Why American Airlines Is Stuck at the Gate

Through it all, AMR’s (AMR) American Airlines looked healthy enough to go it alone. Once the global leader, the Fort Worth-based carrier managed to avoid bankruptcy. Now, as other airlines recover, American is paying the price for sidestepping the near-death experiences of its competitors. It’s bleeding red ink. Its stock price has dropped 20 percent this year, the only decline among the six biggest U.S. carriers. And its pretax margin in the first half was -4.3 percent, the only negative among its peers. “They’re playing the hand they were dealt by avoiding bankruptcy,” says Stifel Nicolaus analyst Hunter Keay. “It’s unfortunately costing them dearly.”

Labor costs remain the big challenge. Of the almost 50,000 workers represented by unions at American, only a group of 90 technical specialists has approved a new contract. The carrier has been negotiating with its pilots for more than four years, while its flight attendants, airport ground workers, and mechanics have been in contract talks for more than two.

A continuing obstacle to labor agreements is the $1.6 billion in annual concessions the unions agreed to in 2003 to help keep the carrier from seeking bankruptcy protection. Filing for Chapter 11 protection would have allowed American to alter its labor accords unilaterally. Workers want the airline to restore at least some of the concessions. Management says that on labor costs alone, the carrier is still at a $600 million-a-year disadvantage to rivals. “It’s a big brick in our backpack to being competitive in this industry,” says Senior Vice-President Jeff Brundage.

The Transport Workers Union scrubbed a tentative accord for 10,600 baggage handlers and ramp workers in June. Mechanics and stock clerks rejected a three-year contract in August and authorized TWU leaders to call a walkout among their 12,700 members.

It’s much the same with flight crews. About 9,600 American pilots are working at 1993 hourly rates, leaving them with “massive anger and frustration” over a lack of progress in the talks, says David Bates, president of the Allied Pilots Assn. Adds Laura Glading, president of the Association of Professional Flight Attendants, which has 16,550 active-duty members at the carrier: “You can’t come to labor and keep taking and taking and taking.” Glading will meet with a federal mediator on Oct. 19 to press a union request that bargaining be declared at a stalemate, which could trigger a countdown toward a strike, the first at a big U.S. airline since 2005.


Once the country’s largest carrier, American has been grounded by labor woes and high costs

By Mary Schlangenstein
http://www.businessweek.com/magazine/content/10_42/b4199019823300.htm

For much of the past decade, U.S. airlines have scrambled to remake themselves. United Airlines (UAUA), Delta Air Lines (DAL), US Airways Group (LCC), and Northwest Airlines all made trips through bankruptcy court and emerged with trimmer operating and labor costs. Then many carriers went into acquisition mode. Delta snapped up Northwest in 2008, United this month completed its takeover of Continental Airlines, and on Sept. 27 Southwest Airlines (LUV) said it will buy AirTran (AAI).

Through it all, AMR’s (AMR) American Airlines looked healthy enough to go it alone. Once the global leader, the Fort Worth-based carrier managed to avoid bankruptcy. Now, as other airlines recover, American is paying the price for sidestepping the near-death experiences of its competitors. It’s bleeding red ink. Its stock price has dropped 20 percent this year, the only decline among the six biggest U.S. carriers. And its pretax margin in the first half was -4.3 percent, the only negative among its peers. “They’re playing the hand they were dealt by avoiding bankruptcy,” says Stifel Nicolaus analyst Hunter Keay. “It’s unfortunately costing them dearly.”

Labor costs remain the big challenge. Of the almost 50,000 workers represented by unions at American, only a group of 90 technical specialists has approved a new contract. The carrier has been negotiating with its pilots for more than four years, while its flight attendants, airport ground workers, and mechanics have been in contract talks for more than two.

A continuing obstacle to labor agreements is the $1.6 billion in annual concessions the unions agreed to in 2003 to help keep the carrier from seeking bankruptcy protection. Filing for Chapter 11 protection would have allowed American to alter its labor accords unilaterally. Workers want the airline to restore at least some of the concessions. Management says that on labor costs alone, the carrier is still at a $600 million-a-year disadvantage to rivals. “It’s a big brick in our backpack to being competitive in this industry,” says Senior Vice-President Jeff Brundage. Leer más “Why American Airlines Is Stuck at the Gate”

More Wives Head for Work

The effect of this gender shift in the job market isn’t simply economic. Ellen Galinsky, president of the Families and Work Institute, has produced studies that show men now struggle to balance family and career more than women do—45 percent of men report such problems, vs. 39 percent of women. “Work isn’t working very well for men,” says Galinsky.

