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Closing Bell: Borders Group


Consumers may think of America West Airlines (AWA) as a cheap flight to Las Vegas, but Doug Parker, the man who runs the nation's eighth-largest airline, has bigger ideas. He wants to merge with US Airways Group (UAIRQ) and form the nation's largest low-cost airline. Taking over bankrupt US Airways, with its higher costs and poor customer service, won't be easy. And Parker insists he won't do any deal that hurts his investors. But Wall Street still knocked America West shares down 5%, to $4.55, on Apr. 20.

During a time of turmoil in the skies, Parker, 42, has made his own luck. He was first to get a government bailout after September 11, charge for meals, and institute lower-priced, last-minute fares -- all strategies followed by others.

And what if the pairing with US Airways doesn't happen? Parker told analysts the time is ripe for mergers, given a better labor climate and bankruptcies that allow carriers to jettison unprofitable leases. Translation: He'll keep his radar on.

The 212-year-old New York Stock Exchange plans to merge with Chicago's Archipelago Holdings (AX) to create the NYSE Group, joining the world's largest equities market with a successful electronic exchange. The member-owned NYSE has been under pressure to compete with electronic upstarts yet preserve the auction system run by its floor brokers and specialists. Said NYSE CEO John Thain at an Apr. 20 press conference: "This is absolutely not the end of the floor." Big Board members will swap their seats for an unspecified amount of cash, as well as shares worth 70% of the new company. Archipelago shareholders get 30% of the new for-profit, publicly traded entity. NYSE says the Securities & Exchange Commission must approve the deal.

Now satellite radio listeners can have all Martha, all the time. Martha Stewart forged a deal on Apr. 18 to have her own channel on Sirius Satellite Radio (SIRI). While the $30 million, four-year deal pales next to Howard Stern's $500 million agreement with Sirius, the new channel could help Martha Stewart Living Omnimedia (MSO) develop new talent to diversify the brand. With a daily TV show, prime-time series, and magazine duties, Stewart won't be spending a lot of time on the radio. But she is expected to join call-in shows from her home and develop content. One challenge: the Sirius audience, which skews toward males. Maybe Martha will attract more women.

Going after American International Group's (AIG) auditor, Ohio Attorney General Jim Petro added PricewaterhouseCoopers as a defendant in a class action brought by AIG shareholders. PwC, the firm's longtime auditor, "recklessly or intentionally" certified AIG's financial statements from 1999 through last year even though they were wrong, Petro charged in an amended complaint on Apr. 19. AIG has admitted to accounting improprieties, and several execs, including CEO Maurice "Hank" Greenberg, have left. BusinessWeek Online on Mar. 30 first reported questions were being asked about PwC's work for AIG. PwC said it could not comment because it hasn't seen the amended complaint.

The only surprise about the Apr. 18 news that Adobe Systems' (ADBE) plans to buy Macromedia (MACR) for $3.4 billion in stock was how long it took to happen. Rumors have been circulating for years. The two graphic-design specialists sell to the same customers with little product overlap -- a rarity in techdom. So what sold Adobe? Macromedia's strides in mobile handsets. Its Flash software for video and animation is on 20 million handsets, and it just signed pacts with Samsung and Nokia (NOK). With more than 700 million cell phones shipping this year -- half with enough memory to use Flash -- Macromedia is poised to clean up.

-- Caterpillar (CAT) boosted its 2005 outlook, saying profits now will rise at least 35%.

-- Independent Vermont Senator James Jeffords will step down next year.

-- A unanimous U.S. Supreme Court raised the bar for investor lawsuits.

Borders Group (BGP) shares slid 7%, to $23.96, on Apr. 20, after the bookseller said it expects to report a first-quarter loss due to lower traffic. Things are a little better at Barnes & Noble (BKS). It affirmed its forecast of a modest $8.5 million first-quarter profit, down 29% from a year earlier.


Hollywood Goes YouTube
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