``We're twisting in the wind, we're airing our financial distress to the world.'' -- Brian Leitch, lawyer for US Airways, asking a bankruptcy court to approve a pay cut tion of the circumstances surrounding it Oilman Boone Pickens, who came to prominence as an 1980s corporate raider, has bet big lately on rising oil prices -- and won. His Dallas commodity fund is up 390% this year on his prescient prediction that oil would hit $50. Here's what Pickens, 76, had to say, in a recent meeting with BusinessWeek editors:
On where oil prices are headed:
I'll say it: $60 before $40. I think that will happen. I think we've seen $40 oil for the last time.
On where the U.S. should get oil:
[Canada's Tar Sands] have the same reserves, 250 billion barrels, as the Saudis have. To bring it up to [Saudi production levels], the cost would be somewhere around $150 or $250 billion. That's not that bad, in that you don't have to have an army and navy protecting it.
On drilling in the Arctic National Wildlife Refuge:
I say leave it for another generation. That's a two million barrel pipeline with 700,000 barrels in it right now. So all you could do is 1.3 million [more]. We're importing daily 10 million barrels of oil.
On natural gas, which hit $7.63 Oct. 20:
You're getting ready to see $10 natural gas. The reason you know that you are is heating oil. Heating oil is in direct competition with natural gas, and it [has set record prices]. So you're headed in that direction, and we'll probably get there [within] four months. So that will become a problem for the country.
On being a senior:
I don't take a salary [from fund management firm BP Capital]. You know why? I get my Social Security.
For a video with Boone Pickens, visit businessweek.com/mediacenter
Is the GOP trying to hold down the turnout among Cincinnati's Democratic voters to help President Bush carry swing state Ohio? Since 1980, local businesses have helped fund get-out-the-vote campaigns for a ballot initiative that pays 15% of the city's education budget. After failing to get the initiative pushed back to spring '05, the Cincinnati Business Committee, which includes Procter & Gamble (PG) and Kroger (KR), is withholding its support -- even though a defeat on Nov. 2 would whack $32 million from the schools this year.
Local Dems charge that the GOP-friendly CBC is worried that the city's largely minority residents likely would pick Senator John Kerry if the initiative brings them to the polls. "That is my theory" for why business has yanked its support, says Cincinnati Board of Education President Florence Newell, a Democrat. The CBC says business acted because of unhappiness with the school board.
The battle is key because surrounding Hamilton County could determine the race of too-close-to-call Ohio, which President Bush barely carried. The county's suburbs tend to be Republican, but Cincinnati could carry the day for Kerry -- if enough residents vote.
When Chiro (CHIR) said it would have a shortage of flu vaccine this winter, it could have been a second chance for MedImmune (MEDI). Last year it rolled out its FluMist nasal spray vaccine to resounding disappointment. The price was high, it had to be stored in special freezers, and it was approved only for those between the ages of 5 and 49, excluding the high-risk population that consumes most vaccines. The Gaithersburg (Md.) biotech sold only 400,000 of 4 million sprays produced.
MedImmune can't take advantage of Chiron's slip. It scaled back production this year to 2.1 million vaccines, compared with Chiron's 48 million shortfall. And it's hampered by the same lengthy production process.
Next year could be better, if Chiron stumbles again and MedImmune gets a federal contract to build a stash of vaccines. But two problems remain: tricky storage and restrictions limiting FluMist to the low-risk group. Those won't be solved until 2007. By then, expect Chiron to be back on track and others to have footholds in the U.S. market.
The prized baseball Barry Bonds socked for homer No. 700 this season has turned up in a surprising place: the new auction site of Web e-tailer Overstock.com (OSTK). The smudged ball, listed on the site along with used harmonicas and a pizza delivery bag, has proved attention-grabbing: Two days after it was posted, bidding hit $686,800. The auction closes on Oct. 27. If Overstock's gambit is designed to drive traffic to its new site, it appears to be a grand slam: The first day of the Bonds sale, the company says traffic doubled. Who knows? Some of those visitors may even be bidding on a pizza bag.
U.S. employers have more than doubled the number of factory and white-collar jobs sent overseas since 2001, according to an Oct. 15 report by the U.S.-China Economic & Security Review Commission. It found that in the first quarter of this year, the annualized pace of job shifts topped 400,000, vs. 200,000 three years ago.
The study likely omitted many moves, especially white-collar jobs to China and India. Why? It's based on corporate announcements, which many companies have stopped because of bad publicity.
Soon after advising a student named Scott McNealy, former Harvard professor William Raduchel got a call from him to join his up-and-coming computer maker, Sun Microsystems (SUNW). For 11 years, Raduchel, 58, was a top adviser to McNealy. In 1999 he jumped to a mainstream consumer market, becoming chief technology officer of America Online (TWX). Now he's going after a less "mature" market -- college kids.
On Oct. 18, Raduchel launched Ruckus Network to offer college students an online portfolio of songs and movies -- legally. Students can get the service for free (if the school picks up the tab) or for below the typical $10 per month for music subscriptions or $4 per pay-per-view movie.
So far the startup has only a few customers, including Northern Illinois University, Alfred State College, and Bentley College. Says Raduchel: "We hope to have a million students in 18 months." If he does, Ruckus could live up to its name.
It's tough being a bicycle maker in China these days. The streets are crowded with cars, and cities have banned bikes from some thoroughfares. There's no shortage of competition, either: China was home to just a half-dozen bike builders in the 1980s but has 300 today. All that didn't stop Sha Yunshu from taking over Flying Pigeon Bicycle, one of China's most storied -- and troubled -- brands.
In the early 1980s, Flying Pigeon was the country's biggest bike builder, and there was a multiyear waiting list to get its 45-pound black one-speeds. In 1986, at the zenith of its prosperity, Flying Pigeon sold 3 million bikes. "In the planned economy, the market was guaranteed by Chairman Mao," says Sha.
Adam Smith has been less indulgent. As rivals moved toward ever-proliferating variations of racing, road, and mountain bikes, Flying Pigeon soldiered on with its sole black model. Sales plum-meted like a wounded bird, to 200,000 bikes in 1998.
Today, Flying Pigeon is taking wing again. This year it expects to sell 1.5 million bikes, and revenues should be up 30%, to $50 million. The era of basic black is gone, too. Flying Pigeons now come in 300 models and dozens of colors.
Even if bikes are no longer basic transportation -- Sha ditched his for a Honda (HMC) Accord -- he is confident the business has legs. "More and more people will use bikes for leisure, not commuting," Sha says. If he has his way, they'll be doing both on Flying Pigeons.
Look out, Wall Street, Bloomberg is watching. By yearend the financial news service will be monitoring millions of e-mails and instant messages that its 240,000 subscribers send each day, looking for insider trading, data theft -- even porn.
Unlike other systems, Bloomberg's will stop problem messages and give authors a chance to make revisions. The software, from New York-based Orchestria, creates a record that can prove intent if the author disregards the warning.
Subscribers will be able to tailor the monitoring feature to fit their needs or opt out. But Nancy Flynn, an expert on e-mail risk, says they shouldn't. With lawsuits on the rise, monitoring internal e-mail traffic isn't enough. Messages sent via third-party vendors such as Bloomberg also must be checked.