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SEPTEMBER 18, 2006
Edited by Harry Maurer Turmoil Times Three Tremors shook the corridors of power at three major companies. On Sept. 5, Ford (F ) announced that Boeing's (BA ) Alan Mulally would take over the CEO spot from William Ford Jr., and Viacom (VIA ) Chairman Sumner Redstone booted out his CEO, Tom Freston, replacing him with two cronies. On the same day, Newsweek.com revealed a boardroom blowup at Hewlett-Packard (HPQ ) that led one member, venture capitalist Tom Perkins, to quit in May, and will result in another, George Keyworth, not being nominated for reelection next March. The SEC is looking into the clash. See "Ford's Latest Recall," "What Freston's Departure Means for Viacom," and "Perkins Goes Up Against HP—Again" A Gusher In The Gulf Want more oil from the Gulf of Mexico? Just keep drilling. Chevron (CVX ) and partners Devon Energy (DVN ) and Statoil (STO ) on Sept. 5 announced a successful production test of the Jack No. 2 well at the deepest undersea level ever, more than 20,000 feet, southwest of New Orleans. With help from new technology, the well sustained a flow rate of more than 6,000 barrels a day. The news sparked hopes that the U.S. has more black gold than previously figured; oil prices slipped 0.9% that day, to $68.60 a barrel. Depending on how other wells develop, the ancient, deep layer of rock could yield 20 billion barrels and boost total U.S. crude reserves by more than 50%. More companies are hunting, including Anadarko (APC ) and BP (BP ), which said on Aug. 31 that they found hydrocarbons at the Kaskida well in the area.   Slimmer Intel It's the classic way to get lean and mean: lay off 10% of the workforce. The world's biggest chipmaker, suffering an inventory glut and with its revenues smacked hard in the bout against Advanced Micro Devices (AMD ), said on Sept. 5 that it would shed 10,500 employees through layoffs, attrition, and business divestitures by the middle of next year. The moves would help save $3 billion by 2008. Wall Street knocked Intel's (INTC ) battered shares down further the next day after CEO Paul Otellini delayed unveiling other restructuring details until mid-October. PS3: Don't Hold Your Breath Sony (SNE ) faces a penalty for delay of game -- PlayStation 3, to be exact. Already lumbering along nearly a year behind Microsoft's (MSFT ) Xbox 360 console, PS3 won't hit Europe, Australia, and other regions until March, 2007, Sony said on Sept. 6. The reason: shortage of a key part for its Blu-ray DVD player. Game time in the U.S. and Japan remains set for this November, but consoles will be so scarce that Microsoft and Nintendo will be cheering. This comes shortly after Sony bore the financial brunt of giant recalls of laptop batteries it made for Dell (DELL ) and Apple (AAPL ). More Metals Mania To merge or not to merge? That is the question Canada's metals miners are asking themselves as they ponder what do to with all their cash and high stock values. Saying yes are Goldcorp (GG ) and Glamis; the two gold miners agreed to an $8.6 billion deal on Aug. 31. Saying no -- at least for now -- is Inco (N ), which announced on Sept. 5, after months of courtship maneuvers worthy of a Shakespeare comedy, that it won't combine with Phelps Dodge (PD ) after all. The breakup opens the door, however, for Brazil's Companhia Vale do Rio Doce, which bid $17 billion some weeks back. Inco indicated it may now accept CVRD's $17 billion proposal or look for a sexier partner. Kiss That $4 Million Goodbye A New York judge nixed a plan by Dana (DCNAQ ) to pay millions in bonuses to six top executives when the auto parts maker motors out of bankruptcy. On Sept. 5, Judge Burton Lifland ruled that the big bucks amounted to improper retention payments, the first such ruling under a law passed last year. The plan would have awarded Dana CEO Michael Burns $4 million in addition to his regular salary and bonus. Dana argued that the payments were legitimate because they were contingent on meeting performance targets. Boeing Loses A Big One... Its NASA nickname is "Apollo on Steroids," and the Orion program -- a $7.5 billion contract for about eight spaceships over the next 13 years -- was expected to go to Boeing, which operates the current Space Shuttle. Instead, Lockheed Martin (LMT ) got the nod on Aug. 31 over Boeing and Northrop Grumman. The award revives Lockheed's flagging space division, which had watched Boeing grab a number of recent satellite contracts, the International Space Station, and a bigger share of the federal and commercial rocket launch biz. ...And Changes Crew Can Scott Carson make planes as well as he sells them? The sales chief who led Boeing's team to record orders in 2005 was named to run its commercial-jet business as former boss Alan Mulally heads to Ford. His big challenge is to keep the 787 Dreamliner taxiing for delivery in 2008. Getting a new plane airborne can be risky: Just ask Charles Champion, the Airbus chief operating officer who lost his job on Sept. 4 because of production snarls on the A380 megaplane. Greenberg vs. Spitzer For Hank Greenberg, it was cause for celebration -- or at least a press release. On Sept. 6 a Greenberg spokesman issued a statement that New York Attorney General Eliot Spitzer had dropped "key charges" in his civil fraud case against the former American International Group (AIG ) czar and his ex-CFO, Howard Smith. Spitzer spokesman Marc Violette countered that only minor charges were axed, likening the move to demoting Pluto but leaving the solar system intact. "All the charges that Mr. Greenberg and Mr. Smith cooked the books are still there," he says. "That's the heart of the case." While no trial date has been set, the PR tussle is already tense. A Painkiller For Merck Capping a 20-month inquiry by a team at Debevoise & Plimpton, U.S. District Judge John Martin Jr. released a report on Sept. 6 that largely clears the drugmaker of malfeasance in its handling of Vioxx. Management sincerely believed the drug was safe and had no reason to think it raised risks of heart attacks, says the report. Needless to say, lawyers who have filed some of the 14,000 lawsuits on behalf of Vioxx users pointed out that the report was commissioned and paid for by Merck (MRK ) and therefore amounts to little more than a whitewash. Wedding Of The Week After sharing quarters for 28 years with a friend of his late wife, Warren Buffett finally tied the knot with Astrid Menks. The billionaire and Menks, a former waitress who made sure the notoriously undomestic Buffett's clothes were freshly cleaned, were wed by a judge on Aug. 30, the Omaha World-Herald reported. Felicitously, it was the Sage of Omaha's 76th birthday. Buffett met Menks, 60, through his wife, Susan, who sang at the restaurant where Menks worked. Although the Buffetts stayed married until Susan's death in 2004, she left Omaha in 1977, and Menks soon took her place in Buffett's home. "Witty and street-smart," the Latvian immigrant echoed Buffett's style by shopping at thrift shops, according to biographer Roger Lowenstein. Even as Buffett picked up a bride, he's giving away most of his $44 billion fortune to the Gates Foundation. He's also auctioning his 2001 Lincoln Town Car for charity on Sept. 12, complete with his famed THRIFTY license plates.
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