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FEBRUARY 6, 2006
Edited by Harry Maurer Welcome Aboard, Steve On Jan. 24, Pixar (PXR ) agreed to climb on Walt Disney's (DIS ) flying carpet -- for $7.4 billion. Pixar CEO Steve Jobs will join the Disney board, a move that could transform the future of digital entertainment. See "Steve Jobs' Magic Kingdom" and "Hi-Ho! Work for Disney or Go?" Ford's New Look Change or die. That's the mantra at Ford these days, championed by President of the Americas Mark Fields, the latest leader of CEO Bill Ford's bid to turn around his great-grandpappy's company. On Jan. 23, Ford reported a profit of $2 billion but said its key North American auto operation leaked $1.55 billion last year and has two years of red ink ahead. So it's cutting 14 factories and up to 35,000 jobs by 2012. It's also talking about shaking off a culture that left it overstocked with gas-thirsty SUVs and creating one focused on nimbly making vehicles that customers actually want. Wall Street pushed shares up, although it wishes Ford would accelerate the shrinkage and execute deeper cuts, such as axing the Mercury brand or perennial money-loser Jaguar. Meantime, with GM (GM ) and Ford slimming down, DaimlerChrysler (DCX ) didn't want to be left out. New Chairman Dieter Zetsche said he will dump 6,000 white-collar jobs in the next three years. And just to keep things interesting at GM, Kirk Kerkorian on Jan. 25 hiked his stake to 9.9%. See "Realignment at the Big Three"   It's Still Knight's Nike Proving once again that it's not easy to run Nike (NKE ) with founder Phil Knight around, CEO William Perez quit on Jan. 23 after just 13 months on the job. See "Nike's CEO Gets the Boot" Wall Street Worries Oil prices and earnings dread whacked the Dow by 213 points on Jan. 20, erasing all gains for the year as bellwethers such as Citigroup (C ), Intel (INTC ), and GE (GE ) turned in limp numbers. And on Jan. 25, poor December figures sent new signals that housing is slowing, which also depressed traders. But don't miss the sunny side of the Street: Through Jan. 25, 64% of 162 companies in the S&P 500 reported profits above estimates, 18% matched estimates, and 18% missed, says Thomson Financial. S&P 500 earnings are forecast to rise 14% in the fourth quarter, which would mark 10 straight quarters of double-digit hikes. Not too shabby. Birth Of A Network Chalk one up for Leslie Moonves, CBS' (CBS ) empire-building CEO. Moonves, whose company was split from Viacom (VIA ) this year, engineered the merger of his lowly UPN network with another weak sister, Time Warner's (TWX ) WB. Both target the young, giving the new CW (for CBS and Warner) network a lineup of shows like One Tree Hill and Everyone Hates Chris that play to the demo advertisers crave. CW, a 50-50 CBS-Time Warner venture, will badly trail the Big Four but will cover more than 95% of the country, with the CBS-owned 12 UPN affiliates joining the 16 large-market stations owned by Tribune Co. (TRB ), a longtime WB affiliate. Albertson's Sells Out They're going to carve up Albertson's (ABS ) like a turkey, and Wal-Mart is the reason it's on the chopping block. On Jan. 23, the grocer accepted a $9.7 billion offer from a consortium with a complex plan. Supervalu will swallow 1,124 of the more successful markets to become the No. 2 U.S. chain. CVS will take about 700 freestanding drugstores, while investors led by Cerberus Capital will grab 655 properties for the real estate. Like most grocers, Albertson's has struggled against Wal-Mart's rise to top hot dog in the business. It remains to be seen whether Supervalu can do better. See "A Supermarket War in Store" and "Supervalu's Supermarket Strategy" Two Faces Of Google? One day, Google (GOOG ) is the hero of netizens, the next it's in the cyber-doghouse. Privacy watchdogs lauded Google on Jan. 18 when it was revealed the company is fighting a subpoena for search data as part of the Bush Administration's antiporn drive. Other Net giants such as Yahoo! turned over data. But on Jan. 24 enthusiasm waned as Google agreed to censor search results in China. The move comes as Google launches a China-based site. Said co-founder Sergey Brin to Maria Bartiromo at Davos: "It's better to get as much as we can for now and move the ball forward." See "Google's Dicey Dance in China" Two Bidding Wars End And the winners are...Boston Scientific (BSX ) and Arcelor. Ending months of brinkmanship, Johnson & Johnson (JNJ ) ceded medical-implant maker Guidant (GDT ) to its archrival, Boston Scientific, for $27 billion on Jan. 25, two days after Germany's ThyssenKrupp declined to bid more than $4.9 billion for Canadian steelmaker Dofasco. But the losers might end up winners for having resisted the temptation to overpay. Plus, J&J gets a $705 million breakup fee from Guidant. See "What's J&J's Next Target?" Wooing Westinghouse You don't need a geiger counter to tell nuclear reactors are hot -- just look at the global tussle for Westinghouse Electric. On Jan. 23 parent British Nuclear Fuels chose a $5 billion bid from Toshiba (TOSBF ) over offers from Matsushita (MC ), Hitachi (HIT ), and GE. Toshiba covets Westinghouse's expertise in pressurized water reactors, now in high demand in China. Beijing plans to spend $50 billion-plus building roughly 30 new reactors over 14 years. A Saudi-China Deal How do you feed a hungry dragon? Start with oil. That's what Saudi King Abdullah and Chinese President Hu Jintao talked about in Beijing on Jan. 23. The leaders signed a pact that would boost Chinese investment in Saudi crude, gas, and refineries. Nice bennies for both sides: The Saudis get a reliable customer, China gets reliable supplies to power its booming economy -- and Washington gets left out in the cold. See "China: A Bull in the Energy Shop" Regulation Of The Week Schmoozing and Wall Street go together like palms and grease. Firms have long lavished goodies on clients -- from the egregious (and illegal) bestowing of shares in initial public offerings to front-row seats at the Metropolitan Opera -- although gifts are not supposed to carry a quid pro quo that the client steer his business to the firm. Now, under rules proposed on Jan. 23, the New York Stock Exchange and NASDAQ will require firms to justify the perks they dole out. Each firm must develop written policies to define what entertainment is "appropriate and inappropriate and to detect and prevent entertainment that is intended as an inducement for obtaining customer business, or could give rise to a conflict of interest." The regs urge firms to develop specific dollar limits or to require supervisory approval at certain thresholds. While more austerity may lie ahead, many Street denizens had feared something a tad more draconian, especially in light of the Jack Abramoff lobbying scandal rocking Washington.
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