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THE WALL STREET JOURNAL CAMPUS EDITION.
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© 2001 Dow Jones & Company, Inc. All Rights Reserved.
What's News- In Business and Finance
Attacks Shatter Employment Picture
Beyond the obvious economic damage of Sept. 11—the stock-market plunge, sputtering airlines and the heightened risk of recession—lurks another threat; an end to a golden era of low unemployment
From 1997 through 2000, the economy expanded at a $4% annual pace, well above the $2% to $3% rate most economists had considered the country's speed limit. Faster growth meant factories produced more, stores sold more, and companies of all kinds needed more workers than in any other recent period in U.S. history.
All of those positives now are threatened. Even before Sept. 11, demand for workers was falling. Since the attack, the labor market has deteriorated sharply, especially in industries such as travel and tourism, which have been among the biggest sources of entry-level jobs in recent years. For some workers, full-time jobs are eroding into part-time posts.
Meanwhile, many people who are laid off are finding it hard to obtain state unemployment insurance. States often require workers to have held a job for a certain length of time and peg insurance payments to income level.
Bush, Democrats Spar Over Economy
President Bush and Democrats tangled over an economic-stimulus package.
Administration officials told congressional leaders that Mr. Bush wants the bulk of his proposed $60 billion to $75 billion package to go toward tax cuts. The rest would go to spending—much of it earmarked for a package of unemployment and health-care benefits for jobless workers.
Democratic leaders generally are comfortable with the size of the White House proposal but want to spend much more of it on worker benefits. Many Democrats also favor massive spending on bridges, road and other infrastructure, rather than tax cuts, to stimulate the economy.
Airlines Make a Play For Leisure Travelers
The nation's big airlines slashed airfares for leisure travel, a few days after most airlines lowered their business tariffs to try to jumpstart business after the terrorist attacks.
Delta Air Lines led the charge, offering a sale on tickets purchased through Monday for domestic travel through Dec. 15. Overseas trips must be completed in March, April or May. Numerous other big carriers, such as United, American and Continental, offered similar deals.
Even before Sept. 11, "Harry Potter and the Sorcerer's Stone" was seen as a can-t-miss holiday blockbuster. Now, young Harry is swooping down at just the right moment for Warner Bros. Pictures.
Warner and Disney Hope for Magic
Warren Bros. and the studio has suffered through a string of disappointments this year, including the recent films "Rock Star" and "American Outlaws." The movie studio that made household names out of Dirty Harry, Batman and Bugs Bunny hasn't produced a blockbuster since "The Perfect Storm" in 1999. Where once its reputation was staked on big movies with big stars, Warner Bros.' greatest success so far this year, "Cats & Dogs," featured a cast of no-name felines and canines.
Meanwhile, Walt Disney Co. chairman and chief executive Michael Eisner has been on an aggressive campaign to reassure investors and the public that everything will be all right at Disney. The lack of a recent hit film—and worries about its theme parks in the wake of terrorist attacks—had increased worries about the company's prospects.
Disappearing Jobs
Disappearing Jobs Total U.S. nonagricultural jobs created, in thousands
Source: Economy.com
problem.
Critics faulted Mr. Elsner for not rushing Disney into acquisitions of Internet or cable companies, as competitors did. Now, Mr. Elsner says, his caution will pay off. Companywide cost-cutting, begun well before the economy went soft last year, will prove Disney prescient, he says, and leave the company poised to "go through the roof" when better economic conditions return. He says he is bullish on the company's entertainment creations and its ability to exploit them. Top of the list is "Monsters Inc.", a computer-animated coproduction with Pixar that is expected to be a big hit in November.
Government Sites Yank Sensitive Data
Government agencies—and even some private entities—have been removing from their Web sites information they fear could help terrorists plot attacks.
The Environmental Protection Agency, concerned about attacks involving chemicals, stripped its Web site of information about the nation's chemicals plants and what companies would do if chemicals escaped. The Defense Department took down its Central Command Web site regarding Middle East and Asian affairs and its Special Operations Command, because it was hacked into this week. The sites contained such items as news releases, speeches and biographies of leaders in the command.
