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THE UNIVERSITY DAILY KANSAN
7A
WEDNESDAY, DECEMBER 12, 2001
THE WALL STREET JOURNAL CAMPUS EDITION.
What's News- In Business and Finance
H-P Bid for Compaq Suffers Big Setback
Hewlett-Packard Co.'s largest shareholder, the family foundation of co-founder David Packard, decided to oppose the company's purchase of Compaq Computer Corp., dealing a possibly fatal blow to what would be the largest acquisition ever in the technology industry.
H-P and Compaq vow to press ahead with the $25.9 billion deal. But opposition from the heirs of the company's founders could sway many other H-P shareholders to vote against the deal.
Walter Hewlett, an H-P director and son of founder William Hewlett who first came out against the deal last month, plans to solicit proxies against the deal. All told, the Hewlett and Packard families hold about 18% of H-P's shares.
Manufacturing Shows Signs of Recovery
For the first time in more than a year, there are incipient signs of a recovery in manufacturing, the sector of the economy where recession hit first and hardest.
The National Purchasing Managers Index, based on a survey of purchasing executives who buy raw materials for manufacturing, jumped to 44.5 last month from 39.8 in October. A turnaround in manufacturing, where the slowdown began, could be the key to the entire economy's recovery.
To be sure, unemployment jumped to 5.7% last month—its highest level in more than six years—from 5.4% in October. But economists say the Federal Reserve's latest rate cut—a quarter percentage point on Tuesday, smaller than the previous three cuts—reflects growing optimism that the recession may be bottoming out.
FTC Probes Group Selling Student Data
A college-admissions group that helps school recruiters find promising students has fallen under government scrutiny for supplying the names and other personal information of high-schoolers to commercial marketers as well—often unbeknownst to the students.
The National Research Center for College and University Admissions surveys over a million U.S. high-school students each year about everything from their career interests to their religion, race and social views. The Federal Trade Commission is investigating whether the Missouri-based group's vague disclosures about how its survey data are used constitute prohibited "unfair or deceptive acts," according to people familiar with the matter.
THE WEEK OF DECEMBER 10.2001
In a statement on National Research's Web site, the group's president, Don M. Munce, said he is forming an advisory committee of leading educators to review its privacy procedures and improve its disclosure statement.
States Offer Changes In Microsoft Pact
The nine states that refused to sign on to Microsoft Corp.'s antitrust settlement with the Justice Department proposed sweeping new restrictions on the company's conduct to the U.S. district court in Washington handling the case.
Among other things, the proposals would require that in addition to its full-featured Windows operating system, Microsoft also must offer a lower-cost Windows that doesn't include add-on technologies such as instant-messaging and music and video software. This would allow computer makers to more freely choose among these rival "middleware" technologies. Microsoft's response is due this week.
Recovery on the Way While the consensus forecast calls for a 1.3% decline in fourth-quarter GDP, some economists see output rising as much as 1%, suggesting the economy already may have rebounded. Annual rates of change in GDP, by quarter, and consensus estimates.
Recovery on the Way?
*Forecasts
Sources: Blue Chip Economic Indicators
Blue Chip Financial Forecasts
THIS WEEK AT:
COLLEGEJOURNAL.COM
Employers Welcome Liberal-Arts Majors
Still, some rivals remain committed to recruiting recent college grads online. TMP Worldwide Inc., New York, says it has no intentions of shutting down MonsterTRAK, its career resource for college students and alumni.
Search Firm Closes College Job Site
Search firm Korn/Ferry International last week shut down its JobDirect site, which had helped companies find qualified college graduates for entry-level positions.
Holiday Markdowns Leave Shoppers Jaded
retail sales haven't accelerated beyond the modest pace of Thanksgiving weekend. At best, retailers and industry analysts are looking for gains in holiday receipts of 1% to 2.5%.
Shopping under the shadow of layoffs and terrorism, many consumers say they just aren't tempted this year by deeply discounted merchandise.
Shoppers' ho-hum reaction to deep discounts is a behavior retailers themselves have created. Some shoppers say the blizzard of price cuts this year has cheapened many stores' images. Others say they have qualms about giving marked-down merchandise as a gift: What if the recipient returns it?