Angela Patterson, 44, knows the struggles all too well. When the single mother of two adult daughters met her husband three years ago, she was hoping to find economic security. Instead, he lost his job as a contractor, and Patterson ended up moving from North Carolina to New York to enroll at the Grace Institute, a nonprofit that prepares women for the workforce. The training helped her become an agent for New York Life. She’s living with her daughter in New York since her husband doesn’t want to come North. “Women are born and bred to be adaptable,” she says. “When you have kids and bills to pay, you make sacrifices.”

Few experts expect the women who were pushed by recession into the labor market to leave as the economy picks up. Eroded housing values, diminished retirement accounts, and the prospect of higher taxes and anemic wage growth for themselves and their husbands provide these reluctant workers powerful incentives to stay at their jobs.

Diana Gomez, for one, isn’t giving up her job in the dentist’s office, even though her husband was recalled to his job in a sheet metal factory four months ago. The double income they have now is enough to restore a minimal sense of security. “We can function as a whole family now,” says Gomez, who has two children. “We’re able to pay the bills. The pressure’s not all on me.”


By Diane Brady | http://www.businessweek.com

As men cope with unemployment, more wives head to work

Angela Patterson is working as an insurance agent in New York while her husband looks for construction jobs in North Carolina. Diana Gomez had been staying home to care for an ill daughter. When her husband lost his job, she became an administrative assistant in a dentist’s office. Michelle, a social worker and mother of three young children in Baltimore, who asked that her last name not be used, switched from part-time to full-time work when her husband was laid off last year. She kept to that schedule after he found work earlier this year—at two-thirds his former salary.

They are the reluctant breadwinners: Women who wanted to stay home until their income suddenly became critical to the well-being of their families. In some cases they are increasing their hours to keep the bills paid. Others are taking up employment for the first time as their husbands struggle to find work. With the anemic recovery keeping the job outlook uncertain, the accelerated gender shift is likely to stick, creating new challenges for U.S. families. Leer más “More Wives Head for Work”

Keeping Pabst Blue Ribbon Cool

On a July afternoon, Evan and Daren Metropoulos, the new owners of Pabst Brewing, showed up at the lounge on the 35th floor of the Mandarin Oriental in midtown Manhattan. They had come to discuss their plans for Pabst, which their father and co-owner, C. Dean Metropoulos, bought in May for about $250 million.

The Oriental does not serve Pabst Blue Ribbon, the company’s flagship brew, so the brothers ordered a lemonade and an iced tea. A hotel like the Mandarin may seem an unlikely meeting place for the owners of a beer that has long traded on its working-class image—the Lutz Tavern, a dive in Portland, Ore., is more like it, where 16-ounce tallboys go for $1.75. But the Metropoulos brothers were very much at home. They were passing through on their way to a wedding in Rhinebeck, N.Y., of an old friend from Martha’s Vineyard, Mass., where they have summered since they were boys. Evan, 29, divides his time between Miami Beach, Los Angeles, and New York City. Daren, 27, lives in Los Angeles, in Hugh Hefner’s old residence, a 7,300-square-foot English manor house he recently bought for $18 million.


For the jet-setting owners of the spontaneously hip beer, the hardest thing may be leaving the brand alone

By Matt Schwartz  |   //businessweek.com

https://i2.wp.com/images.businessweek.com/mz/10/39/370/1039_mz_62pabst.jpg

Jamie Chung

On a July afternoon, Evan and Daren Metropoulos, the new owners of Pabst Brewing, showed up at the lounge on the 35th floor of the Mandarin Oriental in midtown Manhattan. They had come to discuss their plans for Pabst, which their father and co-owner, C. Dean Metropoulos, bought in May for about $250 million.

