April 21, 2008 Issue Posted April 10, 2008, 10:10AM EST

News You Need to Know

Private Equity Rides to the Rescue

Opportunistic investors are slowly surfacing in the market for shaky lenders and mortgage debt. On Apr. 8 a group led by private equity heavyweight David Bonderman of TPG threw a $7 billion lifeline to Washington Mutual (WM). The Seattle thrift lost $1.1 billion in the first quarter. Then, on Apr. 9, Citigroup (C) said it may offload $12 billion in leveraged loans to a private equity house. Still, the markets can't breathe easy: Goldman Sachs (GS) and Morgan Stanley (MS) reported a jump in hard-to-value mortgage-related securities and loans on their balance sheets.

—Edited by Harry Maurer & Cristina Linblad

Vanishing Jobs

The March jobs report sealed the case for recession. The government said on Apr. 4 that the U.S. economy lost 80,000 jobs in March, while the unemployment rate climbed to 5.1% from 4.8%. That's the biggest job loss since March, 2003.

—Edited by Harry Maurer & Cristina Linblad

Equities Anxiety

Is the stock market ready to zoom, as it has in some previous recessions, or plunge? Predicting is a fool's game, but there's a good chance consumer stocks could whack the Street. Many of these stocks, such as Wal-Mart (WMT), Colgate-Palmolive (CL), and Avon (AVP), have done well since last summer. However, a close look at statistics shows a broad decline in real spending for many household items such as food, clothing, furniture, and motor vehicles. Combined with job losses and the credit crunch, these numbers don't bode well for equities.

—Edited by Harry Maurer & Cristina Linblad

Novartis Targets Alcon

It would be the biggest takeover in Swiss history. That may not sound like a big deal, but it is: Pharma giant Novartis (NVS) said on Apr. 7 it will buy 25% of eye- care company Alcon (ACL) from Nestlé (NSRGY) for $11 billion, with an exclusive option to grab Nestle's remaining 52% stake for an additional $28 billion. Novartis wants access to a fast-growing health-care market at a time when pharmaceutical sales are losing vim and vigor.

See "Behind Novartis' Eye-Popping Buyout"

—Edited by Harry Maurer & Cristina Linblad

Cyber Spy Alert

The U.S. Defense Dept. invented the Internet. Now it's coming back to haunt the Pentagon. A BusinessWeek investigation reveals that systematic cyber attacks on the U.S. government, military, and defense contractors in recent years have put "petabytes" of data at risk and spawned a new lingo for e-threats. We follow the trail of one attack back to a Web address in China—and show how Washington is fighting back with classified operations and a plan to spend billions making the Web safe again.

—Edited by Harry Maurer & Cristina Linblad

Peace at Motorola

In the end, Carl Icahn and Motorola (MOT) agreed to bury the handset. The company said in late March that it would separate its handset business from its other operations, something its peskiest investor has been advocating for a year. Then on Apr. 7, Motorola said it would also back two Icahn nominees for the board: William Hambrecht, CEO of WR Hambrecht, and Keith Meister, a managing director of Icahn's investment funds. As part of the peace pact, all litigation will be dropped.

See "Motorola Caves to Icahn"

—Edited by Harry Maurer & Cristina Linblad

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