"It takes an awful lot to stop Americans from spending money." -- Economist David Wyss of Standard & Poor's, a unit of The McGraw-Hill Companies, on October's retail sales surge. On Nov. 6, Hewlett-Packard board member Walter Hewlett shocked investors by saying he would vote the 5% HP (HWP) stake he controls against the $23.5 billion merger with Compaq. But HP's board couldn't have been surprised. Hewlett expressed doubts about the deal throughout the summer. "He voted as a director for the deal, but he didn't make it clear" that he would vote yes with his shares, says an insider.
As Hewlett watched HP's shares drop this fall, he grew increasingly concerned about the value of his parents' foundation and hired a financial consultant for advice. He also missed part of a July board meeting on the merger, choosing instead to play in an annual concert at a retreat called Bohemian Grove. Hewlett's lawyer, Steven Neal, says Hewlett has missed the Thursday portion of that meeting for three years for the same reason. "[HP] made the choice to discuss the deal when they knew he wouldn't be there," says Neal, who notes that the board has previously saved important topics for the Friday session. An HP insider says the board assumed he would skip the concert for a critical meeting.
While Hewlett has little business background, his `no' vote could hurt the merger's chances. David Woodley Packard, son of co-founder Dave Packard, quickly backed Hewlett up. If Packard's parents' foundation votes no with its 10% stake, HP faces a tough proxy fight.
Still, HP execs hope to win investors' support--including the foundations'--with a vote in early 2002. In this corporate soap opera, anything can happen. Hewlett was part of the committee that O.K.'d hefty bonuses to keep top executives on board through the merger. Chief Executive Fiorina has waived her bonus. That would have paid her $8 million, and, no doubt, riled shareholders even further. How much would it cost to make planes secure enough to prevent another September 11? Less than $20 per person per flight, based on calculations by University of California at Irvine economist Peter Navarro.
First, we'd need 40,000 sky marshals, two per flight: $6 billion a year. Then there's the proposed federal takeover of airport security. Additional guards, up from 18,000 to at least 25,000, and increased pay from an average $15,000 a year to $35,000: about $1 billion--$400 million less if they are not federalized (due to lower overhead). Retrofitting 9,000 cockpit doors: $450 million. New technologies, such as retinal scanners for passenger profiling: $2 billion a year.
Total: about $9 billion a year.
A lot of dough? Yeah. But divide that by a sharply reduced number of one-way flights, say 525 million. It comes out to about $35 per round-trip ticket.
Of course, someone has to pay, and that's what Congress is trying to resolve. Former American Airlines CEO Robert Crandall argues against ticket surcharges, saying that for every $1 increase, a million people don't travel. Proposals in Washington suggest surcharges of just $5 a ticket, tops. So who pays the rest? Amazon.com (AMZN) has told the Securities & Exchange Commission that it cut its quarterly tech budget by 24%, or $17 million, mostly by using Linux software. Can this David to Microsoft's Goliath save companies millions?
More companies are betting it can. In the past six months, McDonald's (MCD) said it will use Linux in 4,000 franchises. Royal Dutch/Shell will use it to image oil fields. Pixar (PIXR), DreamWorks, and other special-effects shops are embracing it, too. "They're adopting Linux very heavily," says Bill Claybrook, research director at Aberdeen Group in Cambridge, Mass.
The reason: Linux, an "open-source" system that can be downloaded for free, is a cheap alternative to Windows and to the Unix software sold by Sun (SUNW), IBM (IBM), and Hewlett-Packard (HWP). Over three years, some companies using Linux instead of Unix can cut costs by 50%, says International Data Corp. Vice-President Dan Kusnetzky. He estimates Microsoft (MSFT) has a 42% share of server software shipments, with Linux No. 2 at 27%.
