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Storming Over Ports


The Bush Administration might have seen this one coming. A deal for state-owned Dubai Ports World to take over management of six U.S. ports -- from Newark to New Orleans -- made Capitol Hill crazy. Lawmakers railed that security could be shot when Dubai Ports, controlled by the United Arab Emirates, takes over key entry points for lightly secured container cargo.

By Feb. 21 top Republicans in the House and Senate were calling on President George W. Bush to rescind U.S. approval. The Treasury-chaired Committee on Foreign Investment in the U.S. O.K.'d the takeover as part of Dubai Ports' $6.8 billion buyout of London-based Peninsular & Oriental Steam Navigation, and a defiant Bush says he'll veto any move by Congress to undo the deal. But that wouldn't keep Dubai Ports from heeding Capitol Hill's bipartisan fury and bowing out.

Nigerian militants, angry that so little of the Niger Delta's oil riches filters down to locals, stepped up their guerrilla-style campaign. On Feb. 18 they attacked a barge belonging to a Royal Dutch/Shell contractor, took nine expatriates hostage, and bombed a pipeline. Shell Petroleum Development, a joint venture with the Nigerian government, has shut down 455,000 barrels per day of production, nearly half of its output in Nigeria and a fifth of the country's total. Prices spurted from the mid-$50s per barrel to the low $60s, but such a large outage might have caused them to spike higher were traders not in a bearish mood.

Sure, you've got to spend money to make money. But are sat-radio companies XM Satellite (XMSR) and Sirius Satellite (SIRI) going overboard? It looks that way to Pierce Roberts Jr., onetime Bear Stearns (BSC) investment banker, who quit as a director of XM on Feb. 16 just before the company revealed nastier-than-expected 2005 losses of $667 million on revenues of $558 million. The next day, Sirius, too, reported surprisingly steep losses: $863 million on revenues of $242 million. Pricey programming -- such as $500 million for Howard Stern at Sirius -- and lofty marketing costs have sent expenses into outer space. XM shares fell 13% in the three days after the news, and Sirius lost 11%, although both have come back a bit.

Where do you want to go today? Not to Europe if you're Microsoft (MSFT). Its legal woes there multiplied on Feb. 22 as a group whose members include IBM (IBM), Oracle (ORCL), Red Hat (RHAT), and Sun Microsystems (SUNW) formally complained to the European Commission about Microsoft practices that it says throttle competition, such as bundling critical programs with its operating systems. Already, the EC has fined Microsoft $613 million in a case that's under appeal. Sniffs Microsoft in a statement about the new beef: "When faced with innovation, they choose litigation."

More evidence that supercharged energy prices aren't bad for everyone: German utility giant E.on (EON) made a $34.6 billion all-cash offer on Feb. 21 for Spain's Endesa (ELE). Besides giving E.on access to markets growing faster than Germany's, the move short-circuits shareholders who might have clamored for the company to pay out its cash hoard, fattened by 2005 profits of $8.8 billion -- up 71% -- on sales of $67 billion. Other Euro utilities such as Gas Natural of Spain, which previously bid about 30% less for Endesa, and Germany's RWE are expected to hunt for prey as well, trying to add muscle as the EU pressures member countries to set energy markets free.

See "E.on Bids Big for Endesa"

How many lives does Bill Lerach have? The class action lawyer extraordinaire and bane of Wall Street survived congressional efforts to kill his booming shareholder lawsuit business in 1995. Now he has dodged another bullet. On Feb. 17, Justice Dept. investigators told Lerach and his ex-partner, Melvyn Weiss, that they won't be indicted in a five-year inquiry into whether their firms paid kickbacks to plaintiffs. The duo parted ways in 2004, but their respective firms continue to file the lion's share of shareholder complaints. Prosecutors may still go after lawyers at the firm they founded, now called Millberg Weiss Bershad & Schulman.

If you live in the Midwest, there's hope your heating bills could ease, oh, maybe a decade from now. On Feb. 21, ExxonMobil (XOM), BP (BP), and ConocoPhillips (COP) said they had reached an agreement with Alaska to build a gigantic pipeline that would snake natural gas from Prudhoe Bay through Canada to Chicago. Alaska Governor Frank Murkowski proposed a new energy tax structure that would pave the way for construction. The estimated cost and timetable for the 3,600-mile tube: $25 billion and 10 years.

It would take powerful spin juju to make Carl Icahn's exit from the Time Warner (TWX) battle look like a victory. The stock has hardly left the $17 neighborhood since Icahn's group started buying its 3% stake in August. And the tidbits he won from CEO Richard Parsons won't soon ignite the price either, say analysts. A $20 billion stock buyback will likely hike debt to an ouchy $35 billion. The deal, which calls for $1 billion in cost cuts, will probably nudge earnings up by a meager 3% per share, figures JPMorgan Chase (JPM) analyst Spencer Wang, not enough for anyone on Wall Street to upgrade the stock. That's far from nirvana for Icahn.

He often seemed like a bull in a diploma shop, but the real reasons Larry Summers stepped down as Harvard President on Feb. 21 have more to do with how tough it is to make changes at a modern research university.

See "Wanted: A New Harvard Prez"

The Japanese population may be shrinking -- down 4,000 in 2005 -- but the nation's economy is rising again. On Feb. 17, Tokyo said GDP expanded at a sizzling 5.5% annual pace in the October-December quarter, far hotter than the 1.1% U.S. rate. Economists now figure that in 2006, Japan could outpace the U.S. in GDP growth for the first time in 15 years.

Just over a year ago, RadioShack's (RSM) board was full of pride for orchestrating a change of the guard in textbook fashion. In naming David Edmondson, a 10-year company veteran and proven manager, as its new CEO, the outgoing boss crowed that the transition would be seamless. "The board and I have made succession planning a priority," said Leonard Roberts. "Well, it paid off!"

Some payoff. Nine months after former preacher Edmondson took over, he resigned in disgrace on Feb. 21 after admitting his r?sum? falsely claimed a bachelor's degree in psychology from Pacific Coast Baptist College. He leaves behind a troubled consumer retailer with sinking profits, a risky turnaround plan that calls for closing 700 stores, and zero Street cred after a 35% plunge in its stock in less than a year. Another legacy: More succession committees may look up the meaning of "due diligence."

See "RadioShack's Lesson: Trust, but Verify"


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