The Oriental does not serve Pabst Blue Ribbon, the company’s flagship brew, so the brothers ordered a lemonade and an iced tea. A hotel like the Mandarin may seem an unlikely meeting place for the owners of a beer that has long traded on its working-class image—the Lutz Tavern, a dive in Portland, Ore., is more like it, where 16-ounce tallboys go for $1.75. But the Metropoulos brothers were very much at home. They were passing through on their way to a wedding in Rhinebeck, N.Y., of an old friend from Martha’s Vineyard, Mass., where they have summered since they were boys. Evan, 29, divides his time between Miami Beach, Los Angeles, and New York City. Daren, 27, lives in Los Angeles, in Hugh Hefner’s old residence, a 7,300-square-foot English manor house he recently bought for $18 million.

Evan, in a green polo shirt and gold necklace, has a generous build and gregarious manner. Ideas for the future of Pabst’s portfolio of brands spilled out of him in an entrepreneurial stream of consciousness. Daren, who occasionally interrupted, was in a navy blazer and button-down shirt. He is narrower, quieter, and cleaner shaven than his effusive brother.

Evan had been thinking about Red White & Blue beer, one of the company’s roughly two dozen defunct brands, which they hope to revive. “What if we made that the military beer?” asked Evan. “What if we gave a huge portion of the proceeds to military charities—a grassroots program with military families? Why shouldn’t Red White & Blue be the absolute American beer for the American soldier? We’ll bring, you know, the Rotary Club, the veterans.”

“To help collaborate and get involved,” added Daren.

“To support our troops,” Evan continued. “We could develop a whole beer brand around our troops. So that when you see Red White & Blue at your barbecue, you know that money’s supporting people who have died for our country. Those are ways that Budweiser will never be able to relate to. They’re not American, like us.”

“This is an American company serving the American people,” noted Daren.

Evan began to get worked up, saying: “If you knew that 25 percent of your proceeds from Red White & Blue Beer were going to support these charities, then shame on you for drinking Bud Light! What the hell are you drinking that for? To support some foreigners?” Leer más “Keeping Pabst Blue Ribbon Cool”

Chrysler Aims for February Deadline to Open U.S. Fiat Showrooms

Sergio Marchionne, chief executive officer of both Chrysler and Fiat, has said the Fiat 500 will go on sale late this year in the U.S. as the Turin, Italy-based automaker reintroduces its namesake brand to the world’s second-largest auto market. Fiat, which owns 20 percent of Chrysler, took control of the U.S. automaker as part of its bankruptcy restructuring in 2009.

The company said it will pick new Fiat franchises based on several criteria, including plans to create a standalone facility. Dealers have been told to build a business case for a Fiat franchise based on gross margins of as much as $1,500 for each Fiat 500 sold, people familiar with the planning have said.

Free Space

Some Chrysler dealers will have open space for a Fiat franchise after the closing of General Motors Co.’s Saturn and other brands, said Alan Helfman, vice president of River Oaks Chrysler Jeep Dodge in Houston. Helfman said in a telephone interview that he’s planning to submit a franchise application.

“I can have preparations in place, but I think it’s going to take a little time” for a showroom, he said. “Anytime I’ve built anything, if I thought I could do it in three months, it took six.”

Marchionne is scheduled to attend his first large-scale meeting with Chrysler dealers today in Orlando, Florida. The meeting, the first since 2007, comes as Marchionne is introducing 16 new or refreshed vehicles before the end of the year.

2011 Lineup

The heads of the automaker’s vehicle brands — Chrysler, Dodge, Jeep, Ram and Fiat — are also expected to attend the meeting, Kisiel said. For most dealers, it will be their first chance to see the 2011 model year lineup, much of which will reach showrooms later this year, he said.


Whitehouse Chrysler Group

By Tim Higgins

Sept. 14 (Bloomberg) — Chrysler Group LLC, the automaker run by Fiat SpA, said dealers who want to sell the Fiat 500 subcompact car in the U.S. should have their new showrooms completed and running by the end of February.

Dealers will need time to train staff for selling the Fiat 500 and should have a separate showroom in place prior to the start of marketing in March, Ralph Kisiel, a Chrysler spokesman, said yesterday.

“We’d like it up as soon as possible so they can get their Fiat franchise and start selling the vehicle,” he said in a telephone interview.

Dealers must submit their Fiat franchise proposals to Chrysler by Sept. 22, and about 165 winners will be picked in October, the Auburn Hills, Michigan-based company has said.

