WEDNESDAY,OCT.3,2001
THE UNIVERSITY DAILY KANSAN - 7A
THE WALL STREET JOURNAL CAMPUS EDITION.
WSJ.com
© 2001 Dow Jones & Company, Inc. All Rights Reserved.
What's News- In Business and Finance
As signs of economic recession multiply, the White House and Congress scrambled to devise a legislative package aimed at stimulating the U.S. economy.
The government can pump more money into the economy either by increasing its own spending or giving tax revenues back to households and companies through tax relief. The main issues still to be decided: Should the emphasis be on tax cuts or spending increases? Should the tax cuts be temporary or permanent? Should the emphasis be on consumers or businesses?
What Kind of Help Is Best for Economy?
Meanwhile, some analysts worry that aggressive interest-rate cutting by the Federal Reserve may not stimulate spending at a time when consumers are worried about their jobs, and businesses are stuck with too much capacity.
Airlines Cut Flights As Well as Fares
With planes flying half-empty these days, big airlines are starting to cut fares.
Despite the steep decline in air traffic since the Sept. 11 attacks, most major airlines have been slow to discount their ticket prices to attract business. Carriers have feared appearing opportunistic or insensitive, and they weren't sure cheaper fares would entice jittery customers anyway. One notable exception: Southwest Airlines, which launched a fare sale and new, patriotic advertising to dr up business. Now other major airlines have started to offer deep discounts as well.
Meanwhile, carriers keep laying off employees—and cutting the number of flights. Last Friday, for instance, United said it would reduce its capacity to 74% of what it offered prior to the Sept. 11 terrorist attacks.
THE WEEK OF OCTOBER 1,2001
After One-Way Trips
Rental Cars Adrift After One-Way Trips
Rental-car companies are trying to put their fleets back together.
When airlines were grounded after the Sept. 11 terror attacks, thousands of stranded travelers hit the road instead, picking up rental cars and taking them on one-way trips.
Now rental companies are trying to relocate thousands of vehicles, some left in remote areas around the country, some simply abandoned in parking lots. Among the solutions rental companies are working on: slashing prices on one-way rentals and selling the displaced cars.
Microsoft Sued, Passport Challenge $ ^{1} $
Competitors of Microsoft Corp. served up two new challenges to the software giant.
Software maker Novell Inc. said it sued Microsoft in federal court, alleging that Microsoft made "false and misleading statements" about Novell in statements to customers.
Those statements, Novell said, were made on ersatz cereal boxes called "Microsoft Server Crunch" that Microsoft sent to Novell customers in a marketing campaign. Microsoft said on the box that Novell was shifting its focus from software development to consulting, so customers using Novell's NetWare software would lack proper support, and would therefore face higher costs, Novell said in a statement.
Microsoft declined comment.
Meanwhile, Sun Microsystems Inc. has recruited 32 other big companies to become charter members of an online identification alliance likely to compete with Microsoft's high-profile Passport system. The effort, dubbed the Liberty Alliance Project, plans to set technical ground rules to allow users of PCs, cellphones and other products to get
Tough Times
Companies in many sectors have announced significant layoffs:
COMPANY NUMBER
Boeing 30,000
American Airlines 20,000
United Airlines 20,000
Continental Airlines 12,000
US Airways 11,000
Northwest Airlines 10,000
Honeywell International 7,600
Advanced Micro Devices 2,300
Excite@Home 500
Nordstrom unspecified
Eastman Kodak unspecified
Source: the companies
access to all kinds of Internet resources by logging on just once. That is also the stated goal of Passport—but many companies view Microsoft as a potential competitor in Internet services, or feel more comfortable with standards set by a group rather than by one company.
Sun and other participants hope Microsoft will join the Liberty effort. Microsoft said it would consider working with the alliance, but said it makes more sense for the group to adopt Passport's proposals, since it has a head start.
TV Programmers Tweak for Terror
TV networks have been scrutinizing their shows, looking for anything that might upset viewers by reminding them of Sept. 11. NBC backed out of a planned "Law & Order" ministeries that dealt with biological terrorism, while Fox cut footage of a plane exploding from its new CIA drama "24." Fox's sister syndication unit Twentieth Television decided to pull from reruns an episode of "The Simpsons" in which the family goes to New York to retrieve Homer's car, which is parked illegally in front of the World Trade Center.
