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APRIL 23, 2007
A Trade Spat Heats Up For years, Washington has been pounding the table to get Beijing to clamp down on piracy and counterfeiting. Now the Bush Administration has decided that jawboning just isn't enough. On Apr. 10 it escalated the fight by filing a pair of formal complaints with the World Trade Organization. The next day, China said the move will have "an unfavorable impact on bilateral trade." Congress has been badgering the White House to take steps to narrow America's trade deficit with China, which swelled to $233 billion last year. U.S. film studios, record companies, and book publishers have long griped that Chinese piracy translates into billions in lost sales. They also chafe at the mainland's market access restrictions, an issue addressed in one of the complaints. If Beijing and Washington don't hammer out their differences within the WTO-mandated 60-day consultation period, the U.S. may ask a WTO arbitration panel to weigh in. See "U.S. Takes Piracy Pushback to WTO" Buffett Hops A Train All aboard! Warren Buffett's Berkshire Hathaway (BRK ) said in an Apr. 6 filing that it's now the biggest shareholder of Burlington Northern Santa Fe (BNI ), with a 10.9% stake worth more than $3 billion, and has bought stakes in two other undisclosed lines. Railroads have delivered nine consecutive years of record freight shipments. BN's shares hit an all-time high of 93.22 on Apr. 9, up 80% in two years. See "Buffett's Pricey Railroad Ride"   Economic Anxiety Americans don't seem overly impressed by the health of the economy. Sure, the government said on Apr. 6 that the U.S. created 180,000 jobs in March, leaving the unemployment rate at just 4.4%. But a Bloomberg/Los Angeles Times poll taken on Apr. 5-9 found that 60% of Americans think it's very or somewhat likely there will be a recession in the next year. Maybe it's those gas prices. See "The Economy: Why So Gloomy?" Citi Wields The Ax Citigroup (C ) on Apr. 11 took the wraps off a cost-cutting plan aimed at the bank's bloated expenses, which grew at twice the rate of revenues last year. Three months in the making, the plan calls for a 5% reduction of the bank's 327,000-person workforce. It will streamline layers of management and shift some jobs overseas. The first pink slips go out this week. NASDAQ's New Flame Rebuffed by the London Stock Exchange, NASDAQ (NDAQ ) CEO Robert Greifeld is looking to hook up with the Philadelphia Stock Exchange, said The Wall Street Journal on Apr. 11. Philly, third-ranked among the nation's six options bourses, would instantly put Greifeld within a couple points of his goal of taking a 20% share of the exploding options market by 2009 or so. Biotech Brouhaha Amgen (AMGN ), the biggest biotech, said on Apr. 11 that CFO Richard Nanula was leaving "to pursue other opportunities." This comes six weeks after the company acknowledged it was cooperating with an SEC investigation into its delayed disclosure of a Danish study on its Aranesp anemia remedy. Amgen stock has swooned 26% since October, largely because of safety questions surrounding Aranesp and its other anemia drug, Epogen. Nanula did not return calls. Kerkorian Non Grata DaimlerChrysler (DCX ) officials met with private equity bidders for Chrysler Group (DCX ) on Apr. 11 and 12, but Kirk Kerkorian's Tracinda wasn't among them despite publicly offering $4.5 billion. Kerkorian, who once sat on Chrysler's board, soured his relationship with the carmaker when he sued DaimlerChrysler, and lost. He claimed the Germans misrepresented the acquisition of Chrysler as a "merger of equals." Daimler wants at least $7 billion for Chrysler despite paying nearly $40 billion for it in 1998. Biggest Buyout Ever? In a new twist on LBOs, a Canadian pension fund is moving to form a consortium that would mount a $45 billion bid for BCE (BCE ), the parent of Bell Canada, according to The New York Times on Apr. 10. If the Ontario Teachers' Pension Plan succeeds, the deal could be the largest buyout in history. It's not clear whether private equity firms will join in, but Wall Street has signaled its approval by bumping up BCE stock 7.5%. College Loan Scandal New York Attorney General Andrew Cuomo continued to grab headlines worthy of his predecessor, Eliot Spitzer, as fallout spread from the investigation into kickbacks from student loan providers. Cuomo, who began looking into perks given by commercial lenders to university financial aid officers last November, said on Apr. 11 he'd turned up far more such deals than he expected. That followed news on Apr. 9 that CIT Group (CIT ) put three top executives in its Student Loan Express unit on paid leave, and that Johns Hopkins University did the same to its financial aid director. Pouncing On Puma German sportswear maker Puma, known for its leaping-cat logo, could land in the closet of French group PPR, the owner of Gucci and other luxury brands. PPR bid $7.1 billion for Puma on Apr. 10 after buying 27% from its two biggest shareholders. Puma's board supports a full takeover, and the deal could be wrapped up by summer. Sports shoes and $5,000 handbags might seem an odd match, but Puma's cool styling is a hit with the young and hip—a crowd ppr longs to court. See "Luxury Giant Aims to Take Puma Higher" Baby Food Behemoth On Apr. 11, The Wall Street Journal reported that Nestlé was expected to announce a $5 billion deal to buy the Gerber unit from fellow Swiss company Novartis (NVS ). Nestlé (NSRGY ) has long drooled over Gerber, which would give it nearly four-fifths of the U.S. baby-food market. Novartis would like to get Gerber off its plate to focus on the drug biz. Costly Comment Of The Week After making the latest in a long string of racially questionable comments, this one regarding Rutgers University's women's basketball team, veteran shock jock Don Imus was first suspended for two weeks by CBS (CBS ) and NBC Universal. Then, on Apr. 11, MSNBC said it would no longer simulcast the CBS Radio show on cable TV. At press time no further actions had been taken by the networks, but key advertisers had begun wriggling out of existing ad buys on Imus In The Morning. Among them, according to news reports: Procter & Gamble (PG ), American Express, and Staples (SPLS ). Bigelow Tea, said The New York Times, was reviewing whether or not to pull scheduled ads. A member of the Radio Hall of Fame since 1989, Imus, whose show has long been a favorite haunt of prominent Beltway politicians and media types, first began broadcasting in 1968. The Times says he pulls down an estimated $10 million a year, and his show generates an estimated $50 million in ad revenue for CBS, MSNBC, and their affiliates. Edited by Michael Arndt and Harry Maurer
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