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"Never was there a less dismal practitioner of a dismal science." -- Former British Prime Minister Margaret Thatcher on the passing of Nobel Prize winning economist Milton Friedman

Department stores led the retail pack in same-store sales gains last month, continuing a rise this year that has generated hoopla about the long-dying industry's revival. But the figures, for sales in stores open at least a year, are deceiving. "Everybody is talking about how department stores are showing all this growth," says Marshal Cohen at market researcher NPD Group. "That's bull."

Granted, those same-store sales surged this year, averaging 4.1% monthly gains through October, nearly double the rate of a year ago. At No. 1 Federated Department Stores, owner of Macy's and Bloomingdale's, such sales rose 7.7% last month. But a huge industry consolidation has artificially inflated those numbers, analysts say. As department store outlets close, business tends to shift to remaining department stores. Says ThinkEquity Partners analyst Edward Weller: "The natural place for those sales to transfer is to the most-like' stores nearby."

Deutsche Bank analyst Bill Dreher estimates that $2.9 billion in annual sales has been up for grabs as a result of 133 store closings by Federated and the Mervyns chain just in the last year. So remaining stores got bigger pieces of a shrinking pie: Overall department store sales this October fell by $400 million, to $17.6 billion, from a year earlier. Not much holiday cheer here.

Here's your auto biz quiz: Which carmaker spent the most money per vehicle in October on customer incentives? If you said Ford (F) or General Motors, (GM) you're wrong. If you think it's Chrysler (DCX), you're close, but wrong again. Believe it or not, it's bmw. The company started to spend more on incentives over the summer, but it really sweetened the deals in October. According to auto site Edmunds.com, givebacks cost bmw an average $4,179 per car during October, more than Chrysler's $4,136 a vehicle and more than twice what German rivals Audi and Mercedes-Benz (DCX) are spending on incentives.

It's not a matter of cash on the hood. When bmw cuts deals, it subsidizes leases, which make up at least 60% of its U.S. sales. The carmaker is offering almost $10,000 in lease subsidies for its flagship 7 Series sedan, Edmunds says, and $6,500 worth of lease support on an X5. Even the 5 Series, with sales up 5% this year, has almost $5,700 in lease subsidies.

Frank Ursomarso, who owns a bmw dealership in Wilmington, Del., says you can drive a new 530i sedan for $489 a month--not much more than what you'd pay to get in the smaller Audi A4. The company says there are good reasons for the deals: a soft car market and the fact that the X5 will be replaced soon. (bmw wants to shed inventory of the old model.) But that explanation doesn't hold for the 7 Series and 5 Series, the current generations of which are less than three years old.

The deals might not last. Executives get their bonuses in December, and Bimmers tend to fly off the lot. So now may be the time to hit the showroom.

Following months of gloomy news, the battered newspaper industry announced on Nov. 20 that 176 dailies will team up with Yahoo! (YHOO) to provide the portal with local classified advertising, a first step in a broader sharing agreement. The pact may look as if publishers are admitting defeat by handing over an important (albeit much reduced) revenue stream to their nemesis, the Internet.

But that's not so, say the publishers. "Everyone thinks we are shifting revenues to HotJobs," says Lincoln Millstein, a senior vice-president at Hearst Newspapers. "Why the hell would we do that?" In fact, it's the newspapers that will reap most of the incremental fees that local employers will pay to have their "help wanted" ads also posted on Yahoo! HotJobs. The amount will be separate from what they pay to advertise in local newspapers and on those papers' Web sites.

Yahoo and the newspapers haven't released details, but Robert Jiranek, vice-president for sales and strategic planning at one of the newspapers, The Commercial Appeal in Memphis, says the split will be 80% for newspapers and 20% for Yahoo. "It's good for us because we need to extend beyond print," he says. "And it's good for Yahoo because it gives it a toehold in local advertising."

Newspapers could sure use the lift: Revenues from help wanteds fell 42% from their peak in 2000, to $5.1 billion in 2005, says researcher Corzen. Meanwhile, U.S. revenues at online jobs giant Monster.com, which were $650 million last year, are expected to grow by as much as 15% this year.

