Skip to main content

Notebook Business


Minding its own business

Microsoft drops support of sexual orientation legislation in Washington

"When should a public company take a position on a broader social issue, and when should it not?"

That's the question Microsoft CEO Steve Ballmer asked himself this week after reports surfaced that a proposed Christian boycott prompted the company's refusal to support a statewide bill in Washington barring discrimination on the basis of sexual orientation.

Long a champion of the homosexual agenda, Redmond, Wash.-based Microsoft was criticized by gay-rights advocates for dropping its support for a statewide measure that ultimately failed by one vote.

The issue gained national prominence when The New York Times quoted Ken Hutcherson of nearby Antioch Bible Church saying Microsoft "backed off" after the pastor threatened to organize a national boycott of Microsoft products at a meeting in February.

"If you don't think the moral issue is not a big issue, just count the amount of votes that were cast on moral issues in the last election," Mr. Hutcherson said he told company officials at the time. "A lot of Christians would have joined me, but it would have been a lot more people, too."

The L.A. Gay and Lesbian Center was so outraged by the idea that Microsoft bowed to conservatives that it asked for a civil-rights award presented to the company four years ago to be returned.

In an e-mail response to employees, Mr. Ballmer said he and Microsoft founder Bill Gates personally supported the legislation, but didn't believe the company had the right to offend shareholders and employees who did not agree with their position.

"We are a public corporation with a duty first and foremost to a broad group of shareholders," he said. "I don't want the company to be in the position of appearing to dismiss the deeply-held beliefs of any employee, by picking sides on social policy issues."

Deciphering the code

The Internal Revenue Service estimates that Americans spent 6.6 billion hours preparing their taxes this year. Does that mean current tax laws are a bit too complex? A presidential commission thinks so.

Instead of simply raising revenues to fund government, the tax code also uses numerous deductions and credits to affect behavior, argues President Bush's Advisory Panel on Federal Tax Reform.

"It wasn't until we really had the opportunity to listen to so many different people talk about so many different aspects of the code that it really sunk in about how much and how often the code is being used these days to either create incentives or disincentives for either investment or behavior," said former U.S. Sen. Connie Mack (R-Fla.), who chairs the nine-member commission.

In addition to large tax breaks for homeowners, parents of college students, and businesses that provide health insurance to their employees, there are also smaller credits for encouraging the use of biodiesel fuel, helping the elderly and disabled, and allowing teachers to deduct the cost of school supplies.

The problem comes when taxpayers try to decipher the rules. Tax breaks often overlap and typically come with pages of instructions and qualifications.

This summer, the panel plans to recommend ways to make the tax laws simpler and fairer. But Mr. Mack isn't sure taxpayers will accept any changes. "Anytime you've got a benefit, wherever it happens to be, whether it's spending or taxes, people don't want to give them up," he said.

Balance Sheet

·, a 24-hour online version of MTV aimed at college students and 20-somethings, topped 1 million viewers earlier this year, and 35-year-old founder Drew Massey said he expects the company to turn a profit in 12 months. "The whole mission is to do with internet TV what Ted Turner did with cable," said Mr. Massey.

· General Motors is recalling nearly 1.5 million SUVs and pickup trucks because of seat-belt design flaws. Among the vehicles affected are the Chevrolet Silverado Crew Cab, Suburban, Tahoe, Cadillac Escalade, GMC Sierra Crew Cab, Yukon, and the Hummer H2.

· While the sales of existing homes and condominiums rose 1 percent in March, the median sales price for a home is up 11.4 percent from a year ago to $195,000. That represents the biggest year-over-year gain since December 1980 when surging inflation pushed home prices upward.

· Boeing received a boost when Air Canada announced plans to purchase as many as 96 of the company's 777 and 787 planes. Included in the deal are as many as 60 of Boeing's new fuel-efficient Dreamliner model, which is set to debut in 2008.

Share this article with friends.


'Epic battle' or plain nuts?

Workers at the world's largest walnut processing plant reached a new five-year contract in March, ending a 13-year strike

The answer is a matter of perspective in Stockton, Calif., where workers at the world's largest walnut processing plant reached a new five-year contract in March, ending a strike that was far from ordinary.

When workers at Diamond of California first walked off the job, George Bush was president, but it wasn't George W. Bush, it was his father. That was Sept. 4, 1991.

"Nobody ever thought it would take this long," said Lucio Reyes, the secretary-treasurer for Teamsters Local 601. "The company didn't expect it. We didn't expect it. I think it was worth it in that we did accomplish something. Both parties now realize we have to work together. Everyone should be feeling good about this."

Everyone? After 13 years, only 241 of the 600 striking workers voted on the new contract and 61 of them voted against it. And while former employees were given 10 days to return to their old jobs, most were forced to find work elsewhere during the 13-year strike, and automated machinery made many of their jobs unnecessary. Few of the displaced workers are expected to return.

So what was it that forced the impasse in 1991? It appears that union leadership was unhappy with the company's dime-an-hour raise and bonus package proposal. Because workers had taken a 30 percent pay cut in 1985, the union leaders believed employees deserved more as Diamond's fortunes improved.

With replacement workers, Diamond continued to prosper. And while Teamsters president James Hoffa called the strike one of the union's "epic battles" in 2000, many believe employees would have been better off had they accepted the original proposal.

Name game

Despite the popularity of its products, Microsoft continues to face battles with releasing its Windows XP operating system overseas.

In Europe, Microsoft was forced to release a version of XP without its media player because European Union regulators ruled the company violated antitrust legislation by locking out competitors. Microsoft is appealing a $665 million fine.

