Already a Bloomberg.com user?
Sign in with the same account.
"It seems I'm a uniter, not a divider." --Senator John McCain, on being used in campaign ads for both George Bush and John Kerry If Kenneth Lay ever goes to trial in Houston, he may have a surprising ace up his sleeve: a pool of sympathetic jurors. Although the former Enron chairman is reviled by thousands of local citizens who lost jobs and money because of the company's downfall, he is still regarded fondly by many other Houstonians for his mammoth charitable contributions.
Indicted on July 7 for his role in the debacle, Lay was passionate about turning the Bayou City into a "world-class" community. His generosity touched almost every imaginable segment of the population. During the late 1990s, "he was probably the largest single donor" to the Houston branch of the NAACP and raised "most of" the $375,000 the group needed to host two national conventions, according to Howard Jefferson, president of the local organization. He also played a critical role in the financing of the city's Holocaust Museum.
Sports fans are grateful for his efforts to build a new baseball stadium. Art lovers applaud his contributions to the Houston Museum of Fine Arts. Sick Texans benefited from the money he showered upon the M.D. Anderson Cancer Center. And kids in nearby Katy, Tex., still play T-ball at the Ken Lay YMCA. "There's a good chance that you would see a hung jury against Ken Lay," says Houston criminal defense lawyer David Berg. "He was nice to people on the way up, and it is going to be difficult to get people to turn on him on the way down."
Uncooperative jurors have been a thorny problem for white-collar prosecutors. A lone holdout helped to unravel the case against former Tyco chieftain Dennis Kozlowski. And jury disagreement torpedoed the first case against investment banker Frank Quattrone -- even though prosecutors won a conviction on retrial. While Lay has been knocked off his pedestal, remember this: Defense lawyers have to win over only one juror for a mistrial. The $1.3 billion market for erectile dysfunction drugs is, er, hot. It's about to get even hotter, with a new giveaway that the makers of Cialis will launch on July 12, BusinessWeek has learned. Already, men can get free trial kits of all three impotence pills -- Viagra, Levitra, and Cialis -- from a doctor. And in mid-April, Pfizer (PFE
) launched its version of a frequent-flier program: Buy six Viagra precriptions and get the seventh free.
Now, Eli Lilly (LLY
) and biotech partner ICOS (ICOS
) will go further: Try Cialis, and if you don't like it, they'll mail you a voucher good for a prescription of Viagra or Levitra. The gimmick has been used in consumer marketing before, but this is believed to be a first for a prescription drug. "We're willing to put our money where our mouth is," says ICOS Chief Executive Paul Clark.
The Cialis partners have crossed boundaries before. They were the first to mention erectile dysfunction explicitly in prime-time TV ads when the drug hit the market earlier this year. That was done to point out that Viagra and Levitra work for four hours, while Cialis is good for up to 36 hours. The aggressiveness seems to be working. Viagra, which created the market, still grabs the bulk of sales. But Cialis is now besting Viagra and Levitra by a 2-to-1 margin in new prescriptions, according to market trackers ImpactRx. What will happen now that satisfaction is guaranteed? Prices for directors and officers (D&O) insurance finally seem to be leveling off. In fact, companies in industries at lower risk for shareholder lawsuits, such as health care, may even see rate reductions. The rate-loosening should tamp down the overall D&O premium hike to 20%, according to the Insurance Information Institute. That's pretty modest compared with the 102% and 70% jumps in 2002 and 2003, respectively.
What's behind the stabilization? A less volatile stock market and the Sarbanes-Oxley Act's influence on financial reporting have cut the risk of lawsuits. Plus, scores of companies have entered the market, bringing down rates. "D&O [should] continue to fall, or at least level off, in the next 6 to 12 months," says Marc McCabe, a senior vice-president at D&O specialist Nasdaq Insurance Agency.