Amazon is tight-lipped about its savings. The SEC filing says only that cost reductions "primarily reflect our migration to a Linux-based technology platform"--most likely from Unix--and "general price reductions for data and telecommunication services." Linux may well be headed for a growth spurt. Patriotism and flags dominate most of the Web sites drawing significant numbers of visitors for the first time in October*
usaflagsdirect.com, 3.5 million
Phoenix-based company sells flags and patriotic paraphernalia
deskflag.com, 3.1 million
Download site for U.S. flag icon that waves on computer screen
tigertech.com, 2.4 million
Parent site for the deskflag.com icon; also allows for download
freefinancialsecrets.com, 1.6 million
Advice on managing personal finances and debt
homeofthefreeonline.com, 1.3 million
Gives away flag decals for a $2 shipping charge
* Web sites with more than 500,000 monthly visitors
Data: Jupiter Media Metrix, BusinessWeek Back in Enron's (ENE) heyday, one of its rising stars was Rebecca Mark. Nicknamed "Mark the Shark" because of her ferocious ambition, she made her name in the early '90s building the energy giant's international operations, including the now-troubled Dabhol power plant in India. Once rumored to be a successor to Enron CEO Ken Lay, she resigned from Enron in August, 2000, after two years of heading Enron's ailing water company spin-off, Azurix.
These days, as Enron struggles to stay afloat, Mark-Jusbasche (who hyphenated her name with that of her husband of two years) is watching the action from the sidelines. And she'd like to keep it that way. "I'm very surprised and saddened by [what has happened at Enron], and I wish them all the best," she says. Beyond that, Mark-Jusbasche, 47, is not much interested in talking about Enron, which is being acquired by a small rival after a spectacular Wall Street flameout. Mark left Enron with millions of dollars worth of Enron shares, although she says she has sold them since.
Mark-Jusbasche spends most of her time serving on advisory boards, both at Yale and Harvard business schools, as well as the school where her 16-year-old twin sons from a previous marriage are sophomores.
In her spare time, she seeks out opportunities for investing. Currently, Mark-Jusbasche is considering alternative-energy and water-technology companies. A farm girl from Missouri, she has one investment focus that's especially dear to her heart: looking into expanding her cattle ranches. She now owns 15 acres in New Mexico. "I'm doing things that are fun, interesting, and important to me--family and community," she says. Sure beats being anywhere near Enron. Hasbro (HAS) may have a hit on its hands this Christmas--G.I. Joe as a search-and-rescue firefighter. Hasbro drafted him 15 months ago, long before September 11. Now, renewed respect for firemen is likely to help holiday sales. The $24.99 rescuers, with black garb for East Coast fighters and tan for West Coast ones, hit stores in mid-September. "Everyone's excited about the firefighter," says J.F.K. Sullivan, a buyer for the K-B Toys chain. "They've upped shipments significantly."
Sales of all 60 G.I. Joe incarnations are up a dramatic 56% year-on-year through the fall. Brian Goldner, president of Hasbro's U.S. toy group, thinks the rescuers will do extremely well for Christmas: "Policemen, firefighters, military are all part of the G.I. Joe brand story. These are all among the most heroic people in our society."
Hasbro, based in Pawtucket, R.I., could use some heroics. Last year, it lost $145 million on sales of $3.8 billion as once-hot Pokemon and Furby cooled. This year, Hasbro also has the Monsters, Inc. and Harry Potter licenses. With hot lines like that, the new G.I. Joe may not need to come to the rescue. Want to find out your chances of getting laid off by the end of next year? Just type your Zip Code, industry, occupation, and performance-review rating into the Layoff Calculator, on a Web site run by economy.com's forecasting unit, The Dismal Scientist (www.Dismal.com).
The median probability of being laid off in 2002 is 5%, according to the site, but it varies widely, of course, by industry: A health-care services manager in Minneapolis with a midrange performance rating has just a 3.7% chance of getting the ax. A financial analyst in New York with a midrange performance rating has a 7.7% chance of getting canned. That's one in 13, folks. Feeling lucky?