Not everyone applauds such excising. "I'm not sure if this attempt to protect Americans from seeing these images in entertainment is such a good thing to do," said Robert Thompson, director for the Center for the Study of Popular Television at Syracuse University. "To go back and retroactively make every reference and appearance of the World Trade Center vanish is to make it worse," he says, predicting such moves will later be judged as "overreactions."
In a scene from the comedy show "Ellen" that was pulled by CBS last week, Ellen, played by Ellen DeGeneres, tells her mother that her online business has "collapsed." Her slightly ditty mother replies: "Oh, well thank your lucky stars you weren't there at the time."
Costs From Attack Not 'Extraordinary'
A task force of the Financial Accounting Standards Board has decided not to allow companies to treat costs and expenses related to the Sept. 11 attacks as an "extraordinary item" in the financial statements they file with government regulators. That means costs that companies consider attack-related won't be allowed to be broken out as a separate line item but instead will be considered costs that are part of normal business operations.
The problem was the task force felt it would be impossible to separate the direct effects of the attack from the prevailing economic conditions before the event and the impact on the economy afterwards. The impact was so pervasive, affecting virtually every company and creating such a broadly new economic landscape, that "it almost made it ordinary," a task-force member said.
By Robert J. Toth
THIS WEEK AT:
COLLEGEJOURNAL.COM
College cutbacks: To hold the line on costs, fewer employers will be visiting campuses this year, and those that do may not have many jobs to fill. Here's what to expect—and how you can beat the odds.
from THE WALL STREET JOURNAL.
Seniors in the Job Market Can Expect High Hurdles
how one candidate feels about his job prospects.
Stormy skies: With layoff mounting and a recession looming, the coming on-campus recruitment season could be a washout for second-year M.B.A. students. Find out
- Why B-School Students Are Fearing the Worst
- Are You Clueless About Interviewing?
Basic training; A marketing director explains how candidates can impress employers without making fatal errors that kill their chances.
Retailers Come to Grips With a Delicate Task In Time of Mourning
Holiday Cheer On Hold
H
ACKENSACK, N.J. -Christmas will be a little late this year.
In some stores, that is. Pottery Barn, for instance, had planned to bring out some of its Christmas treasures this week. Two back rooms at the Pottery Barn store in the Riverside Square shopping mall here are packed with items like jingle-bell wreaths, reindeer candelas and peppermint-candy candles that manager George Bautista simply loves. But now Mr. Bautista—like all Pottery Barn managers—will delay launching Christmas for a full month.
It's a potentially costly decision, because many retailers had been counting on early Christmas sales to combat economic weakness. But Mr. Bautista contends that sales growth matters less than decorum. "I see a lot of stores that have Christmas stuff out, and it doesn't seem right vet." he says.
"We can't pretend it's going to be the same cherry season," says Diane Broderick, a 49-year-old office manager, shopping at Riverside Square last week. She hopes that retailers ring in the holidays with "a little bit of good taste."
The weak economy posed a Christmas challenge to retailers even before Sept. 11. Now they face the delicate task of promoting holiday cheer in a season of outrage and grief.
Slowing Growth
This upscale mall is just eight miles from where the attacks on the World Trade Center occurred. But retailers everywhere share its concerns. Meanwhile, expectations for Christmas sales nationwide are sliding further. Research firm Retail
Forward Inc, is predicting fourthquarter sales growth, excluding autos and gasoline, of just 1.5%, compared with 4.5% last year.
At a Pottery Barn competitor in Riverside Square, furniture retailer Bombay Co., Christmas trees already are sparkling. "We have to go on," store manager Matthew Mazza says. Actually, Bombay launched its decorations the week of Sept. 10. The process was well under way when the terrorist attacks occurred. "We certainly didn't mean to offend anyone," says Cathy Pringle, vice president of marketing for Bombay. But "how do you stop 400 stores? It's like turning around the Queen Mary." A couple of customers have called the company, she concedes, calling it "insensitive."
Yet at the moment, excessive cheer is the biggest concern of most retailers at Riverside Square. They realize that many Christmas sales may already be lost; Ms. Broderick, for one, already has decided to trim her $2,000-to-$3,000 holiday budget, giving less to the malls and more to
The mall itself doesn't want any such complaints. After a year of holiday planning, marketing director Brenda Haas is scrapping Christmas ads featuring a smiling girl and replacing them with photos of products that represent security: blankets, candles and pillows in warm colors like amber and plum.
