"Attention people of Afghanistan! Up to $25 million reward is being offered for information leading to the location or capture of Osama bin Laden." -- U.S. reward announcement broadcast into Afghanistan The sour economy has Corporate America playing Scrooge this holiday season, revoking all manner of employee perks, from the lavish to the mundane.
In mid-November, Credit Suisse First Boston, to save some $400 million over three years, did away with hundreds of millions' worth of pay guarantees for about 350 stars, including Frank Quattrone, head of technology investment banking. And as of Jan. 31, 400 top CSFB executives will lose their company cars. In October, Ford Motor (F) stopped handing out free PCs and $5-a-month Internet access to its 346,000 workforce. Half of Ford's employees had signed up in time; they won't have to give back the computers, but must pay the access fee.
Now employers are reconsidering that last remnant of company-sponsored excess: the holiday party. Half of the 150 companies surveyed by search firm Battalia Winston International say the weak economy has made them reconsider the fetes. Of those, 86% will hold more modest gatherings, while 18% are canceling them altogether. In this environment, it seems even holiday parties can get downsized. When big tobacco agreed to pay the 50 states $246 billion in settlements a few years ago, the antismoking crowd hoped the money--to be paid out over 25 years--would be spent on preventing teen smoking and covering health-care costs.
But that's not happening. A National Conference of State Legislatures study found most of the money, 63.4% of the $21.3 billion paid so far, is going elsewhere, to everything from tax cuts to pork-barrel projects. Only 5% has gone to smoking prevention, and 31.6% to health care. The Centers for Disease Control & Prevention give 43 states failing grades on adequate tobacco education. Says CDC policy analyst Melissa Albuquerque: "Our goal is for all states to meet the guidelines." The CDC says 23.5% of adults smoke. It would like to see that drop to 12%.
In Illinois, lawmakers have used the tobacco windfall to help give residents $280 million in property-tax relief. North Dakota is using nearly half its proceeds for water projects, including $52 million to build dams on the Red River. Iowa used $6.4 million of $117 million in last year's payments to expand the state penitentiary by 200 beds and $10.3 million for a new building. Others simply use the money to balance the books: Tennessee, for instance, is covering all of its $560 million deficit with tobacco money.
The states say the settlement terms don't restrict how funds are to be used. While critics say states are morally bound to use the money for antismoking efforts, Lee Dixon of the National Conference notes that "states are free to determine how the dollars should be spent." E-Tailers won't get any breaks this holiday season. A November survey of 500 online shoppers by Harris Interactive (HPOL), Goldman Sachs (GS) and Web rating service Nielsen//NetRatings (NTRT) torpedoed speculation that consumers would skip malls and shop online instead post-September 11. A mere 4% of respondents plan to buy from e-tailers rather than stores because of terror worries. To top it off, only 35% of consumers who already did some holiday shopping online were "very satisfied."
Clearly, the thrill is gone. Ironically, the appeal of e-tailers could be suffering simply because they're trying to do the right thing: make money. They're cutting free goodies as well as services and staff to handle e-mail and phone calls. Shoppers expect to increase their online holiday budget only slightly, to 15% from 13% of total spending.
But at least things are a little better now: 17% of last year's online shoppers were more satisfied this year. That's better than some merchants expected, says Sean Kaldor of Nielsen//NetRatings. In other words: Things could be worse. Software at headlinehaikus.com transforms news stories into Japanese verse of five, seven, and five syllables. While some emerge as gibberish, others are surprisingly on target.
VOICE RECORDER INDICATES PLANE CRASH WAS ACCIDENT
The cockpit other
than the accident sequence
missing on the ground
CHENEY SEES END OF TALIBAN RULE, BIN LADEN ON RUN
the end of Taliban rule
the Taliban was
INDUSTRY POUNDED IN OCTOBER, WORST SINCE FEBRUARY, 1991
It's another nail
the leaner inventories
offer cold comfort
Data: www.headlinehaikus.com Americans, it seems, are in a mood to fight back. That's the message Hollywood is getting from screenings of upcoming war movies. Even as studio execs met with the Bush Administration on Nov. 11 to discuss cooperative patriotism, studios were rushing war films to theaters. That's a change from immediately post-September 11, when execs yanked movies that might further rattle a traumatized nation.
Fox (FOX) has moved up Behind Enemy Lines, starring Gene Hackman, from Jan. 18 to Nov. 30. "A kick-ass film is a good thing to have right now," says Fox Filmed Entertainment Chairman Tom Rothman. Fox beat Sony's Black Hawk Down, a big-budget film depicting the 1993 U.S. military raid in Somalia. Originally set to open in March, it gets limited release on Dec. 28, going national on Jan. 18. Sony (SNE) thinks the heroic tale will resonate, even though 18 soldiers die.
Hollywood couldn't help but notice that rentals were booming for films such as Die Hard, in which Bruce Willis mows down German terrorists. With the Taliban on the run, Hollywood is pulling out its own big gun. In Collateral Damage, at first postponed and now due out in early 2002, Arnold Schwarzenegger will hunt down terrorists who killed his family. Shaken by the first case of mad cow disease in Japan, consumers have been shunning traditional beef dishes such as shabu-shabu and nontraditional ones such as McDonald's burgers.
Now, the government, after bungling its mad-cow response in September, is taking measures to reassure the public--testing all slaughtered cows, and assigning 10-digit identity codes to Japan's 4.5 million bovines. Japan had begun a slow rollout of the $28.3 million plan, modeled on one in Europe, before the panic. But now it will speed it up, completing it by next April instead of 2004. In the 21st century's answer to cattle branding, plastic tags with bar-coded ID numbers will get clipped to cows' ears to record their age, breed, farm location, and place of birth.
Oddly, the government will have a better idea of the whereabouts of cows than taxpayers. National ID numbers for humans won't be issued until next August, three years after passage of a controversial bill. The public has long opposed IDs for fear the government might abuse its power. "Japanese people just don't like the idea of being identified by a number," says an agricultural ministry official. "But the cows don't seem to mind." What's in a name? Plenty, if you're a mutual fund. A new Securities & Exchange Commission rule will require funds to have at least 80% of their assets--up from 65%--in investments that reflect what the funds are called. Thanks to shifts in style and a volatile stock market, expect lots of name changes before the rule goes into effect next summer. A few have changed already:
-- Scudder's $404 million Small-Cap Equity Fund becomes the Dynamic Growth Fund--since only about half its holdings are in small-caps.
-- Strong Capital's $264 million American Utilities Fund becomes the Dividend Income Fund. Just 68% of holdings are now in utilities.
-- Invesco's Blue Chip Growth Fund becomes just Growth Fund: Its $2 billion is 60% invested in technology stocks, which seem less "blue chip" now than they used to.
Of course, funds can have names with no relation to any investment style. There are no plans, for example, to alter Fidelity Investments' flagship Magellan Fund.