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Dems in Denver: So Far, So Good

How're they doin'? As BusinessWeek went to press halfway through the Democrats' Denver convention, Barack Obama could breathe a sigh of relief. His campaign faced critical tasks at the confab: to unite unhappy Hillary Clinton supporters behind Obama and focus intently on convincing skeptical white working-class voters that he's the man with the right plan to ease their economic woes. Clinton's fiery speech on Tuesday night went a long way to healing the rift, while speeches by Michelle Obama and others aimed at showing blue-collar holdouts that the standard-bearer feels their pain because he too has struggled to pay the bills. The real test, of course, was yet to come, as Obama prepared to hit the stage Thursday night with an oration stressing his plans for tax cuts and other help for squeezed voters.

Housing: Dumpsville

Home values have yet to hit bottom in most parts of the country, and while there are signs that prices may be dropping at a slightly slower pace, autumn looks to be painful for sellers. Through June, prices plunged 15.9% over the past year, according to the latest S&P/Case-Shiller Home Price Indices, released on Aug. 26, with Las Vegas, Miami, and Phoenix showing declines of nearly 30%. Pockets of relative strength include Charlotte, Dallas, and Denver. A fragile job market—including big layoffs in the financial sector—could continue to undermine prices.

Fannie, Freddie Rebound

From Aug. 22-27, Fannie Mae (FNM) and Freddie Mac (FRE) shareholders experienced a blast from the past: a string of up days for the battered stocks. But while the share selloff may have come to an end, the mortgage financers' troubles haven't. Standard & Poor's (MHP) and Moody's (MCO) cut the ratings on Fannie and Freddie's subordinated debt and preferred shares on fears that they might not be protected in a government bailout. The move prompted JPMorgan Chase (JPM) to announce on Aug. 25 that it may have to write down $600 million in Fannie-Freddie holdings. Still, it wasn't all gloom for the siblings. On Aug. 27 they said they're making roughly twice as much on new mortgages as they did before the credit crunch began.

Lehman, Hat in Hand

Richard Fuld hasn't found his way out of the woods yet. The CEO of troubled Lehman Brothers (LEH) has been scouring the globe for an infusion of cash. It appeared that either a large bank or a sovereign wealth fund from South Korea might pitch in, but Korean regulators put the kibosh on that. Now, Fuld might sell all or part of one of his crown jewels—the Neuberger Berman money management unit—to a private equity firm.

Nano Roadblocks

Tata's (TTM) revolutionary Nano, at around $2,500 the world's cheapest car, may miss its October launch date. On Aug. 24 some 40,000 protestors, angry at the way the state government had acquired 1,000 acres of land surrounding the Nano plant in Singur near Kolkata, gathered at the factory and blocked roads leading to it. Some 4,000 riot police with water cannons stood by in case of violence. Tata insists the Nano will cross the starting line on time, but the company is considering moving production elsewhere—despite spending $350 million on the Singur plant.

The Regulatory Front

Beset by broadening bank troubles, the Federal Deposit Insurance Corp. may need a bailout itself, hiking fees charged to banks and borrowing from Uncle Sam. The agency's "problem list" grew to 117 banks from 90 at the end of the first quarter. Meanwhile, the SEC on Aug. 27 proposed a "road map" that could require companies by 2014 to adopt international accounting standards, increasing flexibility in reporting assets and income. Chairman Christopher Cox argues the changes will help companies compete globally.

See "Big Shift in Accounting Rules Nears"

They Shrank the Perks

Overall CEO pay may continue to creep up, but after two full years under new SEC disclosure rules, a countertrend is clear: Executive perks are on the decline. Of the nine key fringe benefits tracked in compensation research firm Equilar's third annual study, seven have fallen in value or remained flat from 2006 to 2007. Personal use of aircraft, for instance, is down 9.8%, from a median annual cost of $121,676 to $109,743. (Equilar)

Boeing's Tactical Retreat

Staring down the barrel of a strike vote scheduled for Sept. 3, Boeing (BA) caved in on plans to scrap its traditional pension plan. For now, the aerospace giant still proposes to kill some retiree medical benefits, a move the union says is a no-go. Plagued by delays on its 787 Dreamliner and battling to win a $35 billion contract to build military refueling planes, Boeing would dearly love to avoid a strike.

See "Boeing's Costly Pension Breakthrough"

A Revised Script for MGM

Despite Wall Street rumors that MGM might be on the block, the consortium that owns the home of James Bond, the Pink Panther, and other classic franchises says it is not for sale. On Aug. 25 the debt-heavy studio did acknowledge it hired investment banker Goldman Sachs (GS) to "explore enhancements" to its "long-term capital structure." Sources say that could include an equity infusion, IPO, or restructured debt. The owners, which include Sony (SNE), cable giant Comcast (MCSA), and private equity funds, say MGM has "sufficient" financing.

NBC Sets a Record

Athletes weren't the only ones partying when the Beijing Olympics ended on Aug. 24. With more than 214 million viewers—the biggest audience in American TV history—having watched at least some of the 17-day event, NBC (GE) sold more than $1 billion worth of advertising and generated profits of just under $100 million. On top of that, parent company General Electric (GE) sold $700 million in services to the Chinese. NBC might have rung up more than $5.8 million in online ad sales had it put more live events on the Web. Still, its gold-medal performance has ESPN contemplating making a rival bid for the 2014 and 2016 Games.

India May Get More Strict

Thinking about doing a deal in India? Take care: New Delhi is pondering legislation that would subject foreign direct investment to sharper scrutiny on national security grounds. It's modeled on the U.S.'s Exon-Florio legislation of 1988, which gives Washington the right to nix foreign buyouts. Under the Indian law, cross-border deals involving technology transfers and/or government contracts would require review. The proposal comes as India is reaping a bumper crop of foreign investment. Inflows are forecast to reach $40 billion for the 2008-09 fiscal year, up from $25 billion the year before. (The Economic Times)

Mattel's Modest Award

In the battle of the dolls, the street-smart Bratz dodged a bullet. Jurors in a California federal court on Aug. 26 awarded up to $100 million in damages to Mattel (MAT). That's far less than the nearly $2 billion the world's largest toymaker had been seeking in the high-profile copyright infringement case. The same jury in July decided that MGA Entertainment, maker of the Bratz dolls, had stolen Mattel's property when it hired away the man who dreamed up the Bratz. Mattel spent four years and likely tens of millions of dollars litigating the case.

Lebanon Bounces Back

Most investors might slot Lebanon under "not with a 10-foot pole." But according to the cover story in the August issue of BusinessWeek Al-Arabiya, this Middle East country is now worth a second look. While the political outlook remains uncertain, security has improved, and there are plenty of signs of economic progress. Beirut's real-estate sector is booming, with work resuming on large developments that had been put on hold. Lebanon's relatively relaxed social mores remain a draw for visitors from Arab Gulf countries. The nation is expected to host 1.6 million tourists this year, up 60% from 2007. And the Beirut stock exchange, meanwhile, has seen trading volume soar by more than 300% since the start of the year.


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