If that's not enough to send tremors through publishers, a larger fear, for both newspapers and Yahoo, is Google's plan to move into local advertising. "Our deal with Yahoo was not motivated by fear of Google (GOOG) per se," says Millstein, "but it is an acknowledgement that the world is changing very quickly."

Despite advances in the corporate sphere, it's still lonely at the top for female CEOs--and will be for at least another decade, predicts a study by Dartmouth's Tuck School of Business and Loyola University Chicago. Researchers looked at proxy statements and Securities & Exchange Commission reports from the 942 largest U.S. companies in 2000. They gathered biographical data about executives and categorized them by gender, age, tenure, and "corporate level," from what they called Level 1 (CEO or chairman) to Level 7 (a subsidiary's vice-president, for instance). Assuming executives move up one rank every five years or so--a rate the study's authors call "perhaps optimistic"--the researchers predicted the rate at which female executives at these companies will move through the pipeline to become CEOs.

Tom Anderson, the co-founder of MySpace, is the first to greet the site's 78 million users, installing himself as Friend No. 1 on their profiles and sending memos on how the site works. The role is crucial to forming a community, and as the site has expanded globally, Tom, as MySpacers feel entitled to call him, has played it in Australia, Britain, France, Germany, and Ireland.

But when the Japanese MySpace launched on Nov. 15, users were greeted by someone else: Ozzie Inoue. On the advice of its Japanese partner in the venture, Softbank, MySpace is trying to be culturally relevant in Asia. The switch to Ozzie, who is Japanese, is part of that. So how do Tom and Ozzie compare? Let's consult their profiles: Tom, 30, is a Libra from Santa Monica, Calif. Ozzie, 36, is an Aries from Tokyo. Ozzie is blaring Lost in Your Eyes by vocalist Deborah Gibson on his profile. Tom has posted Mickey Avalon's So Rich, So Pretty. Ozzie is married, Tom is single. Tom has 130 million friends. Ozzie? Just 51,470 --so far.

As New York Attorney General Eliot Spitzer prepares to take over the governor's office in Albany, business is fretting that his legacy of hardball tactics will linger.

As AG, Spitzer adopted a strategy used by the Justice Dept.: Strong-arming companies into refusing to pay legal fees of indicted employees as a condition of avoiding a corporate indictment. Business groups, along with the American Civil Liberties Union, have been lobbying Congress to stop Justice's practice, and Senate Judiciary Chairman Arlen Specter (R-Pa.) and ranking member Patrick Leahy (D-Vt.) may introduce a bill this month. The mounting political pressure has Justice weighing changes to its policy.

But "we may still have a residual problem at the state level," says Susan Hackett, senior vice-president of the Association of Corporate Counsel, noting that state AGs have watched Spitzer succeed with the strategy. Nine of 17 recent deals Spitzer struck with accused companies prohibit the businesses from paying indicted employees' legal fees, according to Corporate Counsel magazine. Among the nine: Bank of America (BAC), Federated Investors (FII), and Strong Capital Management. New York's incoming AG, Andrew Cuomo, declined to comment on the issue.

Most video gamers are male, but they're not all adolescents. The average console-game player is 26, old enough to have an income and smack in the middle of the coveted 18- to 34-year-old demographic. Small wonder that advertisers are increasingly eyeing video games. In-game advertising, expected to triple this year over last, to $164.7 million, is on track to hit $733 million by 2010, says Yankee Group Research. Ubisoft Entertainment's recently released Tom Clancy's Splinter Cell: Double Agent promotes Nivea for Men and Philips Norelco's Cool Skin razor--through product placement and billboard ads in outdoor scenes. A Web address in those ads directs players to a site that offers game tips.

irvingwb.typepad.com

WHY READ IT: Because the guy who led IBM's Internet, Linux, and next-generation Web initiatives should have something interesting to say. And quite often he does. Irving Wladawsky-Berger, the company's vice-president of technical strategy and innovation, is charged with figuring out which technologies and market shifts will matter to the future of IT. To be sure, he hypes IBM initiatives in this blog. But his sharp posts--on everything from his Second Life virtual world experience ("Irving in Wonderland") to the state of innovation in Latin America--are worth it.


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