Some dealers may be allowed to open later, Kisiel said.

“The key here is you don’t open something if they’re not ready,” Kisiel said. Leer más “Chrysler Aims for February Deadline to Open U.S. Fiat Showrooms”

Innovation: Enough with the Freedom to Fail

There’s no doubt that innovation entails risk and randomness, and that sometimes people are going to do all the right things but get bad results. We should celebrate people who take well-thought-out, calculated risks that don’t pan out. That is not failure but important learning on the road to organizational success, as resources can be redirected to projects with higher potential.

But that doesn’t excuse stupidity and sloppiness.

The best innovators approach uncertain problems thoughtfully. They seek to learn as much as possible from whatever data they can get their hands on. They use that information to design and execute well-constructed experiments around the most critical unknowns in their plans. Learning from those experiments informs their next steps.


Let’s not go overboard with the freedom to fail. Companies should let employees know they expect success more often than not. Pro or con?

Pro: Excuses, Excuses

by Scott D. Anthony, Innosight

I’ve seen it happen all too frequently. A manager opens up a review meeting about a project that is clearly struggling by saying, “Remember, we’re innovating here. We should expect to fail.”

Too frequently, that’s code for something far more ominous. Give the manager truth serum, and you would hear, “I screwed up” or “I didn’t do my homework.”

There’s no doubt that innovation entails risk and randomness, and that sometimes people are going to do all the right things but get bad results. We should celebrate people who take well-thought-out, calculated risks that don’t pan out. That is not failure but important learning on the road to organizational success, as resources can be redirected to projects with higher potential.

But that doesn’t excuse stupidity and sloppiness.

The best innovators approach uncertain problems thoughtfully. They seek to learn as much as possible from whatever data they can get their hands on. They use that information to design and execute well-constructed experiments around the most critical unknowns in their plans. Learning from those experiments informs their next steps. Leer más “Innovation: Enough with the Freedom to Fail”

The Big Trend in Small Social Sites

Apple (AAPL) dove into interest-specific social media this month with the launch of Ping, a service for connecting music fans and artists. Unlike Ping, which has a ready-made feeder community of tens of millions of iTunes customers (and which surpassed 1 million users in just 48 hours), most niche network operators have to do more with less, building features into their sites to secure loyalty and interaction from users. There’s a payoff: They can charge higher ad rates. “The only way for a network to survive in a small community is to have a very high revenue per user,” says Jeff Clavier, a Silicon Valley angel investor who has backed canine site Dogster and video-gamer community Curse.

The exemplar of niche network success is myYearbook, founded in 2005 by siblings David and Catherine Cook. The site pulls in 25 million users, mostly teenagers, via dozens of games such as Blind Date, in which players attempt to match up compatible peers. “Our assumption is essentially everyone will have a Facebook account and use it to connect to friends and family,” says Geoff Cook, who joined his brother and sister soon after they founded the New Hope (Pa.) company, becoming chief executive officer. “Our users are here to meet new people.”


Niche social networks such as myYearbook and Dogster draw users and advertisers, adding up to a sizable portion of the social Web

By Douglas MacMillan
Saltwater fly-fishing pro Tony Biski recently came home with a story so good he couldn’t wait to share it. “It was a 12-foot great white shark viciously thrashing his tail and spraying us as he ran off with the fish,” wrote Biski, a resident of Chatham, Mass., in a post that grabbed the attention of dozens of other anglers on the Web. One commenter wanted to know if Biski had time to snap a photo. Another quipped: “Just in time for the 35th anniversary of Jaws.”

Biski didn’t bother posting his fish tale on Facebook, the 500 million-user site that’s the world’s biggest social network. Instead, he shared his story on GoFISHn, a community of a few thousand anglers. The site features maps that pinpoint where fish are biting, a photo gallery where members can show off their catches, and other quirks that distinguish it from a mass audience site. “We feel like we’re a moon orbiting Facebook,” says Ned Desmond, a former digital publishing executive at Time Inc. (TWX) who launched GoFISHn in December 2009. Desmond plans to create GoHUNTn and up to eight other interest-specific networks in coming years.

