Magazine

Europe vs. Redmond


The European Commission stuck it to Microsoft (MSFT) on July 12, fining the software maker $356 million for failing to comply with orders to share information about its operating system for servers. What's more, the EU threatened even nastier fines.

Underneath the tough talk, though, signs of reconciliation emerged. Competition Commissioner Neelie Kroes praised efforts by Microsoft in recent months to provide data that other companies need to develop programs that mesh smoothly with Windows. And while Microsoft is appealing the fine, its top lawyer predicts the company will satisfy EU demands within weeks. Microsoft and European trustbusters still have plenty of issues, such as the company's attempt to overturn a $626 million penalty it drew in 2004 for allegedly abusing its market dominance. But Microsoft may be hoping to tone down the long-running feud before firing up its Vista operating system early in 2007. After many embarrassing delays, the last thing Vista needs is another handicap.

See "One More Hefty EU Fine For Microsoft"

A $145 billion judgment against cigarette makers went up in smoke on July 6, when the Florida Supreme Court said smokers couldn't sue as a class. Investors immediately lit up the shares of Altria (MO)and Reynolds American (RAI). While the legal environment for tobacco is improving, the air hasn't totally cleared -- the Florida court also established industry liability, inviting thousands of new lawsuits from individuals.

With great fanfare, President George W. Bush announced on July 11 that the federal deficit will fall to $296 billion this year, down from $318 billion in 2005. Washington had a $236 billion surplus when Bush took office in 2001. After three years of plunging revenues, the tax coffers have been filling fast for the past couple of years, thanks largely to fatter payments from corporations. But don't celebrate yet: The red ink may start flowing faster again as the economy slows and boomers start collecting Social Security and Medicare.

Here comes Strategy 23.0 for AOL, the I-can't-figure-out-what-I-want-to-be-when-I-grow-up Internet business of Time Warner. (TWX) The media giant said on July 11 that directors will get a plan on Aug. 2 that calls for AOL largely to ditch its subscription business, offering services such as e-mail and instant messaging for free in a bid to boost traffic and ad revenues. Since its merger with Time Warner in 2001, AOL has vacillated between identities as an exclusive-content subscription business or a free portal and ad juggernaut. The latest initiative is the brainchild of Time Warner President Jeffrey Bewkes.

Those record-setting Chinese won't take a rest: The nation's trade surplus hit $14.5 billion in June, the highest ever recorded by any country. Despite swelling imports, up 19%, to $66.8 billion, exports grew even faster, jumping 23%, to $81.3 billion. That's sure to aggravate trade frictions with the U.S., whose deficit with China also set a record of $202 billion last year.

Chinese carmaker Nanjing Automotive apparently isn't fazed by the jokes about its newly acquired British sports car brand MG: "Two guys in an MG were arrested last night in London following a push-by shooting incident." The company said on July 12 that it'll begin building MGs in Ardmore, Okla., in 2008, in an effort to reincarnate the marque. Nanjing will also have plants in China and England and will spend $2 billion on the venture. If all goes as planned, it would become the first Chinese car company to manufacture on American soil. The plant will employ 500. Nanjing bought the remnants of MG Rover last year.

What am I bid for a former eBay (EBAY) honcho? The latest one available is Jeff Jordan, who will depart this fall as president of PayPal, eBay's online payments unit, to spend more time with family. The latest in a series of executive exits since early 2005 knocked 5% off eBay's stock when it was revealed on July 6, leaving shares down 40% for the year. Insiders say Jordan was a candidate for the top job, but CEO Meg Whitman tells BusinessWeek: "I have no plans to leave eBay."

As digital videorecorders proliferate, more TV viewers are using them to zap commercials. Others avoid ads the old-fashioned way, by heading to the refrigerator. So is anybody watching them? Nielsen Media Research plans to find out and will start releasing commercial ratings in November, The Wall Street Journal reported on July 11. The new service comes as marketers push to cut rates because of ad zappers, while network executives point to the hefty audiences that still watch their shows. Ad sales so far for the coming TV season are off slightly.

You don't need a walkie-talkie to know that RadioShack (RSH) got a rare bit of good news this week. The July 7 announcement that retail veteran Julian Day will run the electronics emporium sparked its shares from 13.73 to 17, adding $442 million to market cap. Day has a turnaround track record, most recently as head of Kmart, (SHLD)but he'll need powerful juju at RadioShack. Among its woes: the former boss's fictionalized r?sum?, slumping mall traffic, and fast-fading profits.

Maybe it was just too good to last. The U.S. Army confirmed on July 12 that it will no longer solely rely on Halliburton (HAL) subsidiary Kellogg, Brown & Root as the caretaker of troops abroad. Pentagon officials plan to split the logistics contract, under which Halliburton has raked in roughly $15 billion since 2001, among four vendors, with bidding to begin on July 28. Halliburton, Vice-President Dick Cheney's former employer, could still win a chunk of the new deal. Army officials say they're happy with Halliburton's services, but Defense Dept. auditors have questioned $1.2 billion in charges. Halliburton says its work has been "nothing short of amazing" and that opening up the contract for competitive rebidding is a routine Pentagon move.

A drunken pirate in black mascara has Hollywood doing a jig. The record weekend opening of Disney's (DIS) Pirates of the Caribbean: Dead Man's Chest helped push box office receipts 6.8% ahead of last year, according to tracking firm Exhibitor Relations. More important, attendance, which had fallen for three straight years, is up nearly 4% this year as hot flicks like Disney's Cars and Sony's (SNE) The Da Vinci Code have pulled folks away from video games, the boob tube, and the Net. Johnny Depp's swaggering performance gave studios their eighth straight weekend where ticket sales surpassed a year earlier, says Exhibitor Relations President Paul Dergaradebian, "a world apart from where we were a year ago" when the box office was down for 19 straight weekends. Still, ticket sales are trailing 2004, when around-the-block lines greeted films such as Shrek 2, Spider-Man 2, and The Passion of the Christ. The suits who run the studios had better hope Captain Jack Sparrow brought some friends to the party.


Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus