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JULY 26, 2004
Edited by Ira Sager Talk Show "Tax cuts for wealthy thugs like me are criminal." -- Paul Newman, at a Kerry-Edwards fund-raiser NORTH KOREA Reforms Are Starting To Bear Fruit North Korean leader Kim Jong Il's fledgling economic reforms may be taking root. The country's economy grew a modest 1.8% in 2003, but it's the fifth consecutive year of growth after a decade of contraction in the wake of the collapse of the Soviet Union. Two years ago, Kim started letting citizens open small businesses such as restaurants and bakeries. Last March, he introduced 300 markets where licensed individuals and companies can trade goods. And companies may now retain some of their profits and pass them along to employees as bonuses. This incentive-based system has spurred some companies to temporarily move workers to more profitable enterprises. The reforms helped boost manufacturing output by 2.6% last year, up from a 2.0% fall in 2002. "The economic changes in the past couple of years are much greater than in the previous 50 years," says Jo Dong Ho, of Seoul's Korea Development Institute. Still, North Korea is one of the world's poorest countries, and that won't change without outside help. But aid won't start to flow unless the North shutters its nuclear weapons program. Until then, the North's isolation and stagnation are likely to continue. By Moon Ihlwan   AFTERLIVES A New, Improved Henry Blodget Henry Blodget is back in the research business -- sort of. BusinessWeek has learned that the former Merrill Lynch (MER ) analyst has a fledgling company that plans to provide industry analysis and consulting services. Blodget, who became an emblem of boom-era hucksterism for hailing Net stocks, was barred for life from the securities industry in 2003. An SEC spokesman declined to say whether Blodget's plans violated the terms of his settlement. Blodget says his firm, Cherry Hill Research, won't do stock research, in compliance with the agreement. Legal experts say the venture sounds permissible but note it's a gray area of the law. New York-based Cherry Hill has taken its first steps with a research paper on initial public offering methods distributed free to academics. "To say it is garage-based would be an insult to real companies located [in garages]," Blodget writes in an e-mail. A push for business is a ways off, if ever, says Blodget, who's keeping busy with freelance writing work. Judging by the disclosure page in the paper, it appears Blodget has learned from his travails: "We can guarantee that our opinions, conclusions, and predictions will sometimes be wrong.... Sometimes [errors] will result from mistakes, ignorance, and/or idiocy." How's that for disclosure? By Brian Hindo THE BIG PICTURE 
SLUGFESTS Why Is This Man Bashing CalPERS? Thomas Donohue, president of the U.S. Chamber of Commerce, has come out swinging at the $162 billion California Public Employees' Retirement System. In a recent opinion piece in the San Francisco Examiner, he chided the activist pension fund for being a front for organized labor trying to needle Corporate America every chance it gets. But as a subsequent story in the rival San Francisco Chronicle pointed out, Donohue may have his own agenda -- one he didn't disclose to readers. Donohue sits on the boards of Union Pacific (UNP ) and Qwest Communications, two companies that have been criticized by pension fund activists for overcompensating executives while underperforming. Among the big shareholders in both companies is Denver businessman Philip Anschutz, who happens to own the Examiner. Donohue made at least $160,000 per year from those two board positions and owns stock or options on 27,000 shares of those two companies. Anschutz declined to comment. Says Donohue: "My service on boards is no secret, and my agenda is straightforward." By Christopher Palmeri ILL WINDS Diseases In Your Future People who like to obsess about their health might want to check out a new Web site from Harvard University's School of Public Health: Your Disease Risk (www.yourdiseaserisk.harvard.edu/). Visitors to the site fill out a detailed questionnaire to find out their chances of developing five of the most devastating ailments in America: heart disease, stroke, diabetes, osteoporosis, and 12 varieties of cancer. The site also offers personalized tips on how they might reduce their risk. Of course, the site is not meant to replace a visit to the doctor, but it could be a wake-up call for the "What, me worry?" crowd. By Catherine Arnst BOARD MOVES Fresh Air From The Outside New research provides ammo to support reforms that require a majority of directors to be independent. According to a study in the May/June Financial Analysts Journal, having a high proportion of autonomous directors on boards and oversight committees correlates with a drop in fraud. The study, which analyzed 133 companies accused of fraud between 1978 and 2001, also cautions that the presence of "gray" directors -- such as family members without direct business ties -- increases the likelihood of wrongdoing. By Seth Porges FACE TIME Michael Curry: Holding Court -- In Class  Michael Curry had lots to talk about at Richmond's Virginia Commonwealth University, where he has just finished teaching a sports-business seminar. He's no ordinary prof: A 6-foot-5-inch Toronto Raptors forward, Curry, 35, is enmeshed in the latest round of labor negotiations as president of the National Basketball Players Assn.Curry, who spent his summers picking up a master's degree from Virginia Common-wealth in sports leadership, taught his 22 graduate students the nuances of contract negotiation, drafting, and managing top athletes. Fellow NBA players Grant Hill and Spencer Haywood, plus union Executive Director Billy Hunter, were guest speakers during the weeklong class. The 10-year NBA vet vows to spend "two more good years on the court." Then he may take to the classroom for good. With Shaquille O'Neal campaigning to become the union president, Curry could soon be free to pursue his "personal goal" of a PhD or a management gig in the NBA. Or both. By Erin Chambers FASHION NOTES Is That A Phone You Have On? Over the years, the cell phone has gone through changes even a chameleon would envy. Now get ready for another big makeover: Cell phones are being cleverly concealed in objects such as watches, jacket lapels, and even earrings. Already available in Europe and Asia, wearable cell phones will start making their way into the U.S. in the next year. By 2007, 20% of U.S. cell-phone users could well be donning phones, says Michael King of consultancy Gartner (IT ). Much of the action so far is in Asia, where watchmakers Seiko and Fossil (FOSL ) sell watch-phone combos. When Japanese NTT DoCoMo (DCM ) introduced a wristwatch phone from Seiko last May, it sold out its inventory of the $300 product in 20 minutes. Cell-phone maker Samsung has begun selling its own wristwatch phone in Asia. In Europe, chipmaker Infineon Technologies (IFX ) and apparel maker O'Neill have developed a snowboarding jacket with a woven-in MP3 player, keyboard, and headset (the microphone is integrated into the jacket's collar) that works with a phone in the wearer's hand or pocket. The jacket, priced at around $600, will hit European stores in September. For all the activity abroad, many cell-phone makers believe today's wearable designs are far from optimal. But that could change soon. NTT DoCoMo is developing technology called FingerWhisper that uses a bone in the hand to make a wristwatch phone easier to operate. When a call arrives, the phone sends vibrations through the bones in the index finger. Slip the finger into the ear canal, and those vibrations turn into voice. Users would make calls or send text messages by tapping their palms in certain ways. Now that's true cell-phone evolution. By Olga Kharif CAMPAIGN 2004 Put Your Money Where Your Vote Is How does John Edwards alter the Presidential race? Betting site Tradesports.com, based in Dublin, gives George Bush a 51% chance to win, down from 57% before John Kerry added Edwards to the ticket. A Bush victory would pay out $1.49 on the dollar at Tradesports, which takes bets on athletics, politics, and finance. There's easier money to be had. Tradesports places Kerry's chance of wrapping up the Democratic nomination at 98%. So a $1 million bet would yield a tidy $20,408 profit. A company rep warns that huge bets will take down odds further, and that gam-blers should be prepared to lose any money they wager. It's just a 2% return, but a whole lot less risky than the stock market. By Seth Porges 
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