Facebook’s six-year rise from exclusive online hub for Ivy Leaguers to global digital directory has inspired a countertrend: niche social sites. Name an affinity, hobby, occupation, or demographic—mustache-wearing men, hamster lovers, moms, research scientists, boomers—and there’s likely to be a dedicated social network for it. While most niche networks are run by fledgling tech startups and are, almost by definition, small, they add up to a sizable portion of the social Web; in July at least 280 million people logged on to social sites other than Facebook and Twitter, according to audience tracker comScore (SCOR). Andrew Lipsman, comScore director of industry analysis, estimates the real number could be as high as 700 million, since many people use more than one social site. Leer más “The Big Trend in Small Social Sites”

The Challenges Facing Burger King Buyer 3G Capital

Burger King has had a turbulent history. Under Diageo, a former chain executive says, it was largely left alone and milked for cash, with the unit treated as an outpost for leaders in training. Once it moved into private equity’s hands, the focus switched to differentiating the brand from McDonald’s, with a focus on young men, for whom high-calorie burgers and ads with dancing chickens or a creepy-looking king seemed cool. The investors also focused quickly on returns: They initially kicked in $325 million of their own money, collecting more than that in special dividends. With added fees, funds from the initial public offering, and proceeds from the current sale, Burger King has been an investment winner even as its sales lagged behind rivals.


A Burger King restaurant in Leicester Square, ...

The investment outfit and its Brazilian backers will need to do more than just cut costs at the troubled burger chain

By Diane Brady
When it comes to the pitfalls of operating a fast-food chain, Burger King (BKC) has experienced them all: falling profits and sales, angry franchise owners, mediocre innovation, growing competition, and a razorlike focus on the very customers who have been hardest hit during the recession. So when a little-known investment outfit called 3G Capital said it would buy the Miami-based chain for about $4 billion on Sept. 2, an obvious question was: why?

Burger King may be the world’s No. 2 hamburger chain, but it’s a distant runner-up, with 12,174 restaurants worldwide vs. 32,466 for McDonald’s (MCD). McDonald’s averages about twice the sales volume per U.S. outlet, and its stock has far outperformed that of its rival on the strength of new products such as coffee drinks and smoothies. Burger King, in contrast, has seemed fixated on hawking a $1 double cheeseburger—now $1.29 following a bitter lawsuit with franchisees who claim it’s a money loser. The chain has also narrowed its target audience, chasing young men with cheeky ads, while McDonald’s has gone for broad family appeal. Leer más “The Challenges Facing Burger King Buyer 3G Capital”

Web Impostors May Face Prison in California

Internet users pretending to be others could be prosecuted—and sued—if Governor Arnold Schwarzenegger signs an “e-personation” bill

By Olga Kharif

California Web impostors beware: You may soon be breaking the law, even if you aren’t one of the perpetrators targeted by the state’s “e-personation” bill.

The measure, which is awaiting Governor Arnold Schwarzenegger’s signature, carries fines of as much as $1,000 and a year in jail for anyone who poses as another person online with malicious intent. The law, which would take effect on Jan. 1, would also allow victims to file civil suits.

People other than criminals may be affected by the legislation, Bloomberg Businessweek.com reported today. Pranksters, writers of satire, and even activists living outside the state could be subject to legal action, some lawyers say. Fake accounts in the names of celebrities and politicians abound on microblogging site Twitter and social network Facebook.


Internet users pretending to be others could be prosecuted—and sued—if Governor Arnold Schwarzenegger signs an “e-personation” bill

By Olga Kharif

California Web impostors beware: You may soon be breaking the law, even if you aren’t one of the perpetrators targeted by the state’s “e-personation” bill.

The measure, which is awaiting Governor Arnold Schwarzenegger’s signature, carries fines of as much as $1,000 and a year in jail for anyone who poses as another person online with malicious intent. The law, which would take effect on Jan. 1, would also allow victims to file civil suits.

People other than criminals may be affected by the legislation, Bloomberg Businessweek.com reported today. Pranksters, writers of satire, and even activists living outside the state could be subject to legal action, some lawyers say. Fake accounts in the names of celebrities and politicians abound on microblogging site Twitter and social network Facebook.

“The law is very vague,” Aaron Simpson, a privacy lawyer and partner at firm Hunton & Williams in New York, said in an interview. “Legitimate forms of speech could be caught within its grasp. This is going to be tough for the courts to process.”

