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JULY 12, 2004
Edited by Ira Sager Talk Show "It's like having a rather large weight lifted off my shoulders." -- L. Paul Bremer on handing over power to Iraq's new prime minister, on ABC's Good Morning America PROFIT & GLOSS What Could Crunch Apple Shares These are heady days for Apple (AAPL ) shareholders. Stoked in part by the success of the iPod music player, Apple shares have surged to nearly $34 recently -- the highest in four years. The runup would seem to validate a recent wave of bullish analyst reports. But Apple's earnings per share could fall dramatically if it's forced to expense stock options under new Financial Accounting Standards Board (FASB) rules. The accounting change also could expose another weakness: In the last four quarters, Apple earned $32 million after taxes from inter-est on its $4.6 billion cash horde. That's nearly twice as much as the $18.5 million in operating income it would have earned under the pending FASB rules, says Albert Meyer, principal of 2nd Opinion Research. "Is it a tech company or a credit union?" Meyer asks. If stock options had been treated as a cost, Apple's $179 million in earnings over the last four quarters ended on Mar. 27 would have fallen 69% -- significantly more than the potential drops of under 50% for other tech companies such as Dell. Out of 86 tech companies, Apple was among the 12 with the biggest hit to estimated 2005 earnings, according to Merrill Lynch (MER ). To match its interest profits, Apple would need to double earnings from operations in the next 12 months. That could be hard when Apple says margins on its iPods will drop in the coming year. Apple declined to comment. By Alex Salkever   CAMPAIGN 2004 Really Laboring To Beat Bush The nation's largest union will shell out $65 million to campaign against the reelection of President George Bush. On June 23, the 1.6 million-member Service Employees International Union (SEIU) announced at its annual convention that $40 million will go to pay for 2,000 union members to work full-time as political organizers until November. Thousands of union members volunteer in every national political election -- the SEIU expects 50,000 members will do so by the fall -- but most do it nights and weekends and only take off a few days or a week right before the vote. The rest of the money will go to more traditional activities, such as registering members to vote and educating them about campaign issues. The union's anti-Bush war chest is a huge sum, given that the AFL-CIO will spend only $44 million. SEIU President Andy Stern's ambitious plan will give a big boost to likely Democratic nominee John Kerry, whom the union endorsed -- but only after first supporting former Vermont Governor Howard Dean. "We're going to build the strongest grassroots political voice in North America," Stern told his members. Well, if money talks... By Aaron Bernstein THE BIG PICTURE 
INCONGRUOUS We The People...Can't Make Copies? How much is the U.S. Constitution worth to you? On Amazon.com (AMZN ), the going rate is $2.99. A copy of the founding document, long in the public domain, can be acquired easily and legally for free on the Internet or at any public library. But e-book publisher NuVision Publications has begun selling it online as an e-book in an encrypted format that can be printed only twice per year. "I'm speechless, frankly," says U.S. National Archives & Records Administration spokesperson Susan Cooper. "[But] that's the beauty of the Constitution -- it allows people to do things like that." NuVision did not respond for comment. Oddly enough, people seem to be buying the Constitution. The e-book's Amazon sales ranking, as of June 29, was a respectable 1,016 out of the hundreds of thousands of books Amazon sells on its Web site. That's despite the fact that helping someone print the e-book more than twice could violate the Digital Millennium Copyright Act, the 1998 law that forbids tampering with anti-piracy protections, according to Wendy Seltzer, a staff attorney with the Electronic Frontier Foundation. The irony of encrypting the Constitution isn't completely lost on customers. "Imagine if the original had such restrictions; it would have taken only seven years to send a copy to all 13 colonies," reads one review on Amazon -- where the Constitution has chalked up an average rating of just one star out of five. By Seth Porges TOOTH IN ADVERTISING Toss The Floss The mouthwash marketers at Pfizer (PFE ) have a new claim they can make in their battle against plaque. The American Dental Assn. has given its blessing to market Listerine as a replacement for flossing: Just rinse twice a day. The 120-year-old mouthwash -- originally available only by prescription -- towers over rivals, with 51% of the $1 billion market. But all those customers may not be gargling. Some view Listerine as an all-purpose product. Fans say it can prevent lice, eradicate dandruff, clean dogs' ears, disinfect blisters, ease pain from shingles, and do away with those nasty fungus infections between your toes. Pfizer, of course, promotes it as labeled. By Jessi Hempel FACE TIME Tom Joyner: P&G's Favorite Deejay  Tom "Fly Jock" Joyner may not be a household name in the marketing suites of Corporate America. But a deal inked on June 14 with consumer-products giant Procter & Gamble (PG
) could change that. Joyner, who hosts the Tom Joyner Morning Show, is the nation's most widely syndicated African American deejay.P&G wants to bolster its appeal to Joyner's 8 million listeners. The multimillion-dollar pact goes way beyond the usual radio ads, including sponsorship of minority health promotions and fund-raising for black colleges. The deal also calls for the nation's largest advertiser to study the effectiveness of urban radio, which could change the perceptions of other marketers. "Hopefully this will open doors for everybody," says the Fly Jock, who earned his moniker when he used to fly between Dallas and Chicago to do daily shows. If Joyner can boost sales for P&G, it won't be long before other marketers start tuning in to the Fly Jock. By Stephanie Anderson Forest SLUGFESTS Burning To Burn Instant CDs There's a battle brewing in concert halls across the U.S. Clear Channel Communications' (CCU ) Instant Live unit records concerts and burns CDs for sale right after a show. But rivals in that nascent business fret that Clear Channel, which owns a substantial number of concert venues, will block the use of their services. In a Mar. 31 e-mail obtained by BusinessWeek, Clear Channel Executive Vice-President Steven Simon wrote to Sami Valkonen, president of rival DiscLive: "DiscLive will not be permitted in our venues or at our shows." Valkonen confirmed the e-mail but declined comment. Another rival, Brady Lahr, president of Kufala Recordings, says his service was blocked at a July, 2003, show at a Los Angeles Clear Channel venue. In an interview with BusinessWeek, Simon said that artists could choose any service. A Clear Channel spokesperson says the e-mail was sent because DiscLive did not make prior arrangements, and that it allows third parties at its venues. As for the Kufala allegation, "nobody knows what they're talking about." Another concern: Clear Channel recently acquired a patent for Instant Live's technology. DiscLive and others argue that the patent ignores prior technology. On June 30, the Electronic Frontier Foundation said it will petition to revoke the patent as part of an effort to fight patents it believes are overly broad. The instant-CD market is showing signs of life. Around 20% of concertgoers buy the $20 to $30 disks for acts such as Kiss and Jewel. And Clear Channel has a deal to sell its disks at music chains FYE, Virgin, and Tower Records. In the moribund music biz, that's a revenue stream worth fighting for. By Brian Hindo WEB WATCH China's Great March Online The web search wars raging in the U.S. are spilling over to the Middle Kingdom. On June 21, Yahoo! (YHOO ) rolled out a Chinese-language service called Yisou. Six days earlier, rival Google and a group of investors said they bought a stake in Baidu, a top Chinese search engine. Analysts expect other U.S. players, including Amazon.com (AMZN ), Microsoft (MSFT ), and America Online (TWX ) to follow. No wonder: With backing from Beijing and an economy that's putting more PCs in homes, China has 80 million Net users, second only to the U.S. And it's adding more than any other country. If forecasts by investment bank Piper Jaffray (PJC ) hold, 153 million Chinese will be online by 2006 -- passing the U.S. At that rate, U.S. companies can't dawdle too long before diving into the Chinese market. By Heather Green 
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