"It just takes a long time to turn a battleship around [and] this is a huge battleship." — Angelo Mozilo, CEO and chairman of major mortgage lender Countrywide Financial, predicting, as reported by Reuters, that the floundering housing market likely will not bounce back before 2009
For executives at Scholastic (SCHL), it was a challenge so tough it made them wish for Harry Potter's magic wand: Print 12 million copies of the highly anticipated Harry Potter and the Deathly Hallows—a record first printing in publishing—and deliver them to thousands of retailers around the U.S.
The daunting part was synchronizing shipments to arrive no more than a day (or hours) before the scheduled July 21 12:01 a.m. release—to minimize the risk of someone's leaking the book's ending. "We didn't want 12 million books sitting around the stores any longer than was absolute necessary," says Ed Swart, Scholastic's director of operations.
Even before author J.K. Rowling delivered the manuscript last January, Scholastic was in full battle planning. Executives from its manufacturing and logistics divisions were meeting with printers and trucking companies to make sure they could deliver on the tight turnaround required to get the book to fans before summer vacation ended. After Rowling and her editors put the finishing touches on Deathly Hallows this past spring, Scholastic's printers— R.R. Donnelley & Sons (RRD) and Quebecor World (IQW)—worked around the clock to be sure the book would be ready by the release date. For the sake of speed, Scholastic bypassed its own warehouses, using hired trucks to ship from six printing sites directly to big retailers like Barnes & Noble (BKS) and Amazon.com, as well as to distributors supplying legions of independent booksellers. And to expedite loading and unloading, it required the truckers—led by Yellow Transportation (YRCW) and J.B. Hunt Transport Services (JBHT)—to use same-size trailers and pallets. (If all the trucks that delivered Deathly Hallows were lined up bumper-to-bumper, Scholastic says, the caravan would stretch 15 miles.) What's more, every trailer in the Potter armada had a GPS transponder that would alert Scholastic by e-mail if the driver or the trailer veered off designated routes. "It's not unheard of for a trailer to be hitched up to the wrong truck," Swart says.
But the hardest task was getting the books to hit stores on the Thursday or Friday before the launch. The timing was particularly tricky for e-tailers, which had to ship in advance for the books to hit customers' doorsteps on July 21. Scholastic plans to sue e-tailer DeepDiscount.com for prematurely delivering 1,200 copies. An attorney for DeepDiscount says the company "respects on-sale dates" and began cooperating with Scholastic as soon as it learned books had been shipped early.
Barnes & Noble.com developed special algorithms that enabled its shipping team to figure out when to release books to the U.S. Postal Service and UPS (UPS) to ensure a simultaneous arrival around the country on that Saturday. (UPS declined to discuss its delivery logistics, citing customer confidentiality agreements.) "We had about a week and a half, maybe two weeks, from when we received the books to make it all work," says Marie Toulantis, CEO of Barnes & Noble.com, "and we delivered on 99% of our orders." Not bad for a bunch of Muggles.
How do you say Google (GOOG) in Mandarin? Last year the American search giant announced that its Chinese unit would be called Guge (goo-geh), which translates as "valley song." Google's Chinese fans were upset that such a cool outfit would choose such an unhip name. Now there's a bigger problem: The company is in a legal fight to keep its Chinese name.
Beijing Guge Science & Technology, which runs a beta-stage search engine, claims "Guge" belongs to it.
On June 27, Beijing Guge Science sued Google in Chinese court for infringement of its name, demanding that Google give it up. Callers seeking Google China have "greatly affected the company's normal operation," says Tian Yunshan, spokesman for the company, whose search engine logo and interface look a lot like Google's.
Both companies say they had the name first. Beijing Guge says it was founded in March of last year, getting a license from Beijing authorities on Apr. 19, 2006. But Google, whose Chinese site at Google.cn uses the characters for "Guge" along with the Google logo, says otherwise. "Beijing Guge Science registered its name days after we launched our Chinese name—and months after we filed a trademark application with the Chinese Trademark Office under the State Administration for Industry & Commerce," says a spokesman. The Chinese company, he says, "is infringing upon our mark."
Hoping to boost attendance at games, the Cincinnati Reds are linking two summer traditions: baseball and high gas prices. In a promotion sponsored by United Dairy Farmers, a local convenience-store chain, fans who buy four tickets to any remaining home game get a coupon worth $10 or $20 at UDF gas pumps, with those springing for the expensive seats ($50, $40, and $32) scoring the larger amount. A gallon of gas averages $2.82 in Cincinnati. Brad Blettner, vice-president of business development for the Reds, says it's too early to gauge the success of the promotion, which began on June 25 and ends on July 29. But "we're getting a good reaction," he says. The cellar-dwelling Reds have been drawing just over 26,000 fans per game—putting them in 21st place out of 30 Major League teams in attendance.
