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JULY 28, 2003
Edited by Ira Sager Talk Show "I am the biggest beneficiary of the payout, almost $300 million. So I better be happy." -- Saudi Prince Alwaleed bin Talal, Citigroup's largest shareholder, on the company's decision to increase its annual dividend to $1.40 from $0.80 WATCHDOGS Bad Omen for Oracle The Justice Dept. isn't the only agency looking into antitrust issues surrounding Oracle's (ORCL ) $6.3 billion hostile bid for rival software maker PeopleSoft (PSFT ) Although only Connecticut Attorney General Richard Blumenthal has filed suit to block the deal, at least 30 state AGs have signed confidentiality agreements allowing them to share information. The move doesn't mean all these AGs will take action. But it underscores the states' concern that the deal could be anticompetitive. Oregon is investigating, and others, including California and Texas, are reviewing the deal. "We're monitoring developments in the case," says a spokesman for the California AG. There are other reasons Oracle may have trouble getting its mitts on PeopleSoft. Justice has already O.K.'d a $1.8 billion merger deal between PeopleSoft and J.D. Edwards. That bit of industry consolidation could close by July 18. Plus, PeopleSoft CEO Craig Conway and the board hold a poison pill that could make an Oracle deal prohibitively expensive. Oracle says it remains fully committed to its PeopleSoft bid, "with or without J.D. Edwards." And Oracle CEO Lawrence Ellison told analysts on July 9 that he's willing to wait until spring, when four of PeopleSoft's seven directors come up for reelection. He joked: "At one point, Craigie thought I'd kill his dog. But if Craigie and the dog were standing next to each other and I had only one bullet...it wouldn't be for the dog." A PeopleSoft spokesperson called Ellison's comments "inappropriate and shocking." By Jim Kerstetter   GLOBAL ECONOMY Upbeat about Downgrades Smile, Alan Greenspan -- the news is even better than you thought. On July 15, the Federal Reserve chairman told Congress that a slowdown in the pace of corporate debt-rating downgrades is a good sign for the American economy. But it's not just in the U.S. that credit quality is stabilizing. According to data from Standard & Poor's (MHP ), the trend is global. In S&P's second-quarter summary of the creditworthiness of the world's corporations, the number of downgrades per upgrade -- 3.1 to 1 -- was the lowest since the first quarter of 2000. In this year's first quarter, the ratio was 4.6 to 1. With economies improving, "we're clearly past the trough," says Diane Vazza, S&P's head of fixed-income research. (S&P and BusinessWeek are units of The McGraw-Hill Companies, Inc.) Europe, Latin America, and Canada had the biggest credit improvements. But the Asia-Pacific region worsened because of weak economies and SARS. The U.S. was in the middle, at 3.1 to 1. Moody's Investors Service (MCO ) and Fitch Ratings don't do global reports, but they show similar trends for the U.S. By Peter Coy DESPERATE MANEUVERS Wrestling's Hail Mary Play What to do when Wall Street stops paying attention to your company? If you're World Wrestling Entertainment (WWE ) you become your own analyst. With only one analyst covering the stock these days, on July 7 the WWE began posting on its Web site weekly performance metrics -- TV ratings, pay-per-view buys, and audience totals. "We're going to act like we're our own analysts," says Chief Financial Officer Phil Livingston. It's quite a dramatic turn for WWE, once one of the Street's hottest growth stories. TV ratings for WWE's flagship shows, WWE Raw and WWE SmackDown!, have sunk 15% and 20%, respectively, since 2002. Pay-per-view buys for WWE's special events -- a key profit center -- have dropped more than 18% over the past year. And audiences for live matches in the U.S. have dwindled 25% from last year, to about 6,600 per event. The company blames reality TV for siphoning off viewers. WWE's guidance is hardly upbeat: It sees audience and revenue declines in fiscal '04. Still, the company has $128 million in cash, with only about $9 million in debt. And it just announced a 4 cents per-quarter dividend. Hovering at $10 a share, the stock yields about 1.6%, the same as some money-market funds these days. So is WWE a stock for widows and orphans? That's a story line not even Vince McMahon could have imagined. By Brian Hindo THE LIST  TAXING MATTERS A Big Windfall for Small Biz The Bush administration's recent tax cuts are having an unintended effect: They're encouraging entrepreneurs to sell their companies. The cut in the capital-gains tax from 20% to 15% means most sellers can pocket an extra 5% of the sale price of their businesses. "I think this is going to have a huge effect," says Beatrice Mitchell, co-founder of investment bank Sperry, Mitchell & Co., which specializes in midsize outfits. "I've already had a couple business owners say, 'Maybe the pricing isn't quite what I wanted, but with the extra 5% I'll do it."' There's another bonus in the tax package. Many entrepreneurs nearing retirement age choose to invest the proceeds from a business sale into dividend-paying stocks -- and the dividend tax is now 15%, down from a high of 38%. Together, the two tax cuts give a little breathing room to entrepreneurs worried about maintaining their lifestyle after a business sale. Business owners have reason to be cautious, though. After a rough 2001 and 2002, many are waiting to book a few strong quarters before putting their companies on the block. "You'll probably start seeing an uptick in deals closing into the fall and hopefully into 2004," says Andrew Sherman, a partner with attorneys McDermott, Will & Emery. And maybe an uptick in satisfied sellers, as well. By Kimberly Weisul REALITY CHECK Is the Third Shift Pulling Its Weight? Ever since the advent of the light bulb, employers have seized on all-night operations as an inexpensive way to boost productivity. But the all-nighter might not be a bargain. A new study by consultancy Circadian Technologies estimates night workers cost companies $206 billion annually -- $8,600 per worker. No matter how many espressos night owls belt back, their bodies tell them it's time to sleep. Circadian found that graveyard-shift workers make five times as many mistakes, have 20% more accidents, and have costlier medical problems. "The best third-shift worker could never match your day worker," says Tracy Morgan, human resources manager for Meriden (Conn.) filtration company Cuno. Companies that hesitate to acknowledge fatigue could face big legal judgments. In March, 2002, a lawsuit forced Conrail to pay $52.4 million to the family of an employee accidentally killed by a worker who only had four hours' sleep. Now that might just keep some CEOs up at night. By Kate Hazelwood I-WAY PATROL Weapons of Mass Entertainment While the search goes on for weapons of mass destruction in Iraq, Web surfers are having no trouble finding comic relief in the U.S.'s elusive motive for war. A Web site spoofing the so-far-fruitless search has become one of the easiest -- and most popular -- to find on the Net. Type "Weapons of Mass Destruction" into a search engine like Google, Yahoo! (YHOO ), or MSN (MSFT ), and a satirical site is the first result listed. The link goes to what seems like a standard-looking error page, only the text reads: "These Weapons of Mass Destruction cannot be displayed." It goes on to suggest the country may be having "technical difficulties." The search engines have nothing to do with the site. The satirical page, developed by a 34-year-old British pharmacist, has been so thoroughly trafficked -- over 1,000 visitors per minute -- that many search sites automatically conclude it's the most relevant on the subject. "I was surprised at how quickly it spread," says Anthony Cox, the site's creator. According to Google, four times as many Web sites link to the gag site as to the White House's weapons of mass destruction strategy page. By Ben Elgin THE BIG PICTURE 
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