Skip to main content

Opening Bell: 10.13.06

Sponsored by
Sportingbet sells US business for $1 (Times Online)
Online gambling firm Sportingbet has sold its US casino operations for $1 just as President Bush is expected to sign the bill that will make online gambling illegal (or at least push it until much murkier legal waters). The company says it saved $14 million, which is what it would've cost to just shut down the operation. As for other companies that offer services in the US, the picture is not so clear. Some of the online poker companies insist the ban doesn't apply to them, since poker is a game of skill, not chance. That may be true, but good luck telling anyone that. Time to take up chess, or at least figure out a way to make it a big money game.
Yunus, Grameen Bank win Peace Prize (AP)
We never really held out much hope that an American would win the Nobel Peace Prize. When we saw a headline last night saying that Cindy Sheehan might be in the running for it, we realized it might not be worth winning. Besides, we already lost literature, so there wasn't much chance of a sweep. So while it didn't go to an American, it went to the next best thing, a banker. Well, a "banker". Bangladeshi economist Muhammad Yunus is the founder of the Grameen bank, which makes small loans to women in developing countries so that they can start businesses. It even has something of a franchise model; in other words, women buy into a specific kind of business, like a cell phone rental company, or a dairy business. From what we've heard, it works pretty well. Good to see the committee recognize the benefit of commerce as a key factor for peace.
H.P. Names Ethics Officer (NYT)
One of the casualties of the pretexting operation was HPs chief ethics officer Kevin T. Hunsaker, which should have been proof right there that its a silly, useless position. But, it would've probably looked bad if they didn't replace the guy, so the company has named John Hoak, former general counsel for NCR to the post. Not knowing anything about the guy, we can't vouch for his ethics. That being said, the company could've made a worse choice, like Randy Cohen, the "ethicist" who writes a column for the Times Sunday magazine.
Microsoft tells EU will ship Vista to Europe (Reuters)
After some question of whether Microsoft would be able to ship its forthcoming Vista operating system to the EU, the company announced that it's going forward with the launch. EU anti-trust czar Neelie Kroes has been the company's nemesis on the continent, and she's been concerned that Vista will ship with too many products that step on the toes of its competitors, such as a search feature (like Google), a .pdf maker (like Adobe) and security stuff (like Symantec). Still, the EU isn't exactly in a position to block the release, rather it can fine and sue the company after the release if it likes. So CEO Steve Ballmer called up Kroes, and said, "game on, we're shipping it, take us to court if you want, see if we care".

The Broker Who Fell to Earth (NYT)
If you want a great way to ruin your Friday, read the times profile on Peter Bacanovic, the man who doesn't want to be known for the rest of his life as "Martha's broker", even though he was just that "Martha's broker". Now he's unemployed, low on money, alone, and in terrible physical health caused by years of stress. We'll probably cover this one again later in the day, but everyone should take it as a warning of how quickly your fortunes can fail you.
Calorie-burning drink no diet in a can (Philadelphia Inquirer)
Finally, Coca-Cola can say goodbye to the Coke era. The company, in a joint venture with Nestle is set to drop the painfully unappetizing sounding drink Enviga on to the market. Enviga, which contains some formulation of caffeine and green tea is being pushed as a weight loss magic bullet. But, public health skeptics abound. And they point out that the increased metabolism is likely to be just marginal, and that the only way to lose weight is consume fewer calories than you burn (either that or consume hoodia). Yes, sadly, we think perhaps that even the chubby American consumers has grown skeptical of these claims, but the cans design looks pretty nice, so who knows.
Justice starts chip cost probe (San Francisco Chronicle)
We've heard by some armchair pundits that the DOJ never goes after monopolies anymore, and that it has something to do with the ideology of the Bush administration. That may be true, but there's certainly been no shortage of collusion or price-fixing probes. Such announcements seem to spring up on a daily bases, such as the new investigation into private equity club deals. And then there's the drawn out action against Korean DRAM makers. Now, an investigation has been launched into makers of SRAM, an obscure type of memory chip. Static Random Access Memory chips help speed up performance of cell phones and other mobile devices. Spokesmen for both Cypress Semiconductor and Samsung have admitted that the government has contacted them about the investigation.
Grain stockpiles at lowest for 25 years (Financial Times)
By and large, commodity prices have retraced amid rising inventories and slumping demand. Apparently, that doesn't apply across the board to all of them. According to the Department of Agriculture, wheat inventory is at its lowest level in 25 years. The situation comes amid a big drought in Australia, as well as government measures in the Ukraine that have had unintended consequences. Wheat futures are now at their highest level in 10 years. Still, it's not that big of a deal. Sure, nobody does Atkins anymore, but everyone still knows to lay off the bread.
Getting a Grip on Hedge Fund Risk (WSJ)
We just need to accept the fact that at some point the level of regulation over hedge funds is bound to increase. A Journal poll of 41 economists (probably not a big enough sample size to mean much) found that 60% said that hedge funds posed a risk to the economy and needed to be regulated more closely. Some didn't even say they posed the risk, but as Diane Swonk put it, since we don't know whether they're dangerous, it's the uncertainty is that's unacceptable. What's strange is that this has all come after the Amaranth meltdown, which unwound in an orderly manner. Granted it's just one data point, but it's meaningful in that a meltdown can happen without ripple effects, something that we hadn't been sure of.