The new product in Europe will be called "Windows XP Professional Edition N" after the EU turned down all nine of Microsoft's name suggestions. Company officials aren't excited about the new name, but they're planning to move ahead so they can begin selling the new operating system to computer stores across Europe.

But the fight may not be over. EU regulators are now investigating complaints by software rivals that the new version is not fully compatible with their programs.

In India, Microsoft faces a different problem: piracy. Although Microsoft enjoys 90 percent market share in India, it is estimated that only two in 10 computers use licensed software.

In response, Microsoft developed a low-cost version of XP that it already sells in Indonesia, Malaysia, and Thailand. The "Wndows XP Starter Edition" enables users to run only three programs concurrently and offers lower-resolution graphics. It also lacks capabilities for home networking and multiple-user accounts.

Microsoft had planned to release the new system in June but is running into a language barrier. "We are still working on providing Indian language capability," said Ranjivjit Singh, the marketing and business operations director of Microsoft's Indian subsidiary. "You can't underestimate the huge development work involved."

Mr. Singh said the initial Indian version will support India's dominant Hindi language initially with nine other local languages added later.

Balance Sheet

· In its continuing efforts to avoid bankruptcy, Delta Air Lines is farming out the maintenance work for its airliners. The restructuring, which will eliminate nearly 2,000 jobs, is expected to save the company $240 million over the next five years.

· Stung by a recent rash of bad publicity, Taser International has heard some good news. A Zogby poll last month found that 77 percent of those questioned support the continued use of electronic stun guns by law-enforcement officials while 61 percent favor individual ownership of the devices. Taser is the only company with a patent to distribute the devices.

· In a move reminiscent of the blockbuster buyouts of the late 1980s, seven private investment firms plan to pay $11 billion in cash to acquire SunGard Data Systems Inc., the financial software powerhouse known for trading services and creating backup data systems in the event of a disaster.

· After serving five months in prison for her role in a stock-sale scandal, Martha Stewart is cashing in. Ms. Stewart has collected $75,000 in salary since her release and has been awarded $3.7 million from her company for legal expenses.

Share this article with friends.


Breaking up

Viacom's CEO wants to break his media company into two entities to increase profit margins

In a surprise March 16 announcement, Viacom CEO Sumner Redstone said he hopes to divide the company into two publicly held entities in order to increase stock values. That represents a dramatic shift in direction for Viacom since its purchase of CBS in 1999.

Mr. Redstone's plan calls for MTV, Paramount, and other cable channels to be part of one company, while CBS, outdoor advertising, and local TV and radio stations comprise another.

The idea is to allow investors to value the company's units separately-the MTV properties, which are growing rapidly, versus the broadcast TV and radio properties, which show little growth but still produce large amounts of cash.

Viacom's split could signal an end to the media empire building that began in the 1990s. Industry leaders once believed that large arrays of media businesses under one roof would create value through the ability to sell advertising across various formats, and the use of one media outlet to supplement and promote others.

"Synergy has proved more elusive than a lot of people imagined," said Sam Craig, a professor at New York University's Stern School of Business. "The creation of content and its distribution are not only different businesses but have different degrees of volatility."

No Wal-Mart discount

As the world's largest retailer, Wal-Mart is a constant news source.

The Bentonville, Ark.-based company made headlines last month for its efforts to extend driving hours for truckers to 16 hours per day, as well as the company's plan to skirt local laws in Maryland aimed at limiting the size of commercial buildings.

Additionally, Forbes' annual listing of billionaires includes five heirs of Wal-Mart founder Sam Walton with a combined net worth of more than $90 billion.

But the biggest story was Wal-Mart's decision to pay a record $11 million fine to end a federal probe into the use of illegal immigrants to clean floors at its stores.

The seven-year saga was highlighted by an October 2003 raid of 60 Wal-Mart stores in 21 states that netted 352 allegedly illegal immigrants representing 18 different nations.

The government, though, never charged anyone at Wal-Mart with wrongdoing. Instead, a number of Wal-Mart contractors pleaded guilty to criminal immigration charges and will pay a combined $4 million in fines.

The probe, though, did initiate changes at the corporate level. For example, Wal-Mart no longer employs outside contractors to clean floors and an executive must approve contracts of more than $10,000 for services.

"We've put stronger internal controls in place so hopefully nothing like this would happen again," said Wal-Mart spokesperson Mona Williams.

Balance Sheet

· Toymakers breathed a sigh of relief last week with the announcement that an investment group intended to purchase Toys R Us for a reported $6.6 billion. With several toy store outlets closing since Christmas, Toys R Us represented one of the few remaining places that stocked a large variety of toys.

· While five Wal-Mart heirs made Forbes' annual list of billionaires this year, Microsoft CEO Bill Gates remained at the top for the 11th straight year with a net value of $46.5 billion. Investor Warren Buffett was second at $44 billion. The number of billionaires grew from 587 to a record 691 this year.

· In an effort to control soaring health-care costs, Chrysler reached an agreement with the United Auto Workers union that will require 35,000 hourly workers, retirees, and their families to pay annual deductibles of $100 to $1,000 for health care that had previously been free. Detroit's Big Three automakers spent $10 billion for medical care last year.

· Television executive Barry Diller is joining the rapidly growing business of internet search. Mr. Diller's InterActiveCorp will spend $1.85 billion to acquire Ask Jeeves, the search engine that finds answers to questions written in their natural form. Other IAC holdings include Expedia, Ticketmaster, and the online dating service

Share this article with friends.