DaimlerChrysler NEARS DEAL TO BRING CHINESE AUTOS TO UNITED STATES & EUROPE

From USA Today:

Chrysler Group moved a step closer Tuesday to becoming first to bring Chinese-made cars to the USA. German parent DaimlerChrysler approved a deal to team with Chinese carmaking phenomenon Chery Motor to develop small cars that could be sold in the USA and Europe. If the Chinese government approves the deal as expected next month, Chrysler's Chinese-made cars could be on American roads within a couple of years, Chrysler spokesman Dave Elshoff says. The partnership will focus on developing a car tinier than the Dodge Caliber, currently the smallest vehicle in the Chrysler lineup. The new car would be more the size of Chevrolet Aveo or Honda Fit. As automaking goes, Chery's success has been the stuff of legend. From a start only eight years ago, it is ranked fourth among Chinese automakers with sales of 302,000 vehicles last year, says John Humphrey, senior vice president of Asian-Pacific operations for J.D. Power and Associates. It grew 60% in 2006.

MICROSOFT LOSES $1.5 BILLION PATENT LAWSUIT

Microsoft was ordered to pay $1.5 billion for patent infringement to Alcatel-Lucent in a verdict rendered Thursday. The patents involved in the case deal with converting audio into digital MP3 files on a computer. Microsoft claims to have paid $16 million to Fraunhofer-Gesellschaft, a German research company, to acquire the rights to the technology. Microsoft claims that Fraunhofer-Gesellschaft is the rightful and internationally recognized licensor of the technology used and nothing is owed to Alcatel-Lucent.

USA Today

RULE #1 - A GREAT WAY TO LEARN ABOUT INVESTING

Many of you have asked me investment questions, some pertaining to the stock project, others regarding personal investments you are considering. I'm reluctant to give specific advice, but I do recommend that anyone interested in investing should start reading good books to educate themselves. In my opinion, none are better than Phil Town's Rule #1. Mr. Town writes in a manner that is easy to read, informative, and very entertaining. I'm not going to pretend that everyone who buys and reads Rule #1 will make $1 million in a short time, but it is a great way to get started in educating yourself about investing for your future. I've read it. I loved it. I recommend it to everyone.

APPLE AND CISCO REACH DEAL ON iPHONE TRADEMARK

When Steve Jobs announced the Apple iPhone in January, it was a bit premature to be using the name iPhone because Cisco owned a trademark on it and Apple had not reached an agreement to use the name. Last night, both companies announced that they had reached a deal to allow Apple and Cisco to use and market products under the iPhone name. Specific terms of the agreement were not released, but it was announced that Apple and Cisco will explore making their products more compatible.

Reuters

XM AND SIRIUS SATELLITE RADIO TO MERGE?

On Tuesday the rumors that had swirled for more than a year regarding a possible merger between the two satellite radio companies in the United States, XM and Sirius Satellite Radio, were confirmed when both companies announced they are interested in a "merger of equals". There will be numerous hurdles to overcome before the companies can merge.

1. The Federal Communications Commission will have to approve the merger. They will take into consideration what is in the best interest of the public and if they do green light the merger, they might require concessions such as being able to regulate satellite radio like the currently do with terrestrial radio and requiring XM and Sirius to give back some of the radio spectrum issued to them by the FCC.
2. The Federal Trade Commission's Bureau of Competition seeks to prevent business practices that restrain trade. They get their charge and power from the FTC Act and Clayton Act, both of 1914. If the Bureau of Competition determines that consumers could lose in a scenario in which there was only one provider of satellite radio, the merger would likely not be approved.
3. The Antitrust Division of the Department of Justice will look closely at the proposed merger, consulting with the FTC to streamline the process and avoid duplication. If the DOJ believes that the merger would be a violation of the Sherman Antitrust Act of 1890 and/or the Clayton Act of 1914, the merger would likely not be approved.

Going from two competing satellite radio companies to one merged company seems to violate antitrust laws - one provider of a good or service that lacks a viable substitute - but XM and Sirius will argue that they do have competitors and substitutes in terrestrial radio, internet radio, and iPods and other portable music devices including mobile phones.

