"What's bad for HP is good for startups." -- Keith Benjamin, venture capitalist, telling the San Francisco Chronicle that Hewlett-Packard's layoffs will result in thousands of new Silicon Valley entrepreneurs
Procter & Gamble (PG) has long been a leader in marketing innovation. But would it ever do something as radical as selling ads on its 700 product Web sites, such as Crest.com and Pampers.com? That's what Ted McConnell, P&G's manager of interactive marketing innovation, wants to do, according to Elizabeth Cholawsky, vice-president of marketing at ValueClick, an Internet affiliate-marketing firm. She says McConnell discussed his plans over dinner at the AD:TECH Internet marketing conference in Chicago on July 11. McConnell told her he saw an opportunity to "monetize" the high traffic on P&G's sites: "He described himself as on a mission to make this happen."
McConnell denies saying such a thing, and a spokesman says P&G has no current plan for ads. JupiterResearch analyst Gary Stein says he knows of no one who now sells ads on branded product sites, for fear of brand dilution. If the industry leader moves that way, clearly others would have to take notice.
Sales of Harry Potter and the Half-Blood Prince, the sixth book in J.K. Rowling's sorcery series, are scorching: More than 8.9 million copies moved in the first 24 hours of publication in the U.S. and Britain. But those are just the legal copies. Pirated electronic versions also are hot, with copying more frenzied than for any of the previous five Potter books. About 15,000 text and audio versions were downloaded during the first three days of release, says Web market-research firm BigChampagne. That's a remarkable pace for books, which aren't as popular with e-pirates as music or movies. Moreover, in this case, pirates had to scan 672 pages. BigChampagne found numerous links, including several attached to files using the free BitTorrent file-sharing program. One site turned up 258 items when the term "Harry Potter" was searched.
Rowling's literary agency, Christopher Little, is working furiously to stem the bootlegging. The biggest problem: the sale of e-mailed copies on eBay (EBAY). Just as quickly as agency attorney Neil Blair and assistants spot offers, more pop up. Rowling, who hasn't O.K.'d electronic versions of her books, may have to conjure an anti-copying spell.
Are Catholic churches in Kansas helping parents of more than 10,300 students evade taxes? A Wichita accountant fears they are, through a "stewardship" program that substitutes church tithing for parochial school tuition. Catholics in the Diocese of Wichita's 38 schools pay no tuition so long as they are "active stewards" in their church. That can include tithing of up to 8% of gross income. Non-Catholics pay up to $7,000 tuition, and get no deduction. "They issue receipts for me to cheat the IRS," says CPA Thai Mai, who complained to the agency. "I get one. Everybody gets one."
Church officials insist that Thai is off base. Bob Voboril, superintendent of schools for the diocese, says tithes can be deductible so long as they are not tied directly to nondeductible expenses such as tuition. He says the diocese "scrupulously" abides by IRS guidelines. Churches issue receipts claiming services to donors are "intangible religious benefits."
The IRS won't comment, citing privacy. For now, the idea is largely limited to Kansas Catholics. But others are studying it. Tithing could become a popular education option -- and a costly one for the feds.
Cigarette sales are plunging. States are hiking per-pack taxes. What's a tobacconist to do? Push cigars. Through May, sales of premium stogies were up 6.3% from a year ago, with 2005 volume headed for 300 million. That would be the third straight year of rising sales, putting consumption near 1998 levels, when an earlier craze was tailing off. Arnold Schwarzenegger leads a parade of celebrity smokers -- the Governator loves his Daniel Marshalls so much he erected a smoking tent outside the capitol. Norman Sharp, president of the Cigar Association of America, credits the economic upcycle: "A cigar is still a symbol of success and celebration."
If housing prices sag, consumers may not cut spending. Economists Karl Case of Wellesley College, John Quigley of UC Berkeley, and Robert Shiller of Yale correctly predicted in 2001 that rising housing wealth would boost spending. But in an updated paper, they report that declines in housing wealth have "no effect at all" on consumption. Case says: "People spend and borrow on the way up but don't pay off loans when things fall. They get locked into patterns of spending." Good news for the economy; bad news for household budgets.
Wall Street is abuzz with chatter that Citigroup (C) Chairman Sandy Weill wants to leave to start a private equity fund. But it's unclear if he could do that, or much of anything else, without violating his strict noncompete clause. It says he is "not to engage in any business in which the company or its affiliates is engaged." That's for the rest of Weill's life. "Whoever structured this made it airtight," says Shekhar Purohit of pay consultant Delves Group.
After 10 years, Weill, 72, can opt out of the noncompete conditions. But he would lose $6 million in perks and $2 million in supplemental pension benefits, experts estimate. That means no use of the Citi jet. No car and driver. If he breaks the deal now, he loses all that plus $6 million in stock and $16 million in options. It may still be worth it if Weill considers another possibility: a hedge fund. The 25 top-paid fund managers earned $251 million on average in 2004, says Alpha magazine. Citi won't comment on the rumors or the numbers.
In Philadelphia they're calling it "The Cheese Caper." A Deputy City Commissioner asked the District Attorney's office to investigate who passed out flyers on primary election day -- May 17 -- promising free cheese to voters for particular candidates. The flyers are topped by a handwritten scrawl, "Come Out + Vote," adding below, "For Who Ever." In type, they say "Free Cheese." The flyers list two candidates, both Democrats, running in an area dominated by the 300-plus-unit Hill Creek housing project. "This guy comes to the polls, votes, and asks us for his free cheese," says Eileen Kleindienst, a Republican judge of elections. Geraldine Hacker, the Republican official who sent Kleindienst's complaint to the DA, thought the food might be from a government nutrition program.
The woman who wrote the flyers, Hill Creek tenant council President Gerri Robinson, doesn't think she did anything wrong. "The people around here, you can't get them to come out and do nothing unless you're giving them something," she says. Besides, she adds, the flyers worked: The two cases of cottage cheese were gone by day's end.