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THE UNIVERSITY DAILY KANSAN
7A
WEDNESDAY, NOVEMBER 28, 2001
THE WALL STREET JOURNAL CAMPUS EDITION.
©2001 Dow Jones & Company, Inc. All Rights Reserved
THE WEEK OF NOVEMBER 26, 2001
What's News- In Business and Finance
Top U.S. retailers opened the holiday-shopping season Friday with expanded hours and some of the most aggressive discounts and early-bird specials in recent years in hope of getting consumers back in the buying mood.
So how'd they do? Not great. Shoppers didn't show up in over-whelming numbers, and their purchases were sensible and selective. Roughly 62.1 million people visited a mall on Friday, an 8.1% decline from last year, according to RCT Systems Inc.'s National Retail Traffic Index, which counts the number of people who come in the doors at a sampling of the nation's 1,500 enclosed malls. At department stores, the decline was steeper, at 12.4%. On Saturday, traffic was down 6.8% in malls, and down 11.6% in department stores.
Holiday Season Gets A Lukewarm Start
But the news wasn't all bad for retail. Some early numbers indicate that online sales are off to a healthy start in this year's holiday shopping season. Figures from Nielsen NetRatings showed that 22% more home Internet users conducted online holiday shopping the day after Thanksgiving, compared with the daily average for Monday through Thursday.
Moreover, demand for PCs and consumer electronics, particularly game consoles and DVD players, was stronger than expected. Last year, PC makers never saw robust demand materialize during the closely watched Thanksgiving shopping weekend. With consumer spending representing two-thirds of the nation's gross domestic product, economists track holiday sales closely.
Now It's Official: Recession's Here
A panel of leading economists, the National Bureau of Economic Research, announced that the longest expansion on record gave way to recession in March.
The announcement could give new urgency to a government debate over the proposed economic-stimulus package. Republicans favor loading the package with tax cuts; Democrats want to boost spending.
Trade Group Fights Microsoft Settlement
A trade association representing competitors of Microsoft Corp. is urging a federal judge in Baltimore to reject a proposed settlement of more than 100 class-action antitrust suits against the company.
The settlement of the suits, which claim that Microsoft abused its monopoly power by overcharging for its computer operating system software, fails to help consumers, said Ed Black, president of the Computer and Communications Industry Association in a letter to U.S. District Court Judge J. Frederick Motz.
The settlement would "do nothing to deter future anticompetitive conduct by Microsoft and would inflict great harm upon the technology markets affected by such conduct," Mr. Black wrote. Microsoft agreed in the settlement to provide more than $1.1 billion in software and computers to over 14,000 of the nation's poorest schools.
Microsoft had no immediate comment. Plaintiffs' attorney Stanley Chesley hadn’t seen Mr. Black’s letter, but said there are provisions in the settlement that would address concerns that Microsoft’s gifts would enable it to dominate the educational software market.
New-Car Deals Hurt Used-Car Prices
The 0% financing offers that have boosted new-car sales to record heights are shaking up the used-car
Gauging Recession
Indicators tracked by the National Bureau of Economic Research to date the onset of recession in March 2001 (1.00 = March 2001)
Employment
Payroils peaked in March, and since then are off 0.7%.
1.04
1.02
1.00
Current
1.08
Average*
1.96
1.94
1.92
1999 2000 2001 2002
Industrial Production
*Average for the past six recessions
Source: National Bureau of Economic Research
market. too.
As buyers pounce on Detroit's financing deals for new vehicles, inventories of used cars are pling up, forcing most used-car dealers to slash prices to move vehicles off their lots. But some are holding back and expanding their used-car lineups even more, on a bet that demand for new cars will weaken early next year when the attractive financing offers end.
Consumers are the clear winners in all this. Prices are now some 10% or more below summer levels.
Controversy Erupts Over 'Time Machine'
Many stations use the so-called Time Machine to squeeze more time out of, say, a local news show. But programming that a local station receives from an outside source—a network or a professional sports organization—usually has strict limits on local commercials.
CBS has gotten into a spat with some of its affiliates over a technology that lets TV stations condense shows to slip in more commercials.