Home Offices Get New Lease on Life
Just stay home.
That's the feeling of some workers nervous about going into the office because of the Sept. 11 attacks and the possibility of further terrorist strikes. Across the nation, more people are requesting to work from home, companies and consultants say, wanting to avoid buildings that could be potential targets and to stay closer to their families at a time of heightened anxiety. At the same time, companies are thinking about giving more employees remote computer connections to ensure they can work even if buildings become inaccessible.
Odds & Ends
French food giant Groupe Danone, which makes Dannon yogurt and Evian water, bought a big chunk of Stonyfield Farm Inc., the New Hampshire yogurt maker noted for being "socially conscious" ... Sales of cars and light trucks didn't fall as sharply as expected last month, thanks to interest-deal deals ... Conde Nast Publications will shut down Demode Moselle magazine with its November issue.
By Robert J. Toth
THE WEEK OF OCTOBER 8,2001
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As Sales Slow, Bargains Pile Up
Weak Holiday Forecasts Fuel Deep Discounts Across Retail Sector
t's beginning to look a lot like a discount Christmas.
discount Christmas.
A pair of new K2 inline skates that usually sells for $130 will soon go for less than $65 at Sam's Club, the discount chain.
Syms is offering gray wool Brooks Brothers trousers for only $39.99.
Burlington Co Factory has Chaps Ralph Lauren wool Navy-blue pintriped suits, still perched on their Macy's hangers, marked down to $169.98 from $450.
- Students Change Gears As Career Questions Loom The great disconnect: For some students, there's nothing more disorienting than realizing they probably won't be happy in the profession they're studying for. Here's advice from career counselors on finding the right career path.
Earlier Bargains
Immediately after Sept. 11, fullprice retailers such as Neiman Marcus Group Inc., Saks Inc. and Federated Department Stores Inc. experienced a sharp drop in sales, especially in their Manhattan stores. About two weeks ago, Neiman's Bergdorf Goodman unit canceled its remaining fall orders. Retailers are concerned that if companies continue slashing jobs and the economy worsens, sales will slow further, inventories will bulge and profits will disappear.
$103.59 from Many retailers already were reducing inventories before the Sept. 11 attacks, anticipating slower sales. But now, in the uncertain aftermath of the terrorist attacks, nervous full-price retailers are canceling orders or postponing new shipments, leaving discounters with their pick of in-season merchandise.
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THIS WEEK AT:
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Mind your manners: Lunch and dinner interviews are becoming popular as firms try to assess whether a candidate will fit in and not embarrass the company. A few tips help interviewees manage these situations.
- Well-Prepared Grads Ace Meal Interviews
The retailers' predicament is good news for shoppers, who are likely to find bargains earlier in the Christmas season, often on items that aren't normally discounted. But for full-price chains, such as Federated's Macy's and May Department Stores Co.'s Foley's, the discounting could herald a return to the price
The big discount stores are benefiting, too. Tom Grimm, chief executive of Sam's Club, a unit of Walmart Stores Inc., told analysts the slowing economy has helped his buyers get access to more brand-name merchandise and in larger quantities.
Jan LaDie, a 46-year-old career-development official at the business school at Southern Methodist University in Dallas, says she has become a more cautious consumer as the economy has slowed. Recently, she shopped for the first time at Syms and found a pair of Brothers brood wool trousers for $39.99. Now she's thinking of sending her college-age son and husband in to buy suits. "I expect that stores are going to have to discount items to attract the consumer," she says.
Shoppers are pouncing. At a Dallas-area Burlington Coat Factory, Shirley Brooks, a retired nurse, was hunting for bedding and housewares. "I bought a Jones New York red suit with sequins on the bottom for Christmas," she says. "It cost $69, half of what it would have cost me at a department store. With the economy going down, I'll be shopping here."
presents.