Notable exceptions? The industries most susceptible to litigation -- telecom, technology, and financial services -- are likely to see rising premiums. And there is still-pending litigation that, if successful, could make lawsuits against directors easier to win. Has the D&O market reached the morning after, or is this just the eye of the storm? Look out, Elmo: There's a mouse in the house. This Labor Day, Walt Disney (DIS
) will roll out Mambo Mickey, a $20 version of the iconic cartoon character. It sings and dances to the Lou Bega hit Mambo No. 5. If that sounds familiar, it's because Mattel's (MAT
) Fisher-Price (MAT
) unit has for two years running had one of the top-selling toys with a series of Elmo dolls that do the limbo, hokey pokey, and chicken dance. This year, Elmo will swing to the Village People's YMCA (while crooning E-L-M-O). Mambo Mickey will be available only at Disney stores and at Target (TGT
). Elmo's distribution is wider. Still, it could be paw-to-paw combat in those Target aisles come Christmas. All across Europe, public housing and other properties are on the block. The city of Berlin recently sold 65,700 flats to Goldman Sachs (GS
) and Cerberus Capital Management for $2.4 billion. And France hopes to raise $605 million by selling 10 million square feet of space, including the historic Ecole Nationale d'Administration in Paris.
Poland, the Czech Republic, and Russia also are privatizing apartments. Investors like the distressed prices. And with deficits plaguing Europe, more sales may be in store. When Berkeley (Calif.) lawyer Brad Seligman was asked to take on a sex-discrimination case against Wal-Mart Stores (WMT
), he had never been inside one. He may not be familiar with what's in the aisles, but he can recite statistics on how many women are store managers (34%, vs. a 56% industry average). On June 22, a federal judge ruled that a lawsuit he filed can proceed as a class action representing 1.6 million former and current female Wal-Mart employees.
Public-interest law is Seligman's family legacy. His dad was a prosecutor at the Nuremberg war-crimes trials. The younger Seligman, 52, has filed 45 class actions, from sex-discrimination to disability-bias claims.
To take on Wal-Mart, he recruited 17 lawyers at 7 firms who have shelled out nearly $2 million in expenses so far. "We knew we'd have to be ready to go all the way to trial," says Seligman.
He needs the help: He must contact 1 million women who are no longer at Wal-Mart. Postage alone may cost $500,000. eBay ended its member conference, eBay Live! 2004, on June 26 in New Orleans. More than 10,000 sellers and buyers took classes, traded ideas, and met the online marketplace's staff. Equal parts love fest and bitch ses-sion, it's an annual highlight for eBay (EBAY
) CEO Margaret Whitman, who talked with BusinessWeek's Silicon Valley bureau chief, Robert D. Hof. Here are some excerpts:Members love to complain. Do you ever get tired of it?
No, not really. Yes, we get a lot of feedback from users. But they're pretty happy. I ran into a woman who said: "I really have to dial up my eBay business because I have a second child going to college, and I am paying both college tuitions out of my eBay business." That's the kind of story that is the essence of this company.Some sellers hate the constant changes on the site. How are you responding?
The community has seen a lot of change. We probably need to slow down that pace just a tad. It's hard for folks to adapt to so much change.Have eBay's sites around the world changed how people buy and sell?
I hear all the time that Germans trade on the Italy site. They may not speak much Italian, but the site is laid out the same way, so they kind of know how to do it. In the long run, the way the site works consistently across geographies is going to be important to global trade.Rumor has it that you might leave eBay for Walt Disney (DIS
(Laughs) As far as I know, there isn't a vacancy at Disney. People speculate a lot. But I have one of the best jobs in Corporate America. The community of users is endlessly interesting and endlessly surprising. To read this extended interview, see BW Online, 6/30/04, "The Constant Challenge" at eBay". While Microsoft (MSFT
) has long outrun Apple (AAPL
) in the marketplace, it has trailed Jobs & Co. when it comes to product design. Now, Microsoft wants to be known for its aesthetics, too. On July 8, it will unveil a computer mouse by French designer Philippe Starck. The $35 mouse is a sleek silver orb with a strip of light -- available in blue or orange -- down the center.
Is it a case of design trumping function? To make the mouse light up, a cord brings power from the PC. The most popular mice, though, are wireless. But Microsoft believes certain users won't care. "We're looking to attract people who appreciate design," says Ken Fry, Microsoft's hardware-design director. And maybe even get some style points in the process.