Sponsored by Bloomberg.com
Skilling's reprieve short-lived (Houston Chronicle)
Do not pass Go. Do not collect $200. Go directly to jail. That's what a court told Jeff Skilling, just hours after it appeared to open the window on the possibility that he might remain free on bail during his appeal process. But, check this out. The court noted that there were "serious frailties in Skilling's conviction". That's got to give him some hope. Perhaps he could get a handful of his convictions overturned on appeal, not enough to let him free immediately, but enough so that he might one day walk out of jail a free and healthy man. Might be a more interesting appeal than we thought.
Google's Options Option (Forbes)
Those Google guys are at it again, always thumbing their nose at financial tradition. First they tried their alternative IPO, which angered the street and ended up costing them billions because they didn't have the investment banks acting as boosters for the stock. Now they're creating their own options market for Google shares, in hopes of helping employees better manage risk, and to better determine the accurate price of employee stock options. It's something of an alternative to the Black-Scholes method of doing it. Although Google may be the first to implement something like this, they're not breaking new ground academically speaking. Cisco's John Chambers has proposed things like this before, as have other academics.
United Air, Continental in Merger Talks, People Say (Bloomberg)
According to people, who have sources, who have been apprised of rumors, discussions are underway for yet another airline merger. Well, not yet another airline merger; there haven't been any yet, just a lot of talk. This time it's United Air and Continental, which if they combined would make for the largest domestic airline, measured by passengers. If it actually happens, and that's a big 'if', then it will be interesting to see how it goes, seeing is there isn't much precedent for this sort of thing.
Home Depot says buys China's The Home Way (Reuters)
Best Buy recently announced the purchase of a Chinese electronics retailer, leaving some to wonder whether the business model of selling Chinese-made goods at a solid markup will work in China. It looks like Best Buy isn't the only company opting to buy instead of build in the country. Home Depot announced the purchase of The Home Way, which will give it a modest footprint of 12 stores in six cities. That leaves Wal-Mart as one of the only big box retailers to go it alone, building their own stores from scratch. Although, we still think they should buy out Wu-Mart, just to avoid any brand confusion down the road.
Justice Department limits use of aggressive tactics against corporations (AP)
Is the post-Enron era coming to an end? Are we now in the post-post-Enron era? It sounds like it should be a college course: "Literature post-post-Enron" or "Feminisms post-post-Enron". Recently regulators announced a modest pullback in Sarbanes-Oxley, amid a chorus of complaints that the rules really were too harsh on companies. And now the Justice Department is again offering some (again modest) changes to the way investigators go after corporate crime. It's no longer acceptable to go after a company, simply because they fight the process of handing over documents. And the Department will be more tolerant of companies that pay for their employees' lawyer fees. Of course, just wait for the market to crash, and a few more major bankruptcies. It'll all come back again.
Oil price to fall to below $53 by 2008: World Bank (Reuters)
Not sure what kind of track record the World Bank has in forecasting the price of oil, but it predicts that a barrel of the dirty stuff will fall to $53 by 2008. The reason? You guessed it: supply and demand baby. Increased supply coupled with tempered demand, they say, should bring it on down. Makes sense.
Police raid overshadows launch of A380 (Times Online)
When they make the movie about Airbus, this story would make for a good flash-forward scene right at the very beginning. One the day the company was to unveil (purely ceremonially) it's much delayed A380 Superwidejumbojet, police raided the company's headquarters as part of an investigation into dirty share dealings. There's nothing symbolic about it, just bad timing, but if you put in a story, the event is rich with irony and meaning.
Spitzer Sues UBS Over Its Fee-Based Brokerage Accounts (NYT)
Eliot Spitzer's got what, like 25 days left in office, maybe 35? Either way, he's obviously on a mad dash to file as many lawsuits as he can before he's moved to a position where lawsuits aren't part of his job description. The latest complaint is directed towards UBS, as he alleges that clients were improperly directed to put money into fee-based accounts, costing them millions. The accounts in question were investment accounts that charged customers on the basis of total assets held, as opposed to per-trade fees. They can actually be really good, since they don't give the adviser an incentive to encourage heavy trading, just to rack up commissions. UBS says it will fight the charges vigorously.
JetBlue has to 'become more than low-cost,' analyst says (Today in the Sky)
All the airline stuff that will be talked about all day is a reminder that if you leave these lumbering legacy carriers around long enough, and give them enough chances to reorganize and recapitalize, then they'll eventually find a way to come back and haunt the market, with their drab service, expensive seats, and inclination to hog all the gates, leaving precious little room for more innovative and likable carriers. As these airlines of seen a resurgence, the once surging get jetBlue has faltered over these last couple of years, but an analyst sees a return to profitability in 2007, as the company realizes it's much more than a discounter and learns how to extract more value for its services.