Syms Corp., the Secaucus, N.J.,
off-price apparel retailer with about
45 stores, says worried vendors are
peddling goods at prices about 10%
below where they were several
weeks ago. Manufacturers have
started calling to unload merchandise
calling to a month sooner than usual.
By Wall Street Journal staff reporters Erin White and Ann Zimmerman
Burlington Coat Factory Warehouse Corp., a Burlington, N.J., discounter with 302 stores, says it has seen an increase of about 30% in offers from vendors selling goods. Prices are more negotiable, too. "There will be bigger breaks in the future," Chairman Monroe Milstein predicts.
Nordstrom announced an unprecedented 10-day fall sale starting in late September, discounting certain items by $33% to $60% - the first time it has held a major sale outside the three it schedules each year since it began selling apparel in 1963.
"It'll be the most promotional Christmas ever," predicts Britt Beemer, founder and chairman of America's Research Group, a Charleston, S.C., company that specializes in retail. In the recession of the early 1990s, most retailers waited until the first weekend in December to start whacking prices. This year, Mr. Beemer recommends that retailers start slashing prices on Thanksgiving weekend.
"We're getting calls from people I never heard of, before offering us good deals," says Patrick Byrne, chief executive of Overstock.com. For example, he has snapped up thousands of Citizen watches. "I don't think we would have been able to buy them at all before the attacks," says Mr. Byrne. "The distributor got nervous sitting on inventory."
For a manufacturer, retailers' discounts may salvage some sales, but the brand can be tarnished. The Web site Overstock.com, for example, recently bought some high-end watches from a distributor facing cancellations. The Web site listed a Movado men's watch, the "Esper"
anza," for $585.99, saying it normally sells for $975—a savings of $389.01.
Rick Cote, Movado Group Inc.'s chief operating officer, says he doesn't know how the watches ended up on Overstock.com but isn't happy about it. "It's not in our interest to have our product appear cheapened," he says, adding he wonders if they are counterfeiters. They aren't, the Web site counters.
Unloading Inventory
Overstock.com says it scored 8,000 comforters for about half of what it might have paid in early September. And it bought about 1,500 Hewlett-Packard computers for about 20% less than the usual price.
wars of Christmas past. And once the aggressive ad campaigns and steep markdowns start, they don't end until the season is over.
The lawsuit, filed in U.S. District Court in Los Angeles, says Morpheus is picking up when Napster Inc., now shut down while it refashioned itself as a legal operation, left off. But unlike Napster, whose operations were curbed by the music industry's court action, Morpheus bills itself as a decentralized, or "peer to peer," system with no central computer, but instead, a constantly changing collection of personal computers belonging to the people logged on to the service at any one time.
By LEE GOMES
Record Labels Sue Web Site Sharing Files
The entertainment industry has opened a new chapter in its fight against online piracy by filing a lawsuit against a popular Web file-sharing system called Morpheus.
In their lawsuit, though, record labels and Hollywood studios represented by the Recording Industry Association of America and the Motion Picture Association of America say that Morpheus indeed uses central-server computers for such tasks as keeping track of who is online. Those central machines, says a spokesman for the record-industry group, "make the system more efficient."
the system.
Use of Morpheus has exploded in recent months. According to Webnize, a Cambridge, Mass., research outfit, nearly a million people at a time were using Morpheus last month—nearly double the number from August—and they downloaded more than 1.5 billion files, both music and full-length movies.
The lawsuit names MusicCity.com Inc. and MusicCity Networks, which operate Morpheus, along with several smaller companies. The companies didn't return calls seeking comment.
While the record industry was largely successful in going after Napster, legal observers say it will have a tougher time in taking on Morpheus and other "peer to peer" systems. While Napster's founders made it clear in internal communications during the service's early days that the purpose of the software was to exchange music, the creators of most peer-to-peer systems have been careful to describe their software as general technology capable of exchanging all manner of files, including many legal ones.
peer-to-peer file systems also are likely to claim in court that they have "substantial noninringing" uses, which under a U.S. Supreme Court doctrine, could give them the kind of legal protection Napster lacked.
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