More important than salvaging Christmas is avoiding the possible long-term damage of offending customers. History offers at least one example of how to push on, but tastefully: In 1963, six days after President John F. Kennedy was assassinated, Macy's proceeded with its Thanksgiving Day parade but draped black bunting on its boats. This year, Macy's is brainstorming ways to make parts of the parade its 75th-tributes to New York and America.
Here at Riverside Square, no Christmas lights sparkle yet at anchor Saks Fifth Avenue. But plenty of holiday spirit shone in the retailer's Christmas catalog, and its executives inserted a letter into it apologizing for that. "On press prior to [Sept. 11], this catalog and other mailings may contain material and tone that are inconsistent with the gravity of these events," the note reads.
Wrong Message?
Ms. Haas also did something dramatic—she erected an 88-foot-long board with the words "United We Stand" on top, on which shoppers could write messages. But should the board remain standing when the mall starts piping in Christmas carols? Shopper Marisa Kardos, 16 years old, doesn't think so. While scribbling a message on the board herself, she says the mall should take the board down by Thanksgiving. "It could put a depressing tone to the holidays," she says.
Nothing appears to be different at Riverside Square clothing retailer Chico's. But what customers don't realize is that a Chico's television commercial underwent a crucial change after Sept. 11. In the spot, a
woman talks about growing up in Kentucky and moving to New York. At the end of the ad, she smiles and says, "New York hasn't gotten to me yet"—a line that suddenly struck Jim Frain, Chico's vice president of marketing, as unintentionally callous. On Sept. 12, the Fort Myers, Fla., retailer, which has nearly 300 stores nationwide, pulled the commercial, which it planned to run through Thanksgiving, and later edited in a new ending. Now the model says: "I like to go to Chico's when I'm looking for something really special."
charities.
Similarly, customers at the Gap store at Riverside Square won't notice the change it made in its advertising and marketing—but the changes are real nonetheless. Since Sept. 11, the big apparel retailer has banned all holiday display ideas bearing heavy amounts of the color red, plus ads with deep-red backgrounds. "Certain colors can denote feelings that tie back to something horrible that happened," says Stacy MacLean, a Gap Inc. spokeswoman.
By Wall Street Journal staff reporters Amy Merrick, Patricia Callahan and Shirley Leung.
Workers Find Fewer Jobs, Lower Pay
BY ELLIOT SPAGAT
RVING, Texas-A week before the Sept. 11 terror attacks, Robert Kearney quit a Dallas-area warehouse job that paid $9.25 an hour because he was convinced that he could make $10 an hour elsewhere for similar work.
Now, the 32-year-old is finding that the hourly wage for the work has fallen to between $7 and $8.
Javier Garcia, a 31-year-old factory worker, had three job interviews the week of the attack, all of them canceled. "There is no work," he says while culling job listings at a Texas Workforce Commission office in Arlington, outside Dallas.
Workers are quickly finding that many employers, rattled by the New York and Washington attacks and uncertain about the economy, simply aren't hiring, even in industries that don't appear to be affected by recent events. The fallout affects high-wage and low-wage earners alike. Further, with more layoffs and more worker insecurity, more and more people are looking for work.
That is especially true in areas hard hit by the slide in travel, such as the Dallas-Fort-Worth area, home to the world's fifth-busiest airport and headquarters for AMR Corp. and its American Airlines unit. Cities that rely on travel and tourism are "just getting creamed," says Mark Zandi, chief economist at economy.com, a research firm that has estimated the impact on 318 U.S. metropolitan areas.
Before the attacks, layoffs were largely confined to high-tech hot spots such as Silicon Valley and industrial regions in the Midwest and South, Mr. Zandi says. But the troubles in tourism and other industries are likely to ripple through and "take down economies that had held up pretty well," he says.
The exception to the dismal layoff picture: The government is on a hiring spree to bolster national security. Positions are available at the Federal Bureau of Investigation for speakers of Arabic, Farsi and Pashto. The Federal Aviation Administration is hiring more federal air marshals, and the U.S. Customs Department wants more inspectors at the nation's numerous points of entry.
But neither Mr. Zandi nor other economists see employment increasing generally until next year.
"Nobody really comes out of this ahead," Mr. Zandi says. "It's just a matter of how badly you are affected."
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