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From:the_economist-business-admin@lists.economist.com
To:jdasovic@enron.com
Subject:The world this week: Business 16th - 22nd June 2001
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Date:Fri, 22 Jun 2001 05:34:00 -0700 (PDT)

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[IMAGE]=09[IMAGE]=09[IMAGE]=09[IMAGE]=09Business this week
=09=09=09=09June 21st 2001
=09=09=09=09From The Economist print edition =20
=09=09=09=09
=09=09=09=09
=09=09=09=09Not quite devalued
=09=09=09=09
=09=09=09=09Domingo Cavallo, Argentina=01,s economy minister, announced a s=
et of measures,=20
including subsidies for exports and tariffs on imports, that will have a=20
similar effect to a devaluation. The fixed link between Argentina=01,s curr=
ency,=20
the peso, and the dollar has hampered domestic firms. But markets were=20
unimpressed: bond yields rose.
=09=09=09=09
=09=09=09=09See article: Cavallo's latest gamble E+
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
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=09=09=09=09
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=09=09=09=09
=09=09=09=09Euro-area inflation rose to 3.4% in the year to May, significan=
tly above the=20
European Central Bank=01,s 2% ceiling. America=01,s consumer-price inflatio=
n hit=20
3.6%. The ECB left interest rates unchanged.
=09=09=09=09
=09=09=09=09See article: Stagflation? E+
=09=09=09=09
=09=09=09=09Line breaks up
=09=09=09=09
=09=09=09=09Microsoft and AOL Time Warner broke off talks about including A=
merica Online=01,
s software in a new version of Microsoft=01,s Windows operating system. AOL=
=20
claimed that Microsoft was unwilling to have RealPlayer, AOL=01,s streaming=
=20
music and video software, competing with its own system, Media Player.=20
Microsoft insisted that broader issues were involved.
=09=09=09=09
=09=09=09=09See article: From friends to foes=20
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09Nortel Networks, a large Canadian telecoms-equipment firm, conf=
irming that=20
the telecoms business was in terrible shape, said that its losses in the=20
current quarter would exceed $19 billion. The company said that it would la=
y=20
off 10,000 workers in addition to 20,000 job cuts that it had previously=20
announced.
=09=09=09=09
=09=09=09=09British Telecom announced that 90% of a o5.9 billion ($8.2 bill=
ion) rights=20
issue had been taken up, despite speculation that investors would be=20
reluctant to acquire more BT shares even at a heavily discounted price. The=
=20
company will use the cash to pay off part of its o30 billion debt.
=09=09=09=09
=09=09=09=09Against most expectations, Iran=01,s supreme leader, Ayatollah =
Ali Khamenei,=20
ruled that parliament could investigate the state television and radio=20
monopoly.
=09=09=09=09
=09=09=09=09Oracle, an American software company, bucked the downward trend=
in the=20
technology sector. It announced profits for the latest quarter of $855m,=20
beating analysts=01, expectations. But Infineon, Europe=01,s second-largest=
chip=20
maker, said that it would make a pre-tax loss in the quarter of euro600m=20
($525m), worse than the most pessimistic predictions. The German company=01=
,s=20
shares slumped.=20
=09=09=09=09
=09=09=09=09Marconi, a British telecoms-equipment maker, reacted to its sha=
res hitting a=20
near-six-year low by reducing the strike price of share options for its=20
executives. Hard-hit shareholders were less than impressed.
=09=09=09=09
=09=09=09=09Meat market
=09=09=09=09
=09=09=09=09America=01,s Tyson Foods, the world=01,s biggest chicken compan=
y, renewed its=20
interest in IBP, a leader in beef and pork, after a court ruled that it=20
should not have broken off a $3.2 billion merger last year. Tyson reckoned=
=20
that a merger to create a meat-processing behemoth would beat paying=20
compensation.
=09=09=09=09
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=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09EPA
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09DaimlerChrysler unveiled plans to cut investment at Chrysler, i=
ts loss-making=20
American arm, by 40% over the next five years to save around $18 billion. T=
he=20
company insisted that efficiency would improve and products would not suffe=
r.
=09=09=09=09
=09=09=09=09General Electric=01,s planned takeover of Honeywell, already ap=
proved by America=01,
s regulators, seemed likely to be scuppered by the European Commission. Jac=
k=20
Welch, GE=01,s boss, had delayed his retirement to see the deal through, bu=
t has=20
seen market conditions worsen since the bid was made.
=09=09=09=09
=09=09=09=09
=09=09=09=09See article: Welch squelched E+
=09=09=09=09
=09=09=09=09Net profits at Lehman Brothers, an American investment bank, in=
the latest=20
quarter were up by 14% compared with a year ago, to $430m. Its=20
bond-underwriting business has prospered. Goldman Sachs said that net profi=
ts=20
were down by 24% to $577m after a slowdown of merger and acquisition activi=
ty=20
and initial public offerings.
=09=09=09=09
=09=09=09=09Law and order
=09=09=09=09
=09=09=09=09Andersen, one of the =01&Big Five=018 accountants, agreed to pa=
y a $7m fine imposed=20
by America=01,s Securities and Exchange Commission to settle a case of audi=
ting=20
fraud. Waste Management, a firm audited by Andersen, had overstated profits=
=20
by $1.4 billion between 1992 and 1996.
=09=09=09=09
=09=09=09=09See article: Andersen's fairy tales E+
=09=09=09=09
=09=09=09=09The Federal Energy Regulatory Commission announced that it woul=
d cap=20
wholesale electricity prices in California at all times, rather than just=
=20
during power emergencies. It also extended electricity-price controls to te=
n=20
other western states. The move fell short of even tougher controls favoured=
=20
by Gray Davis, California=01,s governor.
=09=09=09=09
=09=09=09=09See article: A turning point, maybe E+
=09=09=09=09
=09=09=09=09Despite talks with the prime minister, France=01,s employers=01=
, club, Medef, said=20
that from the end of July it would cease to take part in running the=20
social-security system with the trade unions and the government. It objects=
=20
to the government=01,s plan to use social-security funds to help pay for Fr=
ance=01,
s shorter, 35-hour working week.
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09World business on trial.
=09=09=09=09
=09=09=09=09Visit Economist.com's Business section and get authoritative in=
sights on the=20
latest in the mobile-phone industry, E-strategy briefs from Merrill Lynch,=
=20
Siemens, etc., the EU's workers' rights and much more. Also be sure to visi=
t=20
the Business this week section to stay informed on the week's key events. F=
or=20
concise global business reports click here . =20
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