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Costly Gas, Scared Pols


As prices at the pump climb, politicians' spirits sag -- especially as they realize how little they can do about it before the November elections. On Apr. 25, President George W. Bush announced a probe into alleged price gouging. And in a bid to make more gas available, the Administration will suspend filling the Strategic Petroleum Reserve and will relax rules that require clean-burning fuel. At the same time, Capitol Hill is buzzing about a windfall profits tax on Big Oil.

But the Justice Dept. inquiry isn't likely to lead anywhere, the new taxes won't pass Congress, and the crude that goes into the reserve is a drop in the ocean of U.S. consumption. Maybe pols are hoping they won't have to explain a huge oil company tax break they passed just two years ago.

Twenty-two years as chief executive is apparently enough. Sun Microsystems' (SUNW) Scott McNealy said on Apr. 24 that he would turn over the CEO's chair tohis No. 2, Jonathan Schwartz. McNealy will stay on as chairman. The troubled company's stock, which has been stuck below 5, down from 64 in 2000, promptly jumped 8%.

Ford (F) is unveiling a Web site that makes it easier for environmentally conscious consumers to invest in "green" companies and projects. On Wall Street, however, the mood was decidedly blue after Ford posted poor third-quarter results. Shares closed at 6.98 on Apr. 24, the first time in three years that they ended a trading session below 7. Merrill Lynch (MER) analyst John Murphy put a "sell" sticker on Ford despite the seeming bargain-basement price, pointing out that the company has been reporting lower sales volume, profit margins, and residual values on its vehicles.

See "Ford Rough"

If you don't want our natural gas, plenty of others do. That was the gist of a cryptic warning issued by Russian energy behemoth Gazprom on Apr. 19. The Russians are huffy because of signs that Western European countries may block Gazprom from buying local gas distribution companies. But Gazprom could live to regret its tantrum. Europeans were spooked by its brief supply cutoff to Ukraine in January. Now even more wonder whether it's smart to buy so much gas from Russia.

Can Intel (INTC) fight back to health? After a sickly first-quarter earnings report, the chip leader on Apr. 24 took the unusual step of trumpeting a new PC platform months before it will come to market. The business platform, called vPro, builds security and management features into the hardware. That will keep pesky employees from disabling applications like antivirus protection. It also may stop archrival Advanced Micro Devices (AMD) from making headway in the lucrative corporate market, since AMD does not have the one-stop solution Intel is offering.

See "Intel Turns Bearish"

Just a few months ago, German politicians were calling U.S. private-equity firms "locusts" bent on asset-stripping. Now one locust has been welcomed to Germany Inc.'s inner sanctum. On Apr. 24, Blackstone Group agreed to pay $3.3 billion for a 4.5% stake in Deutsche Telekom (DT), the telco one-third owned by the government. It's an offbeat deal for Blackstone: its first stake in a state-dominated outfit and a much smaller chunk than it normally takes. Blackstone will probably get a board seat and is banking it can apply its telecom experience and powers of persuasion to boost DT's value.

Don't be overly impressed by the Apr. 26 Census Bureau report that new home sales in March soared 13.8% above the previous month. The figures gyrate, and a strong March followed a weak February. Going by price, the market looks softer. The median cost of new houses sold in March -- $224,200 -- was down 2.2% from a year earlier, the worst yearly performance since January, 2003. Another red flag: On Apr. 26 the Mortgage Bankers Assn. said that applications in the past week for mortgages to buy houses fell to their lowest level, seasonally adjusted, since November, 2003.

It began four years ago as a low-key federal investigation of software maker CA, (CA) but there was nothing low-key about the ending. Former CEO Sanjay Kumar pleaded guilty on Apr. 24 to charges of securities fraud and obstruction of justice, the seventh CA manager to admit guilt. In an apology to the judge, Kumar noted that he did not initiate CA's practice of shifting revenues to boost earnings. His remarks aren't likely to win him leniency, says C. Evan Stewart, who specializes in white-collar crime at law firm Zuckerman Spaeder in New York. Stewart's appraisal: "He's probably looking at 15 to 20 years." Kumar declined comment.

See "CA Chief Pleads Guilty"

Finally, some relief for Cendant (CD) investors. On Apr. 24 the company revealed it might sell its travel distribution business (including Orbitz and CheapTickets.com). That's a shift from a plan to spin off its four parts -- the others are hotels, real estate, and car rental -- into publicly traded outfits. The price for the travel unit, called Travelport, would run about $4 billion, says JMP Securities analyst James Wilson. Wall Street felt the news made Cendant a hot ticket: Its stock rose 3.8%, to 17.49.

See "Easing Cendant's Bumpy Ride"

Is this a case study in playing it safe? Harvard Business School named Jay Light, a longtime professor and administrator, as its new dean on Apr. 24. Light, 64, has served as acting dean since August, following the abrupt exit of Kim Clark in June. With the departure of Harvard President Lawrence Summers approaching, the school wanted a dean fast -- and no one controversial.

See "Harvard Chooses a Familiar Face"

Sometimes the unwritten rules have been written after all. A popular pamphlet penned by Raytheon (RTN) Chairman and CEO William Swanson, Swanson's Unwritten Rules of Management, is said to resemble advice in a 1944 book by a UCLA professor, W.J. King. Many of the book's 33 "rules" are strikingly akin to King's work, The New York Times revealed on Apr. 24. The Times story was prompted by a blogger who noted the resemblance. In a statement, Swanson said he regretted not crediting King, and in the guide's introduction he notes it is "a product...of people I have learned from, and things I have heard and read." Original or not, the booklet is a genuine phenomenon. Raytheon has given away more than 300,000 copies and was considering a second iteration with new rules for 2007. The magazine Business 2.0 even devoted a cover story ("The CEO's Secret Handbook") to the guide last summer, heralding Swanson's folksy wisdom as "part Ben Franklin and part Yogi Berra, with a dash of Confucius thrown in." Not to mention that ancient sage, W.J. King.


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