The law applies to anyone who credibly impersonates “for purposes of harming, intimidating, threatening, or defrauding another person,” according to the language of the bill, whose author is state Senator Joe Simitian, a Democrat whose district includes parts of Silicon Valley. Leer más “Web Impostors May Face Prison in California”

Why Analysts Don’t Want to Say ‘Buy’

The caution extends beyond the U.S. More than 54 percent of ratings for companies in the U.S., U.K., Japan, and Brazil are “holds,” the highest level since Bloomberg began tracking the data in 1997. While the proportion of “sell” ratings in the U.S. has fallen to 5.1 percent, half the level of 2003, the total combined with “holds” reached a record 71 percent last month, the data show.

While pessimism is increasing, analysts say profits for companies in the MSCI World Index of 24 developed nations will gain 28 percent in the next year. The MSCI index trades at 11.4 times forecast profit, data compiled by Bloomberg show. Except for the six months starting October 2008, the index has never traded below 12.5 times annual earnings.

Shields says his biggest concern is that joblessness will weaken consumer spending, which accounts for 70 percent of the U.S. economy. “Employment is much worse than what people have anticipated,” he says. “If I had to pick one single factor that underlies our negativity, that’s what it is.”


They’re turning more pessimistic even as they push up profit growth estimates. How joblessness will affect consumer spending is a big worry

By Rita Nazareth and Lynn Thomasson

Meyer Shields says earnings at Warren Buffett‘s Berkshire Hathaway (BRK.A) will increase the most since 2006 this year. He’s also telling investors to sell the shares because the economic recovery is weakening.

When it comes to sending mixed messages, the Stifel Nicolaus analyst has plenty of company. For the first time since at least 1997, fewer than 29 percent of ratings on stocks covered by brokerages worldwide are “buys,” according to 159,919 recommendations compiled and tracked by Bloomberg. Analysts are turning more pessimistic even as they push up profit-growth estimates among Standard & Poor’s 500-stock index companies to 36 percent, the highest since 1988.

“People are sitting on a fence,” says Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $550 billion.

“When I go and talk to our equity analysts, they look at the companies and say, ‘Boy, these companies look pretty good, earnings are O.K., they have plenty of cash. What if there’s a double dip?'” Leer más “Why Analysts Don’t Want to Say ‘Buy’”

Japan Has More Than Just a Yen Crisis

Disappointment over token efforts resulted in exactly what Japan didn’t want: an even stronger yen, which has gone from 85.2 to the greenback on Aug. 23 to 84.4 on Sept. 1. Suzuki Motor Chairman Osamu Suzuki, who has built a big export business for his company’s sturdy little cars, speaks for many when he says of the currency: “I spend every day feeling anxious about this.”

So do politicians in Tokyo. That they are at a loss to do anything about it has Japan suffering the same fate as Aesop’s boy who warned of crisis so often that no one took him seriously anymore.

As the dollar and euro slide, the yen rises by default. Rarely before has it been so difficult for Japan to control its currency. The yen’s jump to a 15-year high says much about where Japan finds itself in 2010. Here are three specific things to consider about Japan’s plight.


The currency crisis is merely one symptom of the country’s general aversion to change after the boom-and-bust 1980s

By William Pesek

It’s the economy that cried wolf.

With growth slowing, deflation deepening, and the yen inexplicably surging in late August, Japanese policymakers pledged bold action. Bank of Japan Governor Masaaki Shirakawa rushed home from Jackson Hole, Wyo., to deal with the emergency. Investors braced for aggressive intervention. The media mobilized on Aug. 30 to cover Prime Minister Naoto Kan unveiling a fat stimulus package to counter the export-crimping effects of a strong yen. Then—nothing. Leer más “Japan Has More Than Just a Yen Crisis”

U.S. Economy: Recession Concerns Ease on Private Jobs


By Shobhana Chandra

Sept. 3 (Bloomberg) — Companies in the U.S. added more jobs than forecast in August, easing concern the world’s largest economy is sliding back into a recession.

Private payrolls climbed 67,000 after a revised 107,000 increase in July that was more than initially estimated, Labor Department figures in Washington showed today. The unemployment rate rose to 9.6 percent as more people looked for work. A separate report showed service industries expanded more slowly than estimated.