Controversy erupted this month when Pittsburgh CBS station KDKA was caught using the Time Machine while broadcasting a pro-football game. Later, CBS learned that other stations it owned were also using the Time Machine to insert additional commercials into prime-time network programs, which also have a limit on advertisements. While CBS declined to comment, a top executive there said all of the CBS-owned stations have been told to stop using the Time Machine in all circumstances.
The Time Machine works by cutting out repetitive video frames. Each second of a television show usually has 30 video frames. But often several of those frames will be identical—a lingering shot of someone standing against a tampost, for example. The Time Machine can remove one of those frames, making the program one-thirtieth of a second shorter. After doing that numerous times, the television station has enough room to squeeze in an additional 20- or 30- second commercial, and viewers don't realize a thing.
Amid stagnant growth in the Internet-access market, America Online said its subscriber base has surpassed 32 million, a net increase of 700,000 since Sept. 30. Brooks Brothers Inc., the icon of high-end American menswear, was bought by Retail Brand Alliance Inc., which runs the Casual Corner women's apparel chain. Volkswagen AG shook up its management structure, reorganizing its broad product lines into two groups—Audi, which will be for sportier cars, and Volkswagen, for cars with a "classic" image.
By Robert J. Toth
Odds & Ends
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from THE WALL STREET JOURNAL of experience, and they just might have connections.
Early Birds Fare Better In This Job Market
College seniors who procrastinate may worsen their plight, say career-services experts. The best opportunities usually are snapped up well before graduation, especially when the job market is weakening.
But the two were raised very differently. Harry was coddled with close supervision, while Frodo was pretty much ignored. Now they're heading out into the world, and the movie world is waiting to see how their fates will compare.
How to Make a Film Franchise
wny should students interested in a particular profession consider talking to their schools' alumni? Because these grads are the voices
AOL Time Warner is hoping 'The Fellowship of the Ring' (above) and 'Harry Potter and the Sorcerer's Stone' will spawn film and merchandise franchises for years to come, despite widely differing marketing and production approaches by the films' studios.
Unlike college, where "anything goes" describes the dress code, the work world imposes a host of unwritten rules on attire. Students and new grads can follow these tips to show that they mean business.
corporate parent, AOL Time Warner Inc.
AOL Varies Its Tricks With 'Lord of Rings', Harry Potter' Series
"Harry Potter and the Sorcerer's Stone," produced by AOL's Warner Bros. unit, opened Nov. 16 in about 3,670 theaters across the country. In about three weeks, on Dec. 19, AOL's New Line Cinema unit will release "The Fellowship of the Ring," based on J.R.R. Tolkien's "Lord of the Rings" trilogy about the Hobbit Frodo Baggins.
once upon a time there were two orphans named Harry Potter and Frodo Baggins. Harry knew magic, Frodo liked adventure, and both were adopted by the same AOL Time Warner
Alumni Are the Answer For Networking Contacts
Faith in the Future
By JOHN LIPPMAN
advanced screenings of "Potter." New Line isn't conducting test screenings of its film, and it won't be shown to critics until early December.
Tolkien's estate has had no involvement in the making of the movie. And New Line's choice of a director, New Zealander Peter Jackson, has been applauded by independent filmmakers, who hail his 1994 thriller, "Heavenly Creatures," even though it earned only $3 million in world-wide ticket sales.
"Once you saw 'Heavenly Creatures,' you knew he had it." says Saul Zaentz, producer of "Lord of the Rings." Mr. Zaentz says Mr. Jackson's command of Tolkien's mythology—the 40-year-old director started reading the books when he was 18—persuaded the producers he had the right "passion" for the project.
Both movies are the first installment in series that will unfold over the next three to six years. In each case, AOL has taken Hollywood's infatuation with sequels to a dizzying new level by creating a film "franchise" before the first movie has established credibility at the box office. Production on "Harry Potter and the Chamber of Secrets," the sequel to "Sorcerer's Stone," began days after the movie's release. Warner Bros. acquired the movie rights to the first four Potter books, and it holds an option for the next three. Three "Lord of the Rings" movies have been produced simulata-
neously.