Heisman's Owner Has New Game Plan
The Heisman Trophy, awarded each year to college football's outstanding player, wants to go pro, as it were, in the world of sports sponsorship. New York's Downtown Athletic Club, the award's owner, has hired a marketing firm in hopes of quintupleting its annual Heisman revenue to $10 million. Plans range from selling the trophy's corporate naming rights to an interactive "Heisman Experience" that would tour colleges.
But James Corcoran, the club's volunteer president, says it won't overcommercialize the award. "It would never be the AT&T Heisman," he says. "It would be the Heisman Trophy presented by AT&T."
Majors in psychology, philosophy, history and other "soft" sciences are in demand by companies who value their multi-faceted backgrounds and talents.
-By Don Arbour
Water Wars; With PepsiCo Inc. reportedly set to introduction of its Aquafina bottled water, Coca-Cola Co. is said to be planning four similar brand extensions for its Dasani water...Try Again: AT&T Corp.'s board asked bidders for its cable-TV business to rework their offers..Here's Your Bill: Employers expect health-care costs to jump nearly 13% next year, says a survey by William M. Mercer Inc., and many plan to raise employees' deductibles and co-payments.
Odds & Ends
How to Keep Cool In Performance Reviews
How to contact us:
Campus Edition@wsj.com
Few recent hires like to sit down with their supervisors and review their achievements—or lack of them so far. But a corporate consultant tells of ways to eliminate sur-
Shoppers Perceive Lapses In Clothing's Quality, Defect to Competitors
WSJ.com College Journal
from THE WALL STREET JOURNAL.
Gap's Image Is Wearing Out
prises and get credit when it's due
Being a Team Player
Is Kev in Business School
B-School Diaries: An ability to work well in small groups is a prerequisite for succeeding in business school. Here's how a great team can mean the difference between a positive first-year experience and a hellish one.
RV AMY MERRICK
November marked an anniversary of sorts for Gap Inc., its 19th consecutive month of declining same-store sales. It's a precipitous slide for any retailer to endure, and one that Gap executives seem uncertain how to stop
Linda Rabb has some suggestions. She doesn't work at Gap. She doesn't even shop there. But she does have one powerful credential: She used to be a Gap customer. In other words, she is the problem.
Ms. Rabb, 33 years old, used to buy clothes regularly at the Gap to wear to work at her job as an account supervisor at a Chicago ad agency. But then, in March 2000, Gap began running a "West Side Story" TV ad campaign featuring fire-engine-red denim capri pants, one of its biggest fashion bets of the season. Ms. Rabb had a strong reaction to those pants—"silly."
Now, all it takes is a brief visit to a Chicago-area Gap store for Ms. Rabb to remember what drove her away. Inside the store, she encounters a black T-shirt imprinted with a gold snake. The snake's eye is a pink sequin. The disgusted look on Ms. Rabb's face says it all. Her advice to Gap: Grow up.
Overnight Exodus
Every retailer, of course, has its defectors. But perhaps never before in retail history have so many shopers stopped patronizing a retail chain so precipitously. The exodus of shopers from, say, Montgomery Ward & Co., occurred in slow motion over many years, concurrent with the rise of Wal-Mart Stores Inc. and
other discounters. In contrast, Gap's years-long reign as retailing's apparel star ended almost overnight.
During the 1990s, Gap grew to become the nation's largest specialty apparel retailer. Its sales rose to $11.64 billion in fiscal 1999 from $1.93 billion in fiscal 1990. It accomplished this feat largely by applying to apparel the same strategy Ernest Hemingway applied to writing—keep it simple. The popularity of Gap stores was proof that simple clothes can look good, even elegant. Gap was the retail engine powering the shift to casual attire in the workplace: Wearing a T-shirt to the office seemed irrelevant, until Gap showed how crisp and sharp a T-shirt could look.
Gap reported a 25% decline in same-store sales results for November, its most dismal showing this year; analysts were bracing for a decline of anywhere from 13% to 27%. Same-store sales during each of the previous three months declined 17%. Gap said that the November results "significantly" missed its expectations, and that the negative trends could extend through the quarter. Earlier, the company reported net income plummeted 96% for the first nine months of fiscal 2001, ended Nov. 3, compared with a year ago, citing a tax-related charge and weak sales at its three apparel chains, Gap, Banana Republic and Old Navy.
