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A Partner for GM?


Just as Detroit was set for some quiet time around July 4 -- when car factories shut down for two weeks -- billionaire Kirk Kerkorian launched a cannonade of fireworks. He said on June 30 that he wants GM (GM) (in which he is a 10% shareholder) to hook up with Renault-Nissan (NSANY). Kerkorian would like Renault to take a 20% position in GM for about $3 billion. That would open the way for cost savings and shared technology.

But there is probably more in play here. Kerkorian deputy Jerome York, who sits on GM's board, has been critical of management and has praised Renault-Nissan CEO Carlos Ghosn. The subtext is that York wants Ghosn on GM's board, if not in the executive suite. Will it happen? GM executives whisper that they are cool to the idea, and shareholders of both Renault and Nissan have advised caution.

See "Can Nissan's Ghosn Change GM's Route?"

Shares of European Aeronautics Defence & Space went into a nosedive after Airbus revealed delays on the A380. Now, two top executives have been ejected. Airbus CEO Gustav Humbert resigned on July 2 along with No?l Forgeard, the EADS co-chief executive who was Airbus' boss from 1998 until last year. Louis Gallois, head of the French national railway, will take Forgeard's job, while Christian Streiff, a former executive of building-materials group Saint-Gobain, replaces Humbert.

See "`Major Screwup' at Airbus"

Kenneth Lay, who transformed Enron from a small-time natural gas outfit into a dazzling star before it imploded in one of the greatest corporate scandals ever, died at age 64 on July 5, apparently of a heart attack. He and former Enron CEO Jeffrey Skilling had been convicted of conspiracy and fraud on May 25 and were awaiting sentencing. Lay might well have spent the rest of his life in prison, though he had vowed to appeal. Various civil suits against him may proceed against his estate.

See "Ken Lay's Dark, Ironic Legacy"

Just for a change of pace, the Fed's widely expected 25-basis-point rate hike, to 5.25%, on June 29 sent the Dow on a 217-point romp. What gives? After weeks of anxiety stoked by confusion over Fed Chief Ben Bernanke's remarks, the markets loved the central bank's accompanying statement, which highlighted slower growth. Alas, the relief didn't last long, as investors' expectations for yet another boost in August started edging up.

See "Bernanke's Timely Balm"

Has Mexico bucked the trend toward leftist leaders in Latin America? The July 2 vote left the top two candidates within 1% of each other and was expected to produce a winner by July 8, but legal challenges could prevent a formal declaration for weeks. Unofficial results had center-right, pro-business candidate Felipe Calder?n, of President Vicente Fox's ruling National Action Party, slightly ahead of leftist Andr?s Manuel L?pez Obrador, who pledged to raise welfare payments to reduce the rich-poor divide. L?pez Obrador alleged voting "irregularities," and authorities are bracing for protests.

See "Mexico's Election: Too Close to Call"

On June 29, Apple (AAPL) became the glitziest name yet ensnared in the stock options accounting scandal. The company said it had named two board members and hired an outside counsel to look into certain options grants between 1997 and 2001. These include a massive grant to CEO Steve Jobs that was negated in 2003 when he was given restricted shares instead. The disclosure signals that the scandal has yet to reach its apex, as tech biggies continue the hunt for potential problems.

Back in April leisure and real estate conglomerate Cendant (CD) said it might send its travel business packing. On June 30 it found a destination: ubiquitous private-equity giant Blackstone Group, which will pay $4.3 billion for Travelport, a unit that includes Orbitz and Cheaptickets.com. Cendant originally had said it would breathe life into its moribund stock via a four-way tax-free spin-off. Coldly comforting: It won't incur a fat tax bill on this deal because it overpaid for the companies that make up Travelport.

Yet another Chinese acquisition overseas has come a cropper. On July 3, Luxembourg-based Millicom, which has 11 million cell-phone subscribers in developing countries, said it couldn't close a deal with China Mobile. Last year, Chinese oil producer CNOOC (CEO) was thwarted in a bid to buy U.S.-based Unocal, and appliance maker Haier lost an auction for Maytag. Failure of the $5.3 billion takeover sent Millicom shares plunging, but at least one group was happy: telco equipment outfits such as Sweden's Ericsson (ERICY), which might have lost Millicom's business to Chinese rivals such as Huawei.

How's this for a high-stakes game? Atlantic City police ushered gamblers from their slot machines on July 5 when a New Jersey budget impasse prevented state gambling inspectors from reporting for work. The government shutdown forced the city's 12 casinos to close their gaming floors while lawmakers dickered over a one-point hike in the sales tax demanded by Governor Jon Corzine. City casinos reported $16 million a day in lost revenue, a figure that could grow to $22 million or more as cancellations mount. The hardest hit: Trump Entertainment Resorts and Resorts International Hotel & Casino, whose properties are concentrated in Atlantic City.

No heroic rescues were in store for the world's poorest at a World Trade Organization meeting in Geneva. Stymied by long-running disputes over farm subsidies and tariffs, trade ministers folded their tents and went home early on July 1. The Doha Round, aimed at alleviating poverty by bettering terms of trade for developing nations, now appears ready to receive last rites, since it faces an end-of-July deadline for an accord on tariff cuts. WTO Chief Pascal Lamy told The Wall Street Journal: "It's a crisis, but there is a sense that it remains doable."

This time prosecutors got their man. On June 29 a state jury in Montgomery, Ala., convicted former HealthSouth (HLSH) CEO Richard Scrushy on six counts of bribery, conspiracy, and fraud for his part in funneling $500,000 to former Alabama Governor Donald Siegelman in exchange for a seat on a state hospital regulatory board. Siegelman was also found guilty in the scheme. Scrushy says he'll appeal. The verdict came a year after a federal jury acquitted Scrushy of fraud charges related to his alleged mastermind role in a $2.7 billion accounting scandal at HealthSouth, the Birmingham (Ala.) rehabilitation hospital chain. Scrushy, a minister who often invokes God in court proceedings, faces still more tribulation. Attorneys are preparing for trial in two civil lawsuits against him related to the HealthSouth fraud, and a federal lawsuit brought by the SEC heads to court next April.


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