sun's bid to market a low-cost PC using the Linux operating system, Sun's StarOffice software, e-mail capability, and a Web browser. Sun hasn't decided how much to charge for Mad Hatter, due out by this summer.
CEO Scott McNealy doesn't think the project is so nutty: He says customers such as cash-strapped schools need a low-cost alternative. "They don't need the expense of a Windows desktop," he says. And McNealy is keeping the development costs low by using the free Linux software while outsourcing PC production. No word yet on what the hookah-smoking caterpillar thinks of all this.
By Jim Kerstetter
STREET NEWS
When the Going Gets Tough--Hedge
Trading volumes are puny, initial public offerings rare, and mergers a distant memory. So investment bankers are pouncing on a booming niche: derivatives and other financial hedges.
Sales are skyrocketing for everything from futures contracts to custom swaps. From the first to second half of 2002, the value of outstanding interest-rate and currency derivatives jumped 20%, to $99.8 trillion, according to the International Swaps & Derivatives Assn.
Derivatives are big moneymakers for banks. Gross profit margins on natural gas options are about 30%, says risk management provider Kiodex. Banks also are selling complex -- and pricey -- hedges as insurance against business partners who may go bust. As Robert Lichten, head of derivatives at J.P. Morgan Chase, puts it: "Risk tolerance is extremely low."
The market is so hot that Morgan Stanley (MWD
), Bank of America (BAC
), and Merrill Lynch (MER
) are hiring. Sure, business could wilt if the economy improves and clients feel more secure. But for now, derivatives desks are piled high.
By Emily Thornton
THE BIG PICTURE
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Copyright 2003, by The McGraw-Hill Companies Inc. All rights reserved.
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