Gap Chief Executive Millard "Mickey" Drexler, revered until recently in the retail world for masterminding Gap's success, has had many explanations over the past 19 months for the sharp decline. At various times he has blamed the chain's problems on bringing in new merchandise too quickly, and also on bringing it in too slowly; on staying with outdated styles too long and also on filling the stores with too
But Gap's success spawned lower-priced imitators. To keep growing, Gap decided it would expand beyond apparel basics into more far-fetched fashions, such as a denim trenchcoat with faux-fur collar and a "bleach graphic T", which looks like something that fell into the
many trendy looks.
wrong load of laundry. That's when the alienation of many customers began.
Meanwhile, former customers offer up their own explanations: The styles are adolescent. Quality has declined. Within the fashion category that Gap made famous—buttoned down shirts, khaki pants and other basics—the variety of colors and other styling details has diminished.
Gap spokesman Alan Marks says the Spring 2022 season will address the problem of too-trendy fashion. Still, lingering problems at the Gap and Old Navy have gone unfixed despite previous assurances. Quality, he says, remains as high as ever. "We've not reduced the quality we put into our merchandise," he says.
Into 'Navy' Now
Complaints about quality may be especially hard to counter. A pillar of Gap's success was its ability to bring a high level of quality to casual clothes. But in 1994, Gap launched its bargain chain, Old Navy, which featured lower-priced, less-durable clothes with all the classic styling of Gap.
At first, Old Navy's sales soared. But as competitors began offering similar clothing at even lower prices, Old Navy shoppers defected to stores such as discounter Target Corp., also admiried for durability and styling. Meanwhile, many once-loyal customers of the Gap were trading down to Old Navy—or up to Banana Republic.
But many former customers don't like it. When Heather Ceron, a 25-year old public relations executive in Los Angeles, visited a Gap store last year in search of capri pants, she wasn't pleased with what she found. "You can't take pink and baby-blue to work," she says.
Gap's ads continue to work at enhancing the brand image, typically featuring either celebrities or hip-looking young people dancing and singing. Rarely do they highlight specific styles.
Another Gap hallmark was to offer relatively few items, but in a wide choice of colors. But as the number of trendy styles grew, Gap trimmed the color selection of its basics. Mr. Marks says it was a smart decision to go in this direction.
'Hip'Cigarette Wins Suitors And Critics
By GORDON FAIRCLOUGH
For some smokers, Natural American Spirit is something of an oxymoron—a politically correct cigarette.
Made by tiny Santa Fe
Made by tiny Santa Fe Natural Tobacco Co., the cigarette has built a loyal following among hip, younger smokers drawn by its boast of being additive-free and, in some cases, made from organically grown tobacco. Packs, emblazoned with the profile of a Native American wearing a headdress and smoking a pipe, began appearing in organic markets and metaphysical bookstores in the late 1980s and have since caught on beyond the granola set. Sales have nearly tripled since 1997 and are expected to reach at least $120 million this year.
That's why R.J. Reynolds Tobacco Holdings Inc. on Tuesday agreed to acquire Santa Fe for $340 million in cash. Santa Fe accepted Reynolds's bid over an offer from Rothman's Inc. of $353.7 million in cash and mixed securities.
Reynolds, maker of such brands as Winston, Salem, Doral and Camel, figures that with its extensive, nationwide distribution network, it can lend a lot of marketing firepower to American Spirit, which has about 6.2% of the U.S. market. The brand earned $20.6 million last year, and profits are expected to grow about 30% this year. The cigarettes are the brainchild of Santa Fe's 57-year-old chief executive, Robin Sommers, who says he set out to build a brand around the "traditional American Indian usage of tobacco in its natural state."
Public-health experts, however, say additives aren't at the root of the major health problems caused by smoking. Rather, byproducts from the burning of tobacco are. American Spirit cigarettes have higher levels of tar than comparable big brands, says Gregory Connolly, director of the Massachusetts health department's tobacco-control program. American Spirits also contain roughly twice as much nicotine, the addictive chemical in cigarettes, as comparable top-selling smokes. Dr. Connolly says.
Mr. Sommers says his cigarettes have higher tar and nicotine levels because they contain only leaf tobacco and not the fillers often used by bigger manufacturers. He says all packs of American Spirit carry the message: "We make no representation, either expressed or implied, that these cigarettes are any less hazardous than any other cigarettes."
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