The housing bust has heightened Wall Street's interest in betting on home prices. Coming soon: a second tool to let traders gamble on housing the way they now go long or short on oil and gold. A New York startup, Radar Logic, has developed home-price measures for 20 metro areas and is licensing them to investment banks as the basis of new derivatives. Slated for a September launch, the calculated prices will be updated daily from reported past sales.
The startup will be taking on the year-old S&P/Case-Shiller Home Price Indices from Standard & Poor's, which, like BusinessWeek, is owned by The McGraw-Hill Companies. (MHP) Radar Logic's CEO, Wall Street veteran Michael Feder, contends that his Daily Price—not strictly speaking an index—will ignite more trading, partly because it includes new and foreclosed homes and condos, which S&P excludes. But Yale University economist Robert Shiller, co-inventor of the rival S&P index, argues that mixing different property types will skew the Daily Price whenever the mix changes. Trading in the S&P index has been light, but bankers see potential in home-price betting. "We're bullish," says Erik Siegel, an executive director in derivatives trading at Morgan Stanley (MS).
For almost a decade, German software billionaire Hasso Plattner has been trying to create Germany's answer to Stanford University. That's not much time for an institution to establish itself as a major incubator of software talent, but the Hasso Plattner Institute in Potsdam seems to be getting some traction.
"They're well positioned in the early-stage venture capital market, which is not served properly in this country," says Falk Mueller-Veerse, managing director of Cartagena Capital in Munich.
Among the first businesses spun off: 3D Geo, which sells software that creates 3-D computer cityscapes in a Google (GOOG) Earth format for urban planners and businesses. Started in 2004, it is already profitable—with Deutsche Telekom (DT), the city of Berlin, and Akron, Ohio, as customers and sales expected to hit more than $1 million this year. That's the kind of entrepreneurship Plattner—co-founder of software maker SAP (SAP)—hoped to generate when he personally committed $270 million to the institute.
For accreditation purposes, the institute is attached to the University of Potsdam and awards degrees. But it's unlike Germany's overcrowded state-financed universities. The 360 enrollees don't have to jostle for computer access. There's a 7-to-1 student-teacher ratio. And professors like Dr. Jürgen Döllner, a 3D Geo co-founder, talk like evangelists for American-style enterprise. Says Döllner of the institute: "A tight relationship between universities and companies is needed if you're going to have innovation."
As anyone with a teenager knows, college admission test preparation books are a staple of high school life these days. Sales topped $18.5 million in 2006, according to Kaplan publishing, an industry leader that has been a bright spot for its owner, Washington Post Co. (WPO) but it's also a crowded market, with more than 100 SAT, PSAT, and ACT prep books currently on store shelves.
To help compete with rivals such as Princeton Review (REVU), Kaplan recently launched a series of manga, or Japanese-style comics, injected with SAT-level vocabulary words. Nontraditional tools such as vocabulary-building novels are a growing subcategory in test prep, says Kaplan Publishing Vice-President Maureen McMahon. "Students these days are drawn to things that are more visually engaging," she explains.
The manga series—which follow Kaplan's successful 2004 foray into vocabulary-building versions of classics such as Wuthering Heights—feature more than 300 words found on SAT or ACT tests, each highlighted and defined.
Los Angeles publisher TOKYOPOP provided all the manga: a sci-fi fantasy, a medieval epic based on the hit video game Warcraft, and a swords-and-sorcery tale. To beef up the books' SAT quotient, the companies upgraded some of the dialogue. But all the original art and story lines are preserved, says TOKYOPOP CEO Stu Levy. Designed for 14- to 16-year-olds, the books, says Kaplan's McMahon, may also appeal to another expanding market: English-language learners.
Just months after Toyota (TM) passed General Motors (GM) as the world's No. 1 carmaker, industry experts are predicting that the combined U.S. market shares of GM, Ford (F), and Chrysler (DCX) will fall below 50% for the first time as early as this year, perhaps at the close of July sales.
Previous forecasts saw this coming after 2010, but market forces now point to an earlier reckoning. Detroit has cut its unprofitable sales to rental fleets, while Toyota and Nissan (NSANY) sales are up in the face of excess U.S. production of certain models. In hybrids, demand for Toyotas is stronger than expected, as the Big Three play catch-up. And Detroit's strongest products—SUVs and pickups—are under pressure from high gas prices. Add a hidden effect of Detroit's 70,000 job cuts in the past 18 months: lower sales to employees and their families. Last June the Big Three held 56% of the new-vehicle market. This June's figure was 50.2%.
How ominous would a minority share be? John Casesa of auto investment firm Casesa Shapiro Group says "the bigger issue" is that Detroit's good products have an image problem. But Tom Libby, senior analyst at J.D. Power Information Network (MHP)—like BusinessWeek, a unit of The McGraw-Hill Companies (MHP)—says that for U.S. manufacturers, such a milestone marks the loss of a "dominance they once had in perhaps the highest-visibility industry in the country."