Nike Reaches $7.6 Million Settlement In Race-Discrimination Suit

PORTLAND, Ore. (AP)--Nike Inc. (NKE) has reached a $7.6 million settlement in a class-action race-discrimination lawsuit filed on behalf of 400 black employees of the company's Chicago Niketown store, the company said Monday.

The lawsuit, filed in 2003, claimed managers at the retail store used racial slurs to refer to black workers and customers. They also said the store segregated black employees into lower-paying jobs as stockroom workers and cashiers rather than giving them lucrative sales jobs. And they alleged managers made unfounded accusations of theft against black workers and directed store security to monitor black employees and customers because of their race.

Nike has denied the allegations.

Under terms of the agreement, Nike Retail Services will pay $7.6 million to the current and former employees to resolve the claims. The lawsuit covers black employees who worked at the store from 1999 until now.

Nike also must make a host of other changes to address diversity, such as appointing a diversity consultant to monitor the Chicago store's compliance and a compliance officer at Nike's headquarters in Beaverton. The company must also add an ombudsperson at the store and conduct diversity training for all supervisors and managers there.

Nike also is required to review its human resources practice, create equal opportunity objectives for the store and review its theft-loss policies. It also will create a formal mentoring program for black employees.

The company and the attorney for the plaintiffs declined to comment further on the case.

iPhone Battery Lawsuit: What Did Steve Jobs Say, and When Did He Say It?

The lawsuit filed against Apple (AAPL) and AT&T (T) by a user named Jose Trujillo has generated a lot of heated discussion here and elsewhere, much of it aimed at lawyers and their litigious clients.

Leaving aside the lawyer jokes (we've heard 'em all), there seems to be some confusion about the facts of the case, which centers on whether or not Apple informed purchasers ahead of time that the iPhone's battery was sealed and would need to be professionally replaced after a fixed number of charges -- leaving the owner without a cell phone in the interim.

The complaint claims that this information did not appear in the product's packaging and never came up in Apple's promotion or marketing of the device. A group called the Foundation for Consumer and Taxpayer Rights made a similar complaint about a week after the iPhone went on sale.

At the risk of being called as a witness in the trial, this is what I've learned about what Steve Jobs and Apple said about the battery issue and when they said it:

At the MacWorld keynote in which he introduced the iPhone, Jobs gave specs on battery life but did not volunteer the information that it wasn't user replaceable. Neither does Apple's Jan. 9 iPhone press release.

In subsequent press coverage, the news eventually leaked out, perhaps most memorably in John Dvorak's famous iPhone podcast, in which he quotes an unnamed Cingular (AT&T) executive complaining about the "amateur mistake" Apple made in not having a removable battery.

But the issue here is what Apple said or didn't say, not what the press surmised.

On June 18, Apple issued another press release:

CUPERTINO, California—June 18, 2007—Apple® today announced that iPhone™ will deliver significantly longer battery life when it ships on June 29 than was originally estimated when iPhone was unveiled in January. iPhone will feature up to 8 hours of talk time, 6 hours of Internet use, 7 hours of video playback or 24 hours of audio playback.*

Nothing about battery replacement.

On June 29, the iPhone was released and sold like hot cakes.

On July 2, Glenn Fleishmann on TidBits posted an item complaining that Apple had not yet provided details about the cost of replacing the battery . A week later, he posted a corrective:

...in fact, those were apparently available for at least a day on the Apple Store's ordering page for the iPhone (click the Warranty button in the bottom right). Other repair information appears to have shown up on or around 02-Jul-07.

Among the information Fleishmann says showed up "on or around July 2" is Apple's "iPhone Service FAQ." That file contains this paragraph:

My iPhone warranty has expired. What are my service options?

Apple offers two service options for iPhones that are no longer within warranty. If your iPhone requires service only because the battery’s ability to hold an electrical charge has diminished, Apple will replace your battery for a service fee of $79, plus $6.95 shipping and handling.

The FAQ also describes Apple's $29 Apple Care Service Phone program, which provides a loaner cell phone for use during the three business days yours is off being repaired.

According to Trujillo's complaint, Apple spokesperson Jennifer Hakes confirmed that "Apple posted the battery replacement program details on its website after the iPhone went on sale."

On July 23 Apple posted its iPhone Battery page, describing the proper care and feeding of an iPhone battery. It contains this key paragraph:

Charge Cycles

A properly maintained iPhone battery is designed to retain up to 80% of its original capacity at 400 full charge and discharge cycles. You may choose to replace your battery when it no longer holds sufficient charge to meet your needs.

That "replace" link takes you to a page that tells you what it will cost for the service.

Does any of this justify a class action lawsuit or entitle Mr. Trujillo, his lawyers and the class of iPhone purchasers to damages? You be the judge.

For more on the battery issue, see Joe Nocera's column in the June 30 New York Times, which looks at it from pretty much every angle except the legal and gives Steve Dowling and others at Apple PR a couple of chances to say their piece. (Free subscription required.)

Crude reaches August 2006 high

Oil up 87 cents after surging more than a dollar, driven by third consecutive decline in U.S. inventories.


LONDON (Reuters) -- Crude oil surged more than $1 to $77 on Thursday, its highest level in almost a year, on increasing demand from refiners in the world's top consumer.

The rally lifted U.S. crude above London Brent for the first time since February, restoring its traditional premium. Analysts and investors pointed to U.S. data released Wednesday that showed crude stocks fell for a third consecutive week.