Most proposed mergers take a few months to clear all of the hurdles, but this one will likely take much longer, possibly going into 2008 before a final decision is rendered.

WSJ.com
USA Today

SHAREHOLDERS STARTING TO USE THE POWER OF THE VOTE

Most business students are surprised to learn that shareholders have very little power in most publicly traded companies. They aren't allowed to dictate CEO or other executive pay, they aren't allowed to nominate their own board candidates in many cases, and there is little they can do to stop boards that are too cozy with executives from creating severance packages that are far too generous (see Nardelli at Home Depot and McKinnell at Pfizer). This might be the year that some of that changes. USA Today reports that shareholders are prepared to flex their muscles this year and possibly make big changes shaking up the corporate landscape. On their radar:

1. Being allowed to nominate their own slate of board candidates, not merely vote for the slate put forward by the company.
2. Being allowed to vote for executive compensation in a non-binding manner, as is required in the United Kingdom.
3. Requiring more than 50% of the vote to be elected to the board. Currently, in many companies, unopposed directors can be elected with a tiny percentage of the vote.
4. Getting more of a say in global warming issues. There are 42 global-warming-related resolutions up for vote this year.

CHRYSLER: $35 BILLION IN 1998 TO $5 BILLION IN 2007

DaimlerChrysler is looking to potentially sell ailing U.S. automaker Chrysler, spin the unit off to existing shareholders, get involved with strategic alliances and joint ventures to cut costs and expand sales, and/or restructure the company once again, according to The Wall Street Journal. Chrysler was valued at $35 billion in 1998 when Daimler-Benz AG merged with Chrysler to form DaimlerChrysler. Today, analysts put the price tag for Chrysler around $5 billion.

NORTHWEST AIRLINES FILES REORGANIZATION PLAN

Northwest Airlines filed its plan for emerging from Chapter 11 bankruptcy on Thursday. The company filed for bankruptcy protection in September of 2005 and has eliminated $2.4 billion in annual operating costs, $1.35 billion coming from labor concessions. According to the plan, unsecured creditors are expected to receive between 66% and 83% of the value of their claims against the company.

USA Today

AFLAC TO ALLOW SHAREHOLDERS TO VOTE ON EXECUTIVE PAY

Aflac will become the first major U.S. company to let shareholders vote on executive pay. The vote will be for the pay packages of the top five executives and will be non-binding. In the United Kingdom, the law requires that shareholders vote on executive compensation causing CEO pay to be more in line with performance. Shareholders in the U.K. rarely vote down proposed pay packages, which when presented to shareholders are much less generous than many U.S. executive pay packages.

USA Today

ONE "BAD APPLE" CAN SPOIL THE WHOLE OFFICE

Researchers at the University of Washington have come to the conclusion that having just one "bad apple" in the workplace can cause negative behavior to spread like a virus, bringing down coworkers and destroying good teams. In the study, a bad apple was defined as someone who was chronically unhappy and emotionally unstable, or a bully who attacks others, or someone who does not do his/her fair share of the work. What should businesses do to weed out bad apples before they become a problem? If one is already hired, consider putting him/her on projects that do not require teamwork and keep him/her away from the team. In the hiring process, a more thorough screening process that includes checking references and administering personality tests could help businesses identify candidates who are disagreeable and lack emotional stability.

Reuters

TOP HEAD ROLLS AT CARTOON NETWORK

The president and general manager of Cartoon Network, Jim Samples, resigned under pressure Friday following the incident on January 31st that caused Boston to shut down subway, highway, and river traffic due to fear that some of the 40 blinking signs for the "Aqua Teen Hunger Force" series and movie were thought to be potential terrorist weapons. Samples had worked at Cartoon Network for 13 years.

From WSJ.com:

"I deeply regret the negative publicity and expense caused to our company as a result of this campaign," Mr. Samples wrote in an email to Cartoon Network employees. "I feel compelled to step down .. in recognition of the gravity of the situation that occurred under my watch."

