Flying Into Chapter 11
Two more airlines, Delta and Northwest, filed for protection from creditors, putting nearly half of the industry in bankruptcy proceedings. Both carriers said they would shrink and impose yet another round of pay cuts on employees. Without a change in pension law, they may also be forced to terminate their underfunded plans and hand them over to the government. Meanwhile, bankrupt US Airways sealed its merger with America West, and United plans to emerge from three years of reorganization in February.
Japan's Broad Mandate
Japan's Prime Minister Junichiro Koizumi won a broad mandate from voters to deregulate and open up an economy finally crawling out of a decade of stagnation. Koizumi had called a snap election after rejection of his plan to privatize Japan's giant postal network, which symbolized the inefficiency and political corruption embedded in its non-export sectors. His Liberal Democratic party and coalition partners won enough of a majority in the lower house of parliament to override votes in the upper chamber.
Big week for Oracle's humble founder Lawrence J. Ellison. The software giant agreed to buy Siebel Systems, founded by former protege Thomas M. Siebel. The deal, valued at $5.53 billion, represented a 17 percent premium, moving Oracle close to the size of industry leader, SAP. Ellison also agreed to settle a four-year-old shareholder lawsuit accusing him of insider trading. Under the settlement, he agreed to donate $100 million to charity -- and $22.5 million to the plaintiff's lawyers. The shareholders will get nothing.
Microsoft Eyes AOL
With investor Carl Icahn pursuing a proxy contest and pushing for divestitures of lagging divisions, Time Warner stepped up secret talks with Microsoft about a possible joint venture with America Online. Among the options: Microsoft investing in AOL, merging the sales forces of AOL and Microsoft's MSN network, or combining the two online services in a separate entity. The talks could prompt Google, which raised $4.18 billion in new equity last week, to try to stymie Microsoft by strengthening its own ties to AOL.
The Best a Razor Can Get?
The razor wars heated up. Gillette unveiled a new razor that features five blades, with or without vibration. There's even a sixth blade for trimming increasingly popular beards and mustaches. Following its tried-and-true formula, Gillette will launch its new product with a big advertising campaign and a discount to get existing customers to buy the $3-plus blades. But it faces competition from a reenergized Schick, whose four-blade cartridge has shaved five percentage points off Gillette's market share.