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Et Tu, Chrysler?


Valentine's Day wasn't exactly a love-in at Chrysler Group (DCX). The DaimlerChrysler (DCX) unit followed General Motors (GM) and Ford (F) in announcing drastic cuts: 13,000 workers over the next three years and 400,000 vehicles from its annual production. Chrysler lost $1.5 billion in 2006 after an operating profit of $2 billion in 2005. DaimlerChrysler Chairman Dieter Zetsche said he's looking at all options for Chrysler, implying he might sell off all or parts of it. The most valuable piece is the Jeep business, but Renault-Nissan (NSANY), as well as Chinese carmakers, might well be interested in buying chunks.

In other auto news, The New York Times reported on Feb. 14 that four of the nation's largest car-rental brands—National, Alamo, Thrifty, and Dollar, may team up. Dollar Thrifty Automotive Group (DTG), the paper said, is talking with Vanguard Car Rental, which owns National and Alamo, about a deal valued at more than $3 billion. One likely outcome of such a merger: higher fees at the rental counter.

See "Dr. Z's Painful Cure for Chrysler"

It's gut-and-renovate time. Home Depot (HD) said on Feb. 12 that it plans to evaluate whether to sell, spin off, or take public HD Supply, its $12 billion wholesale construction-supply unit. The announcement is the latest move by new CEO Frank Blake to overhaul the culture and strategy of the nation's second-largest retailer following the Jan. 2 ouster of Robert Nardelli. Critics have complained that margins at the wholesale unit are low.

The SEC has joined the crusade against the plaintiffs' bar. On Feb. 9 the agency sided with the corporate defendant in Tellabs Inc. v. Makor Issues & Rights Ltd., asking the Supreme Court to make it harder for investors to sue companies for securities fraud. sec chief Christopher Cox says the goal is to weed out frivolous suits. But while the SEC is bearing down on lawsuits, shareholders got a break in Delaware Chancery Court, which on Feb. 6 ruled for the first time that directors who O.K. stock option backdating or spring-loading can be sued for breach of fiduciary duty.

Investors stormed the barricades to get shares of Fortress Investment Group (FIG), the $30 billion hedge fund and private equity firm, which went public on Feb. 9. It's the first U.S.-based hedge fund to do so. Shares rose 68% in their first day of trading, to close at 31. The stock has fallen back a bit since then but still trades at a price a little under 40 times its past earnings—a lofty multiple for financial-services firms. On paper, Fortress' five founders are worth a total of more than $9 billion. Look for other big hedge funds to follow suit.

See "Investors Storm Fortress IPO"

Robert Greifeld, the marathoner who heads NASDAQ, lost the race for the London Stock Exchange. His hostile offer of $5.3 billion failed on Feb. 10 when too few shareholders tendered their holdings. He admitted to being "naturally disappointed."

For a company so dependent on the media, Google (GOOG) isn't making many friends in the business. Movie studios claim the search giant aided two pirate video sites, providing help on how best to run ads on Google and getting paid for them. Google said only that it bars ads that offer sales of materials that infringe on copyright owners, but it's working with the studios to stem piracy. Little more than a day after those complaints came to light, Google on Feb. 13 lost a copyright lawsuit to a group of Belgian newspapers. Google will appeal, but legal experts figure it will negotiate licensing or other deals to avoid what could be a precedent that hems in search engines.

See "Belgian Court Deals Google a Bombshell"

On Feb. 12, Johnson & Johnson (JNJ) told the Justice Dept. and the SEC that some of its medical-device units had made improper payments related to sales in two foreign countries. The company's worldwide head of medical devices, Michael Dormer, retired as a result.

There's not much growth left in its European backyard, so London-based Vodafone (VOD) is hunting more aggressively abroad. On Feb 11 it announced it had bagged Hutchison Whampoa's (HUWHY) 67% controlling stake in India's No. 4 telecom operator, Hutchison Essar, for $11.1 billion. Vodafone entered India in 2005 with a 10% stake in the largest local telco, Bharti Airtel. Vodafone now wields major clout: 23.3 million subscribers and a 16.4% share in the world's fastest-growing telecom market.

See "India Cheers Vodafone Megadeal"

Four Seasons Hotels (FS), famous for its luxurious and pricey accommodations, is taking privacy to an even higher level. On Feb. 12 the luxury hotel chain's board accepted a deal valued at $3.8 billion (including debt) to go private. The principals include companies owned by Microsoft (MSFT) founder Bill Gates and Saudi Prince Alwaleed bin Talal, as well as Four Seasons Chairman and CEO Isadore "Izzy" Sharp. The Toronto founder will get $289 million in cash and a major stake in the private group, which owns or operates 74 hotels worldwide. He should be able to afford the penthouse suite for a while.

See "Private Equity Slugfest"

It's always nice to hear you're in the clear with the feds. On Feb. 14, Scottsdale (Ariz.) research shop Gradient Analytics announced that it had received a letter from the SEC saying regulators recommend that no action be taken against the firm. Internet retailer Overstock.com and drugmaker Biovail (BVF) have filed lawsuits alleging that Gradient and a group of hedge funds attempted to drive down their stock prices. In a statement, Gradient CEO Brad Forst said the letter "confirms our resolve to...publish true and insightful information."

Rupert Murdoch built his News Corp. (NWS) empire by zigging while others zag—most notably in offering racier fare than his stodgier broadcast rivals. But will folks lap up pro-business news on the Fox Business Channel, which launches later this year, as he confirmed on Feb. 8 at the McGraw-Hill Media Summit? So far Murdoch has signed up Comcast (CMCSA), Time Warner (TWX), and the News Corp.-controlled DirecTV (DTV) satellite service to carry the channel. He promises it will be more supportive of business than CNBC, which, Murdoch complains, "leaps on every scandal." The new channel was the brainchild of Fox News' take-no-prisoners CEO, Roger Ailes, who told reporters that CNBC is "not as friendly to corporations and profits as they should be." Responds CNBC spokesman Kevin Goldman: "It doesn't surprise me that the alleged competition is starting with its usual lies and propaganda." Fox business anchor Neil Cavuto will headline the new operation. So forget about Temptation Island—anyone for Temptation Options?


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