EXECUTIVE PAY BECOMING A SERIOUS ISSUE

How does a $210 million severance package sound? $200 million? Well, Robert Nardelli did a poor job of running Home Depot and got pushed out of the executive suite recently, but was handed the $210 million king's ransom on his way out the door. Henry A. McKinnell did perhaps an even worse job of running Pfizer. His reward? A cool $200 million.

Things have gotten so bad on the executive pay front that even President Bush has recently weighed in on the issue. In a speech on Wall Street in January he said that corporate board members "need to pay attention to the executive compensation packages that you approve."

From the AP:

Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, is expected to introduce legislation on the issue. Frank said in a January speech at the National Press Club that high CEO pay is "not just a matter of envy. It has reached a point where it has some macroeconomic significance."

Frank pointed to research done by Harvard professor Lucian Bebchuk showing that compensation of the top five officers at the country's public companies between 1993 and 2002 totaled about $250 billion — nearly 10 percent of aggregate profits. CEO pay grew by a median 11.29 percent in 2005, according to The Corporate Library, which tracks governance, compensation and performance.

SNICKERS DROPS "MECHANICS KISSING" AD

The ninth-ranked Super Bowl ad according to USA Today's Ad Meter has been pulled by the makers of Snickers. It will no longer run on television and has been deleted from the Snickers website, although it is widely available on other sites. The ad was pulled after several organizations that represent gays and lesbians complained that it was offensive.

From USA Today:

Among groups who complained is the Gay & Lesbian Alliance Against Defamation. "Mars needs to apologize for the deplorable actions of its Snickers brand," said GLAAD President Neil Giuliano in a statement.

But not all gay activists object to the ad. Cyd Zeigler, co-founder of Outsports.com, a website for gay sports enthusiasts, says he saw it at a Super Bowl party with 30 gay friends — and no one had a problem with it. "I simply wasn't offended by it," Zeigler says. "I just don't see how a couple of mechanics pulling out chest hair because they kissed is offensive."

Still, he thinks that Masterfoods would be wise to apologize. "They're a business," he says. "And no company in a free market is in the business of alienating consumers, intentional or not."

ANHEUSER-BUSCH WINS SUPER BOWL AD BATTLE

Anheuser-Busch won USA Today's Super Bowl Ad Meter battle for a record ninth consecutive year. AB had the highest rated ad, four of the top five, and seven of the top ten ads, making the most of their $20+ million investment. The winning ads were produced by the superstar ad agency DDB Chicago. To view all of the ads at USA Today click here. Anheuser-Busch also has the top five rated ads on the WSJ.com site according to an online opinion poll.

JANUARY UNEMPLOYMENT RISES TO 4.6%

The Department of Labor released the January 2007 unemployment data today showing that unemployment rose from 4.5% in December to 4.6%. Some highlights of the report:

• 111,000 net new jobs were added to non-farm payrolls, 104,000 of those in the service sector.
• 16,000 factory jobs were lost in January, the seventh straight monthly decline.
• 22,000 construction jobs were added in January.
• Average hourly earnings rose 0.2% to $17.09 per hour.
• Over the past year, hourly and weekly earnings have risen 4%.
• The unemployment rate for Hispanics rose to 5.7% from 4.9% in December.
• The unemployment rate for African Americans dropped to 8% from 8.4%.
• The unemployment rate for whites rose to 4.1% from 4%.

USA Today
WSJ.com

FEDERAL RESERVES LEAVES RATES AT 5.25%

On Wednesday, the Federal Reserve left the Federal Funds Target Rate unchanged at 5.25%. That is the highest rate in six years. After increasing the rate 17 consecutive times from June 2004 to June 2006, the Fed has now left it unchanged for five consecutive meetings.

USA Today

MICHAEL DELL TAKES OVER AS CEO AT DELL

When Michael Dell handed over the CEO title to Kevin Rollins in 2004, he remained as chairman of the board. Yesterday, after Rollins resigned, Michael Dell took back over as CEO and will remain as chairman. Even though the company has endured some bad times and just announced that it will miss fourth quarter revenue and earnings estimates, after it was announced the Michael Dell was taking over, the stock rose $1, or 4.1%.

WSJ.com
USA Today