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The Auto Workers Blink


Was it mostly theater? When the UAW struck General Motors on Sept. 24, some observers guessed that union President Ronald Gettelfinger needed a walkout to show he wasn't knuckling under. Less than 48 hours later, the UAW and GM came to a four-year deal, and it won't have workers dancing in Detroit's streets.

Of course, given the rickety shape of GM and other American carmakers, the union knew it would take its lumps. As expected, it agreed to set up a Voluntary Employee Beneficiary Assn. that will let the company unload about $51 billion in health-care costs, with the UAW getting roughly $35 billion, most of it in cash, to set up the fund. Gettelfinger also agreed to a two-tier wage system, with new hires getting less money, and to cuts in the Jobs Bank that pays furloughed employees. The union did win assurances that GM will invest in U.S. factories. And perhaps most important, active workers won't see pay or benefits whacked.

A buck won't go far in Paris these days—or in Moose Jaw, for that matter. On Sept. 25 the euro hit a new high against the greenback, more than $1.41. And in the ultimate indignity, the Canadian dollar, or loonie, is trading almost at par with its southern cousin. The huge U.S. trade deficit and the Fed's rate cut on Sept. 18 are weighing on the dollar, but it's not in free fall just yet. Against a broad, inflation-adjusted market basket of foreign monies, it's still above the bottoms of 1994 and 1995.

The only thing going up in the U.S. housing market is for-sale signs. The National Association of Realtors said on Sept. 25 that sales fell a seasonally adjusted 4.3% from July to August, leaving 4.58 million existing homes up for grabs at month's end. The Standard & Poor's Case-Shiller Home Price Index for 20 cities was down 3.9% in July from a year earlier. Homebuilders' distress signals are louder: Lennar (LEN) on Sept. 25 posted its biggest loss ever, $514 million, for the three months ended Aug. 31. And in another sign of economic feebleness, durable goods orders fell a steeper-than-expected 4.9% in August.

Many thought Facebook founder and CEO Mark Zuckerberg was crazy when he turned down a billion-dollar offer from Yahoo! (YHOO) last year. We should all be so crazy: The hot online social network, expected to generate about $150 million in revenues this year, is looking to raise a war chest of around $250 million. It'll do so by selling a small stake that values the company at a minimum of $10 billion, says one person knowledgeable about the company. The Wall Street Journal on Sept. 25 said the main suitor is Microsoft (MSFT), but Google (GOOG) may jump in, too.

See "Facebook: The $10 Billion Social Network"

Some sequels take time—in this case, nearly 30 years. On Sept. 25, NRG Energy (NRG) applied to erect two atomic energy plants in Texas, the first such filing since the Three Mile Island disaster in 1979. A nuclear renaissance may be in the works: The feds expect building requests for up to 30 units by yearend 2008.

See "New Nukes Are Finally Coming"

This would turn Goldfinger green with envy. Anglo-Australian mining giant BHP Billiton (BHP) once again proved its Midas touch on Sept. 26 by announcing that yearly gold output at its Olympic Dam mine will be more than 10% bigger than previously thought. That makes it one of the world's richest mines and pushed BHP stock up to a record as gold prices neared a 30-year high.

It's back to the play-it-safe Prime Minister model in Japan. Just 13 days after Shinzo Abe quit, a Sept. 25 vote in the Lower House rubber-stamped Yasuo Fukuda, 71, a former Chief Cabinet Secretary who won the presidency of the ruling Liberal Democratic Party on Sept. 23. Fukuda, an LDP stalwart backed by anti-reform elements, may not get an easy ride. After Abe's ill-fated reign the party is struggling in polls, and the opposition controls the Upper House, making the passage of legislation perilous.

See "No Honeymoon for Japan's New Leader"

Facing reality can be tough, but Dell (DELL) at last accepted that direct sales aren't working in China and signed on to sell through top electronics retailer Gome.

It was the day hard-bitten gamers have been longing for: On Sept. 25, Halo 3 landed. Fans lined up before midnight at 10,000 retail outlets to buy the latest installment in one of the most lucrative video game franchises. The first two Halo games, developed by Microsoft-owned Bungie Studios, have sold a combined 14.8 million copies. Microsoft figures fans will lavish more than $1 billion on Halo games and related merchandise by the end of 2007, including up to 3 million copies of Halo 3 before October is out.

See "The Halo 3 Effect"

Big G has a new general. Kendall Powell, 53, a 28-year veteran at General Mills (GIS), was elevated to CEO of the cereal and packaged-food company on Sept. 24. He succeeds Stephen Sanger, who expanded the menu of organic foods after taking over in 1995. Powell plans to emulate Sanger by reaching out to U.S. minority shoppers and faster-growing markets abroad.

Borse Dubai and its new ally, NASDAQ, appear to have the upper hand over Qatar Investment Authority in the contest for Scandinavian exchange OMX. After years of evangelizing, tech visionary Nicholas Negroponte's so-called $100 laptop is finally set to roll off the assembly line of a factory near Shanghai. Massachusetts Institute of Technology prof Negroponte and his team at the One Laptop per Child organization want to distribute millions of laptops to children in developing countries, but the price of their XO model is nearly twice the original estimate, and no governments have written them a check. To kick-start the campaign, OLPC on Sept. 24 unveiled a money-raising gambit called Give 1 Get 1. Customers who order two laptops for $399 will receive one early next year, with the other going to a kid in Cambodia, Rwanda, Afghanistan, or Haiti. (People can also make a $200 donation.) And Negroponte isn't giving up on government sales. "I have met with about 30 heads of state. they're all enthusiastic," he says. "But there's a huge gulf between a head of state shaking your hand and a minister making a bank transfer."

See "Give a Laptop and Get One"


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