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JUNE 14, 2004
Edited by Ira Sager Talk Show "Burn, baby, burn. That's a beautiful thing." -- A trader at Enron Corp.'s West Coast trading desk, on an audiotape obtained by CBS News, celebrating a forest fire that could raise energy prices. CASINO NATION See Arnold Deal. Hear Larry Squeal It sounds like a creepy Hollywood sequel: The Terminator vs. Larry Flynt. But California's booming Indian gaming market is turning movie star-Governor Arnold Schwarzenegger and the Hustler magazine founder into archrivals. Making good on a campaign promise to get the state a piece of Indian gaming revenue, Schwarzenegger is negotiating a deal to have tribes pony up a one-time payment of $1 billion and an additional yearly fee. In exchange, the tribes would get to expand without competition from other venues, says Howard Dickstein, a lawyer representing some tribes. Naturally, the deal isn't sitting well with operators of racetracks and card clubs -- gambling halls that allow only card games. Among them is Flynt, who ran for governor last year and owns a card club near Los Angeles. Flynt and his backers want the right to add slot machines. They've put a rival proposal on the ballot in November that would either require the tribes to pay 25% of their slot machine revenue to the state, which could top $1 billion a year, or allow slots at their facilities. Schwarzenegger could not be reached for comment. By Christopher Palmeri   HYPE & GLORY iPods Rock. Just Not That Much With iPod a bona fide hit, many people assume that Apple rules the market for digital-music players. And in many places they do. "In the biggest markets we're...40% to 50% of the market share of all MP3 players," gushed sales chief Phil Schiller during a May 14 Merrill Lynch conference call. Apple officials are referring only to markets in the U.S., Japan, and Western Europe. Although no reliable global market share data exist, many Wall Street analysts have assumed Apple has well over 25% of worldwide digital-music player sales. That assumption may be off base. According to market researchers and one of the companies that makes the chips that go into the players, worldwide shipments of digital-music-player chips hit about 15 million last year. Market researcher Gartner estimates global sales of digital players at 14 million. That would mean the 1.5 million iPods sold in 2003 give Apple just 11% share worldwide. A hot Christmas run could put iPod sales over 4 million for 2004. Still, that would bring it to just 19% share worldwide. Apple declined to comment. Apple is the market leader, but it has yet to achieve dominance, despite the hype. By Alex Salkever THE BIG PICTURE 
WEB WATCH Will The Feds Tackle The Tune Pirates? Suing illegal downloaders can be expensive, but now companies might get a break -- from taxpayers. The Pirate Act, a bill set for a Senate vote this month, would authorize the Justice Dept. to bring civil cases against file-swappers who illegally share music, and other content from sites such as KaZaA. Once the Feds have laid the legal groundwork, it will be easier -- and less costly -- for companies to bring their own suits. "Industry figures that the government will pay [its] legal expenses," says Philip Corwin, a lobbyist for Sharman Networks, which operates KaZaA. Mitch Bainwol, CEO of the Recording Industry Assn. of America counters that KaZaA and its ilk are the real freeloaders: "When the government doesn't have the tools to enforce the law, that's corporate welfare for the companies that facilitate copyright theft and pocket millions from it." The bill's co-sponsors, Orrin Hatch (R-Utah) and Patrick Leahy (D-Vt.), say private lawsuits aren't enough. "Tens of thousands of continuing civil enforcement actions might be needed to generate the necessary deterrence," Hatch says. That might be news to the RIAA, which claims its 3,000 legal actions against individuals have helped cut file-swapping. By Lorraine Woellert CHARITY HAUL Power Lunch The good times are back on Wall Street: On June 1, the Robin Hood Foundation, a charity founded by hedge-fund guru Paul Tudor Jones, raised $6.4 million from bankers and hedge-fund managers at its annual auction, almost double last year's total. Golf with Bill Clinton went for $300,000, as did lunch with six celebs, including Sarah Jessica Parker and Oprah Winfrey. Lunch