) CEO Robert Nardelli to head up newly acquired Chrysler. Nardelli was known as a turnaround specialist when he was at General Electric (GE
), but his management style sent insiders fleeing at Home Depot, and cost cuts led to customer service snafus. The road won't be smooth at Chrysler, either. First, Nardelli must help negotiate retiree health-care concessions from the United Auto Workers. Then he needs to find a way to get sales moving again. And he'll have to boost quality and productivity in the carmaker's factories.
Cerberus' choice has gotten mixed reviews. Retired GE Chairman Jack Welch and Home Depot founder Ken Langone both figure Nardelli's the perfect man for the job. But others, like ex-Chrysler President Thomas Stallkamp, say it will be hard for an outsider to make a quick U-turn without knowing anything about the car business. As nearly everyone expected, the Federal Reserve kept its benchmark rate at 5.25% on Aug. 7, saying inflation remains Economic Enemy No. 1. The stock market took the Fed's statement in stride, steadying after its recent wilder than usual gyrations.See "Sorry, Wall Street" Well, that didn't take very long. Just weeks after Rodger Lawson was installed as president of FMR, Ellyn McColgan quit. McColgan was widely viewed as a contender to lead the Boston mutual-fund giant after 77-year-old founder Edward Johnson III steps down. She said on Aug. 7 that she's exiting "to pursue new opportunities." Under McColgan's watch as head of Fidelity's brokerage unit, the firm's funds attracted $45 billion last year. In April she took on added management responsibilities at the company's mutual fund unit, Fidelity Investments. Now seen as front-runners to fill Johnson's shoes: his daughter Abigail, a.k.a. Abby, and Lawson. Could this be a milestone case? On Aug. 7 a federal court jury in San Francisco convicted Gregory Reyes, former CEO of Brocade Communications (BRCD
), of securities fraud involving options backdating. It's the first verdict after a trial and is likely to bolster a probe of backdating at some 140 companies--and make those under scrutiny exceedingly nervous. Reyes' attorney says he'll appeal.See "
New Stock Ooption Fears in the Valley" Immigrant labor woes have dogged business for years, but the worst may be yet to come. The Homeland Security Dept. will soon impose tough enforcement rules on employers, The New York Times reported on Aug. 8. The new regs, which could affect 8 million workers, will require companies to fire those whose names don't match their Social Security numbers--or risk tens of thousands of dollars in fines. Business owners predict big layoffs, big legal headaches, and a big labor shortage. After months of wrangling, Dutch paints and coatings giant Akzo Nobel agreed on Aug. 6 to pay $16 billion for British rival ICI (ICIYY
). Buying the maker of Dulux paint will help Akzo shore up operations in the U.S. and China, where it faces tough competition. Akzo's shareholders could still upend the deal if they balk at the hefty price tag. PetroChina (PTR
) has picked Chevron (CVX
) to help it develop a natural gas field in central China, a sign the country is turning to outside expertise to help it sate its bottomless energy appetites. The U.S. oil major beat out offers from Norway's Statoil (STO
), France's Total (TOT
), and Anglo-Dutch outfit Royal Dutch Shell (RDS
), The Wall Street Journal reported on Aug 7. Meanwhile, oil prices dipped from record highs the previous week, settling around $72 a barrel on fears the U.S. economy was cooling. Can Microsoft's (MSFT
) Xbox 360 get back in the game? Faced with relatively anemic sales of its high-def gaming console this year, the team in Redmond, Wash., on Aug. 8 slashed the price of its most popular model by $50, to $350. It cut other versions by a smaller amount. Both Microsoft and Sony (SNE
), which lowered prices on a discontinued PlayStation 3 model a few weeks earlier, have struggled against the smash success of Nintendo's (NTDOY
) family-friendly Wii. You may have to wait a bit longer to get that cutting-edge phone you've been coveting. On Aug. 7 the Bush Administration let stand a U.S. trade agency ban on imports of cell phones containing Qualcomm (QCOM
) chips that were found to infringe on Broadcom (BRCM
) patents. Some fret that the ban may slow the advent of 3G phones, but Verizon Wireless has already hammered out a deal with Broadcom that would allow imports of the offending phones, and Qualcomm, which is appealing the ban, also says it has cooked up a "workaround."See "
Qualcomm Fix Won't End Broadcom Brawl" Who would have guessed that betting on Hollywood would be a bright spot for Paul Allen? The Microsoft co-founder, a pinup boy for failed investments after money-sopping forays into cable TV, is selling an estimated $300 million of his stake in DreamWorks Animation (DWA
), the company said on Aug. 6. That makes $1 billion-plus he has taken out after spending $700 million in 1994 to help Steven Spielberg, Jeffrey Katzenberg, and David Geffen launch the company. Allen still owns an estimated $200 million stake but is giving up his board seat. As overextended homeowners default on more mortgages, casualties are mounting on Wall Street. Warren Spector, president and co-chief operating officer at big brokerage Bear Stearns (BSC
), lost his job on Aug. 5. The next day, American Home Mortgage Investment (AHM
), once the nation's 10th-largest mortgage lender, filed for bankruptcy protection to wind up its business. Both firms suffered from loss of confidence by creditors and investors. For Bear, doubts rose over losses that it may be holding from two busted hedge funds that had invested in mortgage-backed securities and junk-grade corporate loans. Another concern: potential losses on $20 billion of corporate buyout loans it has committed to fund. Bear shares are down more than 30% from mid-January. American Home, on the other hand, is comatose after its lenders cut off its credit, leaving the company unable to fund some $500 million in promised loans. And the bleeding continued on Aug. 8, when Luminent Mortgage Capital (LUM
), a leveraged investor in adjustable-rate mortgages, said it had received notices of default from two lenders.