At the same time, Mr. Jackson
By contrast, the fate of "Fellowship of the Ring" remains to be seen. Only about 30 people have seen advanced screenings so far, compared with some 30,000 to 40,000 who saw
wasn't a slave to the Tolkien world: He eliminated Tom Bombadil, a character beloved by fans, because the character didn't fit into the narrative that he and his writing partner, Fran Walsh, had devised.
Young Harry's success is already firmly in hand. The movie, which cost about $125 million to make, plus $40 million for U.S. marketing costs, is fast approaching $200 million in gross receipts in only its first two weeks. Earlier fears about the long shadow that "Potter" creator J.K. Rowling was casting over the production—affecting everything from the choice of director to the design of the Potter merchandise that is hitting store shelves—appear to have been unfounded. Indeed, the film's producer, David Heyman, has attributed much of the film's success to the fact that it hews so closely to the book.
Hobbit-Sized Actors
The track record of Hollywood's other franchise movies has been uneven at best. Metro-Goldwyn-Mayer's James Bond movies and Paramount Pictures' "Star Trek" movies already number in the double digits. But Warner Bros.' "Lethal Weapon" movies became too expensive after No. 4, and the studio has had problems developing a fifth "Batman" movie. Expectations were high for Universal's comic book-inspired "Darkman," but its two sequels went directly to video.
Mr. Jackson pitched New Line on making "Rings" after Walt Disney Co.'s Miramax pulled out because he wouldn't meet Miramax's demand to condense the three books into a single, two-hour movie. He arrived brandishing conceptual designs from artists Alan Lee and John Howe, who illustrated and provided the covers for the Tolkien books. He also brought a 40-minute tape that showed everything from the misty New Zealand landscape where the movie would be shot to demonstrations of "forced perspective" showing how he would shrink the actors to a Hobbits-sized 3 feet, 6 inches.
New Line spent about $275 million to make the three "Rings" movies, and it's spending at least $30 million more just to market the first one in the U.S. New Line executives have said that more than two-thirds of the production budget has been covered by selling movie distribution and product-licensing rights. The film is scheduled to open in more than 3,000 theaters on Dec. 19.
Some Pout As Lipstick Sees Uptick
BV EMILY NELSON
lipstick sales are red hot. So why is no one smiling?
The reason is that women traditionally turn to lipstick when they cut back on life's other luxuries. They see lipstick, which sells for as little as $1.99 at a supermarket to $20-plus at a department store, as a reasonable indulgence and pick-me-up when they feel they can't afford a whole new outfit. "When lipstick sales go up, people don't want to buy dresses," says Leonard Lauder, chairman of Estée Lauder Cos.
Lauder's Leading Lipstick Index tracks lipstick sales across Estée Lauder's many brands, which account for sales of about half of all prestige cosmetics in the U.S. and include Stila, Origins, Bobbi Brown, MAC and Prescriptives. Since the Sept. 11 terrorist attacks, the index is up broadly, says Mr. Lauder. The index also climbed during past recessions, such as in 1990.
MAC factories started running extra shifts to produce more lipstick after Sept. 11. In the past three weeks, sales of MAC lipstick and lip gloss have grown $12\%$ at stores open at least a year, compared with the year earlier.
"It's like getting a haircut. It makes you immediately feel better," says Meredith Foulke, a 21-year-old senior at Auburn University. This year, she doesn't plan on splurging for a new suede handbag, she says, "but there's always lipstick."
Lipstick sales at mass retailers tracked by Information Resources Inc., the market-research firm, rose 11% from August through October compared with a year ago.
Sales of lipstick at Borghese Cosmetics Inc. are also up 12% since mid-September vs. last year, spurred on by saleswomen wearing T-shirts emblazoned with the American flag and the words, "love, peace and lipstick." Company executives in New York designed the T-shirts after noticing shoppers buying lipsticks and expressing "a sense of defiance that they' aren't going to disrupt our lives and take away our simple pleasures," says Georgette Mushober, the New York-based company's chief executive.
Deep, bright lipstick shades are now most popular, while pale, neutral shades aren't selling as well. Ms. Msobacher says. "This is a case of wanting to brighten up ... [lipstick] has always made women feel good.
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