Stocks climbed around the world and U.S. Treasuries slumped as the employment report bolstered Federal Reserve Chairman Ben S. Bernanke’s view that the conditions are in place for a pickup in growth in 2011. While companies such as Caterpillar Inc. are boosting staff as the global economy recovers, payrolls are expanding too slowly to bring down an unemployment rate hovering near a 26-year high. Leer más “U.S. Economy: Recession Concerns Ease on Private Jobs”

Intel Wants to Be Inside Everything

Chips that act as the brains of electronic devices other than computers or mobile phones are known as embedded processors and represent a $10 billion market, according to Intel Chief Executive Paul Otellini. That’s small compared with the $34.5 billion market for PC processors. Intel will have $43 billion in revenues this year, according to analysts in a Bloomberg survey. Of that, only about $1 billion comes from embedded products, says the company. Still, Atom sales are growing fast, and the company is counting on the chip to help break its dependence on the slowing PC market. “There’s a limit to where their core business will take them,” says Alex Vallecillo, a fund manager at PNC Capital Advisors.

Although Atom chips aren’t as powerful as the ones that run PCs, they’re much cheaper, which makes them economical for powering all kinds of devices. Nautilus puts Atom chips into its treadmills to stream Internet video onto built-in displays and upload the times and distances from workouts, Intel Vice-President Doug Davis says. Digital advertising signage is another growth market for Intel, says Alex Gauna, an analyst at JMP Securities in San Francisco. LG Electronics is using Atom chips in signs that will recognize the age, gender, and other characteristics of passersby and change the advertising pitch accordingly—similar to electronic billboards in the 2002 Steven Spielberg science fiction film Minority Report. Since Atoms also use little power and don’t require bulky batteries to run, they’re popping up in unexpected parts of the world. In India, banks are using them in handheld terminals that serve rural areas off the electricity grid. Once a month or so, an itinerant teller visits a village, giving locals access to loans and other banking services.


Image representing Intel as depicted in CrunchBase

Intel is counting on its Atom embedded processors to help break its dependence on the slowing PC market

By Ian King

Two years ago, Intel (INTC) held a contest for college students, asking them to come up with new uses for the company’s Atom processor. One proposal: a shower that regulates water temperature and plays music from the Internet. While Intel doesn’t plan to enter the shower market, it is putting its chips into gas pumps, cars, musical instruments, and other devices where few processors have gone before. Leer más “Intel Wants to Be Inside Everything”

Burger King Agrees to $4 Billion Bid From 3G Capital

Transactions in the restaurant industry have picked up as the U.S. economy begins to recover, with rival chains such as Wendy’s/Arby’s Group Inc. attracting interest. 3G, based in New York, has shown interest in fast-food chains in the past, disclosing last year that it owned about 4.2 million shares of Wendy’s/Arby’s. 3G’s disclosure of holdings as of June 30 didn’t show any Wendy’s/Arby’s shares.

Behring’s History

3G managing partner Alexandre Behring has ties to fellow Brazilian Jorge Paulo Lemann, having spent a decade at the buyout firm the 71-year-old billionaire founded. Lemann and three of his fellow directors at Anheuser-Busch InBev NV, the world’s largest brewer, also are directors of 3G, according to a regulatory filing from the beer company.

John Chidsey, Burger King’s chief executive officer, will remain CEO through a transition period, according to the statement. Chidsey will then become co-chairman of the board along with Behring.

Burger King gets about two-thirds of its revenue from the U.S. and Canada. The chain also operates in Latin America, Europe and parts of Asia. Total sales fell 1.4 percent to $2.5 billion in the year ended June 30, Burger King said last week.

TPG Inc., Bain Capital LLC and Goldman Sachs Group Inc. bought Burger King from Diageo Plc in 2002 before selling shares to the public again four years later. The three own about one- third of Burger King and agreed to tender their shares into the offer.

Lazard Ltd., J.P. Morgan Securities LLC, and Barclays Capital advised 3G. Burger King was advised by Morgan Stanley and Goldman Sachs Group Inc. 3G Capital’s legal advisers were Kirkland & Ellis LLP, and Burger King’s were Skadden, Arps, Slate, Meagher & Flom LLP and Holland & Knight LLP.


