Opening Bell: 6.16.06

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U.S. paints al-Zarqawi successor as outsider to Iraq (Chicago Tribune)
After the death of Zarqawi, markets didn't really know how to behave. Some thought his death would hit the oil market and oil companies (which it did at first), while others saw increased chaos canceling out the effects. Much of the problem was that investors felt uncertainty over Al-Qaeda's Iraq succession planning. Due to the unexpected timing of the death (though you'd sort think they'd had to have seen this coming), they didn't have a known #2 in place to take the helm -- they should have learned from Goldman that when your top guy is "called up", the markets appreciate the orderly transfer of power. It appears we're getting answers as the broadline terrorist firm has selected from within its Iraq operations the Egyptian-born Sheik Abu Hamza al-Muhajer (AKA Abu Ayyub al-Masri). The new chief has almost 24 years of experience in radical Islamist activity.
U.S.-Style Pay Packages Are All the Rage in Europe (NYT)
This story will come as a relief to anyone who has been lectured about how CEO salaries in Europe are so modest, and how they only make seven times what the lowest employee makes, etc. There's some anecdotal and statistical evidence that this may be changing, as European executives are closing the gap. That's good; the trans-Atlantic wealth gap among the richest 1% on both continents was one of the more disturbing economic anomalies of the developed world. Of course, the Times is interested in the outrage, and who sees American-style greed encroaching on august European shores. According to one "greed has been legalized" in France. What took them so long? One irony is that in the push back against higher wages, France has increased its disclosure regulations -- but of course now that everyone can see how much their colleagues are making, more people are convinced they're not getting paid enough. (Note: Expect a Gretchen Morgenson piece this weekend decrying the situation.)
Gates Will Cede Day-to-Day Role At Microsoft (WSJ)
Oh, the painfully slow business of going. Yesterday, Bill Gates announced that he'd be giving up on his day-to-day role at the software company he founded. He gave up the CEO spot six years ago, though still retains the chairman role, as well as the title of Chief Software Architect. While he'll keep his role as chairman, the CSA title will fall to CTO Ray Ozzie, who has become something of a star at Microsoft. But Gates departure won't happen right away -- instead it will occur over the next two years, at which point he'll invest himself full time into his philanthropic endeavors. The move probably means very little for the company, though Paul Kedrosky notices how little Steve Ballmer came up in the announcement, which he takes to be a signal of weak support for the CEO.
Big Airlines to Increase Some Fares (NYT)
Just in time for the "summer air-traveling season", a handful of major airlines are pushing the price up on last minute bookings, including walk-ons. It's always a proverbial game of chicken when a traveler comes on at the last minute. Who will blink first, the customer desperate for the seat or the airline that theoretically profits as long as the ticket is sold for more than the customer will cost in (marginal) gas+chips+soda. If it were a negotiating game, the airline might sense desperation and go high -- that's what's going on now, as a few carriers have jacked up their last-minute fares by $50. Still, it's going to be hard to raise general rates. The tyranny of the comparison shopping engine means that if you're only a nickel more expensive than the cheapest, your flight will show up in second place.


GM, Delphi workers take early deal (Reuters)
It appears that about 33,000 GM and Delphi workers have accepted large buyout offers, between $70,000-$140,000, to vacate there job. The number is more than expected, which is good news for the company, but what does this tell us about the company's health? Who are the 33,000? Are they the smart ones, who don't think there'll be a GM in a couple years? If so, perhaps we can read into this some sort of probability of GM going bankrupts. Or maybe they're just the talented ones -- the ones who think they can easily find new jobs, in which case an eventual bankruptcy doesn't bode well for the rest of the labor force. Or, they could be the ones who are the most in debt, and need the big one-time payday to avoid bankruptcy. Read into it what you will.
Does the world need another Vonage? (Fortune)
As if the Vonage IPO weren't painful enough, another copycat VoIP firm is interested in testing the IPO waters. SunRocket, which does the exact same thing, thinks it can succeed where Vonage failed because it has lower marketing costs (it only advertises online) and lower equipment costs, because it got into the game later, and thus their own prices for servers and gear are lower. The latter may be true, but from an ongoing standpoint it means very little, in terms of Vonage bleeding cash. Further demonstrating the folly of this thinking is the fact that in two years, another company could come along and set up shop for a fraction of SunRocket's cost. Meanwhile, the same cutthroat competitive pressures from free, lightweight services (like Skype) to the bundled-in digital voice offerings from the cable companies still make the space look ugly. Whatever they do, they shouldn't offer shares to their customers. It's just not worth it.
Oracle's 4Q Profit to Top Expectations (AP)
Oracle announced after the bell some news that investors have been waiting to hear for a long time -- revenue is finally growing. The company has been on an acquisition rampage for over two years now, starting with its acquisition of PeopleSoft. Since then, the company has been buying smaller application makers in hopes of complementing and adding value to its core database business. And while the moves have made the company a lot bigger, they haven't actually contributed to any real growth. The company claims that's changing, with licensing revenues growing at a 32% clip in this, their fiscal fourth quarter. After a strong day, the company's shares added another 6% after the bell.
EADS executive aware of Airbus A380 delay (Marketwatch)
When Airbus announced the delay of its forthcoming A380, it wiped billions in value off its parent company EADS. But you didn't think that that would be the end of it, did you? Of course there has to be a scandal. Co-CEO Noel Forgeard apparently knew about the problem as early as April, though the fact that he and his family unloaded shares in March is raising the suspicion of French regulators. He calls it unfortunate timing, though to most people, 'fortunate' might be a better way to describe it. Going on nothing, it seems unlikely that this is insider trading -- and he can probably prove that he heard about the news after the trade, but you can never be too sure that someone doesn't deserve to lose their head, when a company loses this much money overnight. If failure isn't a crime, it certainly should be.

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