"Microsoft is going to suck the value out of the telecommunications companies." -- Former Bell Labs researcher David Isenberg to The New York Times on Microsoft's plans to turn computers into telephones One of Corporate America's toughest cost-cutters, General Electric, has declared war on employee desktop printers. The same goes for individual fax machines and copiers--or any other machine that spits out paper and isn't shared by a group of workers.
GE is removing such equipment by the truckload--handing them back to vendors, giving them to charities, or, as a last resort, dumping them in the trash. The haul: 30,000 machines when it's all done by next year. Paper consumption is already down 28% since Gary Reiner, the head of GE's Net strategy, issued the edict six months ago. GE expects to save $18 million a year.
Dumping printers and faxes is part of Reiner's ploy to persuade the 300,000-plus workers at GE to live and breathe Net culture. "Big cultural shifts take time, and we're just at the beginning of this one," he says. So far, no loud complaints from the deprived. They say they're happy to store data in laptops and smart phones--company-provided, of course. For years, American multinationals have been pilloried for shipping U.S. jobs overseas. Now, they're exporting something else: layoffs. As more and more employers respond to the economic slowdown by hacking payrolls, a growing number are doing their job-chopping abroad.
The toll is substantial. Dig into the 10 biggest cutbacks announced by U.S. companies this year, and you'll find that at least 46,000--almost half the jobs axed--are abroad. Economist Gordon Richards of the National Association of Manufacturers says that could help the U.S. rebound faster. "American business is not firing as many of its own customers," he reasons.
Among the giants going abroad with their axes: Motorola, Goodyear, Procter & Gamble, Compaq Computer, JDS Uniphase, and Delphi Automotive. Each is cutting at least 2,500 overseas jobs. Sara Lee recently announced 1,300 job cuts--not one in the U.S. All are at its Hanes clothing plants in Central and South America. Those were on top of 7,000 layoffs earlier this year that were almost entirely in Europe. Why the foreign bias? After restructuring its U.S. operations in the 1990s, Sara Lee says overseas is where it can now save the most money.
Of course, many Americans are still getting tossed out of work. But it's clear the rest of the world is sharing their pain. Everyone knows there's no such thing as a free lunch. Now, in a growing number of cities, there's no such thing as free pizza delivery, either. Hoping to offset higher fuel costs, franchisees at the nation's biggest pizza chains, including Pizza Hut, Domino's, and Papa John's, are starting to charge fees of $1 or more on each delivery. Like many trends, the surcharges began in Southern California, but they've spread to the Midwest, where gas prices have topped $2 a gallon.
The pizza surcharge is just the latest fee being passed on to consumers for high fuel costs. Airlines have been imposing fuel surcharges since early 2000, when energy prices first surged. Then shippers such as United Parcel Service and FedEx joined in. Today, even hotels are slapping on surcharges, billing guests as much as $3.50 per night to cover energy costs.
At least one pizza chain--Domino's--would like to keep deliveries free and has asked franchisees to stop charging consumers. But the franchisees can set their own policies. "Our costs are going up," says Alex Samios, who owns 30 Papa John's in suburban Los Angeles. Pizza Hut, on the other hand, is fine with it. Says a spokeswoman: "A service charge is nothing for the convenience of having a meal delivered to your home." The $3 billion award to a lung-cancer victim by a Los Angeles jury on June 6 pushed punitive damages to unprecedented levels. Since the first key case, in 1988, awards* to smokers have been skyrocketing. With dozens more suits nationwide, how far will juries go? Here are some key verdicts:
PHILIP MORRIS, $3 BILLION
PHILIP MORRIS/R.J. REYNOLDS, $21.7 MILLION
PHILIP MORRIS, $80.3 MILLION
PHILIP MORRIS, $51.5 MILLION
BROWN & WILLIAMSON, $952,000
BROWN & WILLIAMSON, $750,000
* Initial jury awards; many are reduced or overturned on appeal.
Data: Salomon Smith Barney Tobacco Research Management guru and Harvard Business School professor Clayton Christensen was once called a rising star of the New Economy and "the most important business thinker in the world today." His celebrated 1997 book, The Innovator's Dilemma, remains a best-seller. So when he launched a mutual fund last year, the financial world had high expectations.
As it turned out, the Nasdaq peaked on the fund's first day, Mar. 10, 2000. And, BusinessWeek has discovered through SEC filings, the fund quietly closed before seeing its first birthday. The $3.8 million Disruptive Growth Fund, which Christensen co-managed with St. Louis brokerage owner Neil Eisner, held 45 stocks, with Broadcom, Digex, and EMC among the largest holdings.
When the fund liquidated in February, it had lost 64% of its value. Christensen and Eisner declined to comment.
Nearly all the stocks were chosen by Christensen based on his theory that companies that develop innovative products--"disruptive technologies"--can topple market leaders. In hindsight, however, the only disruption was in sky-high valuations for tech stocks. U.S. Universities, hawking everything from branded apparel to credit cards, haven't been shy about marketing their images like, well, a box of Tide.
But now, some are finding a new venue: NASCAR. In a novel promotion, 14 mostly public universities--including North Carolina, Michigan, Connecticut, and Purdue---are co-sponsoring a car driven by Elton Sawyer in the second-tier Busch Series. Each school gets to paint a car its colors once a year. (Sawyer drove a "Carolina Blue" in May.)
If seeing their alma mater linked with NASCAR rankles some alumni, university officials offer no apologies. "NASCAR reaches the masses probably better than any other sport in America," notes Norwood Teague, associate athletic director at North Carolina, whose goal is to promote the Tar Heels. Adds Kyle Moats of the University of Kentucky, which aims to co-sponsor NASCAR's top-tier Winston Cup next year: "We think a lot of the same fans fit with NASCAR and Kentucky."
There's huge potential: Imagine Auburn vs. Alabama on the track. For years, Asia lagged behind as the Net transformed the West. Today, though, Asians lead the world in page views, click rates on ad banners, and stickiness on Web sites, according to a survey by AC Nielsen eRating.com. The reason? A love affair with gadgets and tech, figures Hugh Bloch, an AC Nielsen managing director.
No Asian country is more Net crazy than South Korea. With few English speakers, "they've been forced by language to localize their Web sites," says Song Kwan Ho, president of the Korea Network Information Center, which doles out Korean domains. Now, Korean-language pages tailored to local tastes--community sites, games, chat rooms, even info on university entrance exams---are drawing Netizens in droves. Koreans are the world's most active home surfers--hitting an average of 2,164 Web pages a month. That's nearly double the 1,123 page views in
Hong Kong--which was second among 21 countries surveyed--and more than triple the 678 in the U.S. Koreans also lead in some e-commerce areas: More than 60% of all stock trades, even by pros, are done online. Hear that, E*Trade? Women who report not getting credit for the same good idea as a man: 65%; who say men excel at self-promo: 63%
Data: Leader's Edge Research