with eight moguls -- Jones, Jeff Immelt, Brian Roberts, Michael Dell, Kenneth Chenault, Barry Diller, Steven Cohen, and Goldman Sachs' (GS ) No. 2, Lloyd Blankfein -- went for $340,000, a mere $42,500 per head. By Emily Thornton STOCKWATCH NASDAQ's Qube: The World Tour Nasdaq is pushing its popular QQQ (QQQ ) exchange-traded fund abroad. On May 17, the "Qube," which tracks the tech-heavy NASDAQ 100 index, began trading in Japan. Two weeks earlier, it launched in Mexico. Now there are plans for an Israeli Qube as early as this summer. That's good news for foreign investors, who have had to use U.S. brokers -- and trade in U.S. dollars -- because their local exchanges didn't offer the funds. Now that things are looking up for tech, investors should expect to see Qubes multiply. By Jessi Hempel FACE TIME Kevin McCormick: An Unlikely Union Honcho  Kevin McCormick has to be the oddest choice to run a labor union. He's also the hottest. A property-association adviser who has never belonged to a union, McCormick was hired as an outside contractor to run the Aircraft Mechanics Fraternal Assn. (AMFA) in 1998. Since then, AMFA has picked up mechanics at United (UALAQ
), Northwest (NWAC
), Southwest (LUV
), and ATA (ATAH
), swelling its ranks to nearly 20,000, from just 1,500.Soon, it may have more. By mid-June, the National Mediation Board will rule on whether to allow American Airlines' 16,000 mechanics to vote this summer between AMFA and the incumbent Transport Workers Union. McCormick, 53, knows other union chiefs call him a carpetbagger and bad-mouth him because he has been poaching their members. "I'm a lightning rod," he says. And he makes no bones about his $800,000-a-year contract with AMFA. McCormick may not be your everyday labor boss. But how many of them can claim rising membership rolls? By Michael Arndt SILICON CULTURE VC's Turn An Eagle Eye On China Every tech company with global ambitions knows that it will wind up being either a partner with China's emerging tech sector or else its rival. This month, an A-list delegation of Silicon Valley venture capitalists will set out on a weeklong tour of China, hoping to network its way into the next century. People in Silicon Valley "have decided they have to do something in China, but very few have figured out what they want to do," says Dixon Doll, of DCM-Doll Capital Management. While a number of Chinese startups have attracted U.S. investment, most American VCs have done no more than a handful of deals in China so far. But China has produced a half-dozen companies that have begun trading shares in the U.S. in the past year alone, sparking interest among latecoming VCs. What's more, Chinese players such as Huawei can make telecom gear for as little as half what it costs American rivals, which will press U.S. startups to work with China to stay competitive, says Cliff Higgerson of ComVentures in Palo Alto, Calif. That's why there will be plenty of big names among the two dozen VCs set to visit Beijing and Shanghai on June 19-26. In addition to Doll and Higgerson, Kleiner Perkins Caufield & Byers partner John Doerr, New Enterprise Associates partner Richard Kramlich, and Sequoia Capital partner Don Valentine are expected to go. That Silicon Valley Bancshares (SIVB ), which is organizing the trip, had to limit the size of the group shows just how much the West Coast tech crowd is looking to the Far East for opportunity. By Timothy J. Mullaney HALLS OF IVY Poor Marks For Ethics Teaching MBAs have given barely passing marks to Columbia Business School's first required ethics course. Five ethics classes and extra lectures were woven into the core curriculum. But an informal tap of student opinion finds execution was uneven: "Some professors found teaching ethics a burden, so it showed in their teaching," says first-year MBA Nicolina Kuh. And the thought of earning an F in a class called "ethics" spurred rumblings of discontent. "It implies that you're unethical," says classmate Rendel Solomon. That led profs to switch from the standard bell curve to a pass/incomplete grading system. Next year, Columbia professor Michael Feiner says lessons from philosophers such as Immanuel Kant will be downplayed in favor of decision-making exercises. Of course, the true grades will come once students hit the real world. By Mica Schneider 
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