"Just her being in the fray will create new fans for the [Ladies Professional Golf Assn.]." -- LPGA Commissioner Ty Votaw, on Annika Sorenstam becoming the first woman in 53 years to play in a PGA event The blizzard of 2003 ended up dumping yet more problems on already-struggling businesses, and the ultimate costs to the economy are still adding up.
Troubled airlines chafed at the expense of cancelling thousands of flights, and deficit-strained cities forked out millions for snow removal. Don Borut, Executive Director of the National League of Cities, says many blew their snow budgets at a time when they're "already in the worst fiscal condition they've been in for 10 years." Now, he says, "they'll have to draw down reserves or cut other services."
While the Northeast certainly got socked, insurers, at least, breathed a sigh of relief over Mother Nature's timing. Presidents' Day meant fewer cars on the roads to cause traffic accidents--which normally account for 25% to 30% of storm-related claims, according to the Insurance Information Institute. And fewer companies are likely to file business-interruption claims because of the holiday. While the Institute has yet to estimate the insurance costs, officials doubt it will come close to the blizzard of March, 1993, which came with an invoice for $1.7 billion. Remember the days when receptionists answered phones and fetched coffee? Now they've become front-line troops in the war against terrorism.
Across the country, thousands of receptionists are being sent off to various workshops that teach them how to increase security at their companies' front doors. The National Seminars Group's one-day Security Essentials for Front Desk Professionals, for example, includes how to "spot holes in security in your reception area" (such as subdued lighting and blockable exits) and identifying "red flag" behaviors. That means visitors who avoid eye contact or are vague about their intentions. Seminar execs say interest in their workplace-violence training, picked up after September 11. Participants are "more concerned about planned threats," says curriculum director John Carey. So far, though, there's no instruction on how to duct tape your office. Major online retailers led by Amazon.com (AMZN) have long insisted that local sales taxes--set by 7,500 jurisdictions nationwide--are so inconsistent they can't collect them properly for online purchases. And so, by and large, they haven't. Now, with several e-tailers including Wal-Mart (WMT) and Target (TGT) saying they plan to start, it raises the question: Is it really so hard?
Difficult, yes, but not impossible. Companies such as CCH, Taxware, and Vertex (VRTX) make software that calculates local sales taxes, usually using the buyer's Zip Code. "The software's getting better all the time," says David Bullington, Wal-Mart's chief tax officer.
Cost may be an issue. Software runs about $25,000 per site license for the first year, says PricewaterhouseCoopers senior manager Scott Walters. A big e-commerce site might need several licenses. Then there's installation and configuration--an additional $60,000. For the largest e-commerce sites, the costs could run well into the six figures.
There are other hassles, too. If they don't already have a tax department, Web sites will need to hire someone to file returns. And the software needs to be manually tweaked for events such as tax holidays or tax-exempt buyers. Sure, it's a lot of work. But beyond the reach of the biggest e-commerce players? Hard to believe.
No tax, since the tie costs less than $175
Taxed at 5%, since it costs more than $110
No tax, since it's considered clothing
Taxed at 7.917%
Data: Taxware Is this any time to start a hedge fund? Barton Biggs, one of the longest-standing, most widely followed strategists on Wall Street, certainly thinks so. Never mind that the former Morgan Stanley chief global strategist warned of a hedge-fund bubble in June, 2001, a year when the then $600 billion industry saw its largest cash inflows in history. Biggs said then: "The money gush is wild, and the risks are growing."
Now, Biggs says the danger of a bubble is past, since the gush has slowed and hundreds of fly-by-night funds have liquidated. He plans to launch later this year. "Hedge funds have done well by preserving capital in the bear market," says Biggs.
Given his track record as a forecaster, investors have reason to be wary. In 1998, he predicted that the bull market was at an end. And he was enthusiastic about Asia right up until economic crisis hit in 1997. But then again, Biggs has had his share of shrewd calls: He correctly predicted the bursting of the tech bubble in 2000, for instance. Investors in his new fund hope he's right this time. Every carmaker wants to tap the youth market. Honda (HMC) has its funky-looking Element sport-utility vehicle. Toyota (TM) is kicking off a new brand with an ultra-boxy compact SUV. And General Motors (GM)? It hopes to sell, um, used cars.
Don't laugh--the idea may have merit. GM has styled new front- and rear-end pieces that slap a race-car look on Pontiac Sunfire and Chevrolet Cavalier models going back to 1995. The body kits cost about $2,000, and they can generate profit margins as fat as 50%. Since old Sunfires can be had for as little as $2,000, young buyers can customize pretty cheaply. "The key to the youth market has always been used cars," GM Vice-Chairman Bob Lutz said in an interview in December, making a statement reminiscent of retired Chairman Roger Smith's comment in the '80s that the best entry-level car was an old Buick.
But GM also is trying to crack the lucrative market for custom parts--body kits, tuners, turbochargers, and other stuff to trick out cars--currently dominated by independent shops. It's a $26 billion-a-year business, and so far, auto makers have managed to get just 11% of it. GM has modest goals to start, making just 1,000 kits for the Sunfire. If they sell well, the company plans to make more, and kits for other used GM cars are in the works. Food manufacturers in Japan are finally feeling the pinch of a decades-long decline in the birth rate. Already, one out of five Japanese is 65 or older. By 2014, it'll be one out of four. And the trend is starting to take a bite out of the other end of the demographic--baby food. From a peak of $252 million in 1999, baby food sales fell to $235 million in 2001.
Searching for new sources of revenue, Japanese food companies stumbled on an intriguing notion: The same characteristics that make baby food appealing to babies--soft, small morsels, low salt, easy preparation--also draw the silver-haired set. So foodmakers have come out with ready-to-eat treats: soft-boiled fish, bite-size shrimp meatballs, chop suey with tofu, and dozens of others. The packaging--"Fun Meals" or "Food for Ages 0-100"--only hints at the target demographic, lest buyers feel embarrassed about their age. "Looks tasty," says 64-year-old shopper Shu Hamada while strolling the aisles of his neighborhood supermarket. "If it's soft and nutritious, why not?"
Good question--and one that Japan's baby-food producers have now answered.