By Duane D. Stanford and Burt Helm

(Bloomberg) — Burger King Holdings Inc. agreed to be acquired by 3G Capital in a deal valued at $4 billion including debt, giving the New York investment firm control over the second-largest U.S. hamburger chain.

The $24-a-share price is 46 percent more than Miami-based Burger King’s close Aug. 31, before reports of a deal surfaced. Under the terms of the agreement, Burger King can solicit superior bids through Oct. 12, according to a statement today.

The chain’s sales growth has slowed for two straight years as consumers ate out less to deal with the U.S. economic slump. Burger King, which trails only McDonald’s Corp. in the U.S., has seen a slower recovery than its larger rival as its clientele suffered more from the recession, said Tom Forte, an analyst at New York-based Telsey Advisory Group.

“Burger King’s heavy user — young, male, and more likely to be a minority — has had a higher rate of unemployment than the McDonald’s consumer,” Forte said in a telephone interview.

Burger King rose $4.55, or 24 percent, to $23.41 at 10:24 a.m. in New York Stock Exchange composite trading. The gain was the largest since May 2006, when the company went public.

The deal values Burger King at 9 times earnings before interest, taxes, depreciation, and amortization in the year ended June 30. Over the past five years, U.S. restaurant acquisitions closed at a median multiple of 8.2, according to Bloomberg data. Leer más “Burger King Agrees to $4 Billion Bid From 3G Capital”

Nike’s Tiger Woods Apparel Line Snubbed by Consumers

Tiger Woods fans have put up with the philandering, the text messages and the domestic spats. Now comes what may be the hardest thing of all to tolerate: Losing.

Woods has played through the year without a single tournament win, putting him at 83rd on the PGA Tour’s money list. As his performance slumps, so have sales of his apparel line through Nike Inc., according to retailers Golfsmith International Holdings Inc., Roger Dunn Golf Shops and Golf Discount Superstore.


AT&T National Golf Tournament @ Congressional ...
Image by Chase McAlpine via Flickr

By Alex Sherman

Tiger Woods fans have put up with the philandering, the text messages and the domestic spats. Now comes what may be the hardest thing of all to tolerate: Losing.

Woods has played through the year without a single tournament win, putting him at 83rd on the PGA Tour’s money list. As his performance slumps, so have sales of his apparel line through Nike Inc., according to retailers Golfsmith International Holdings Inc., Roger Dunn Golf Shops and Golf Discount Superstore. Leer más “Nike’s Tiger Woods Apparel Line Snubbed by Consumers”

Missile Shield at $10 Billion Sets Up Boeing-Lockheed Showdown

Aug. 23 (Bloomberg) — Boeing Co. will compete for the first time to keep its U.S. missile defense work as Lockheed Martin Corp. seeks to wrest away an order for as much as $10 billion.

The Pentagon’s Missile Defense Agency is preparing to take bids on a contract that Boeing has held since 1998 to design, build and operate the arsenal of satellites, radar and high- speed interceptors intended to shoot down enemy intercontinental ballistic missiles in space. The new order will be for management and maintenance.

The contest gives the companies a shot at a decade-long program as the Pentagon reins in spending increases. Riding on the outcome is Boeing’s future as a so-called systems integrator directing projects through suppliers, said Philip Finnegan, an analyst at consultant Teal Group in Fairfax, Virginia.


By Gopal Ratnam

Aug. 23 (Bloomberg) — Boeing Co. will compete for the first time to keep its U.S. missile defense work as Lockheed Martin Corp. seeks to wrest away an order for as much as $10 billion.

The Pentagon’s Missile Defense Agency is preparing to take bids on a contract that Boeing has held since 1998 to design, build and operate the arsenal of satellites, radar and high- speed interceptors intended to shoot down enemy intercontinental ballistic missiles in space. The new order will be for management and maintenance.

The contest gives the companies a shot at a decade-long program as the Pentagon reins in spending increases. Riding on the outcome is Boeing’s future as a so-called systems integrator directing projects through suppliers, said Philip Finnegan, an analyst at consultant Teal Group in Fairfax, Virginia. Leer más “Missile Shield at $10 Billion Sets Up Boeing-Lockheed Showdown”