"With imports staying around the current 10.4 million barrels per day and refinery runs expected to increase 150,000 to 250,000 bpd over the next two weeks, potentially larger draws for crude may be on the horizon," Lehman Brothers analysts said.

At 6:47 am ET, crude was up 87 cents at $76.76 a barrel, off a session peak of $77.24, the highest since Aug. 9, 2006. It had surged $2.32 on Wednesday.

London Brent crude was up 52 cents to $76.84. That put the North Sea grade at a discount to U.S. oil for the first time since late February.

"It's a return to normality," said Rob Laughlin at Man Financial, adding that U.S. oil's discount to Brent had been caused in part by refinery problems in the U.S. and he expected the U.S. crude to continue commanding a premium.

"The draw that we saw in some of the crude stocks are demonstrating that the refining position in the states is probably the best it has been for about three months in terms of the operating capacity."

Other analysts pointed to the emergency shutdown of most of Exxon Mobil Corp.'s (Charts, Fortune 500) 326,000 bpd Fawley refinery, which accounts for almost a fifth of Britain's refining capacity.

While bullish for gasoline and heating oil, the closure could be bearish for crude if the plant stops processing for a prolonged period.

Barclays Capital technical analysts, who study charts to determine future price direction, said $76.40 was a key level for U.S. oil, the high of the September contract.

"We are keeping a close eye on the $76.40, WTI high, as a close above would confirm a resumption of the larger uptrend, increasing the odds that prices will test the July 2006, all-time highs at 78.40," they said.

Nokia snaps up Twango

Acquisition of photo-sharing site is part of No. 1 cellphone maker's strategy to broaden its multimedia offering; terms not disclosed.


HELSINKI (Reuters) -- Nokia, the world's top mobile phone maker, said Tuesday it would buy U.S.-based photo-sharing social networking site Twango, but did not disclose the price.

Twango was founded in 2004 but U.S. traffic data from measurement firms Hitwise and Quantcast and global data from Alexa.com show it has found little audience so far compared to sites such as Google (Charts, Fortune 500)-owned YouTube, PhotoBucket or Flickr.

Nokia (Charts) has increased its acquisitions under Chief Executive Olli-Pekka Kallasvuo, who took over in June 2006. He has said the firm is looking to acquire more companies to strengthen its multimedia and corporate offering.

"The Twango acquisition is a concrete step towards our Internet services vision of providing seamless access to information, entertainment, and social networks," Anssi Vanjoki, head of Nokia's multimedia unit said in a statement.

"We have the most complete suite of connected multimedia experiences including music, navigation, games, and - with the Twango acquisition - photos, videos, and a variety of document types," he said.

Analysts see Internet social networks as a key element in the future of the media business. News Corp.'s (Charts, Fortune 500) 2005 acquisition of MySpace has boosted the value of Rupert Murdoch's media conglomerate as a whole.

Wal-Mart in price-cutting mode

No. 1 discounter, battling gas price pressures and housing softness, cuts prices on 16,000 products ahead of back-to-school season.


NEW YORK (CNNMoney.com) -- As Wal-Mart continues to struggle with soft sales amid a housing slowdown and gas price pressures, the retailer announced Monday that it will cut prices further on 16,000 items this week to spur sales for the back-to-school shopping season.

Wal-Mart (Charts, Fortune 500), the world's largest retailer, said in a statement that it hopes to save families with children 10 to 50 percent on school-related merchandise through its new discounts.

Wal-Mart said its plans are based on this year's report from the National Retail Federation, which says families on average will spend $563.49 on school-related purchases for their kids.

As part of the new price rollbacks, Wal-Mart said it offer customers 4 wide ruled notebooks for $1, a 10-pack of No.#2 pencils for $2, 2-pack erasers and 10-pack Bic pens for $5, a Texas Instrument or Casio scientific calculator for $10 and a week's worth of school clothes for $50.

"We know it's tough right now and Americans are looking to us to provide the best value, and we will," Bill Simon, Wal-Mart's chief operating officer, said in a statement.

"We'll continue to be more aggressive on pricing," said Simon added, "[We] already are working with key suppliers on upcoming plans for fall and holiday."

The retailer said in a statement it will change prices on a weekly basis, "depending on the seasonal need," and the top brands that customers want.

Sales of Wal-Mart stores open at least a year, a key measure of retail performance known as same-store sales, continue to trail same-store sales growth at its main competitor Target (Charts, Fortune 500), the No. 2 discounter.

Although Target is in the same discount category as Wal-Mart, its sales haven't been hit as hard as Wal-Mart's in recent months because Target appeals to slightly higher-income shoppers whose disposable incomes are less affected by gas price swings.

However, Wal-Mart surprised its detractors last month with better-than-expected June same-store sales, helped by strong demand for its expanded array of name-brand electronics, including the newly launched Dell computers and other flat panel televisions.

No doubt, Wal-Mart is eager to keep fueling last month's sales momentum heading into the important back-to-school sales season, which typically the second most-important selling season after the fourth-quarter holiday period.

6 months later, a report card on Vista

SEATTLE (AP) - Chris Pirillo leaned away from his webcam and pointed to his printer/scanner/fax machine, which stopped scanning and faxing after he installed Microsoft Corp.'s (NASDAQ:MSFT) new Windows Vista operating system.

'I can't live in Vista if the software that I use in my life for productivity does not work,' said Pirillo, in the third minute of a 52-minute video he posted on YouTube.

Nearly six months after it launched, gripes over what doesn't work with Vista continue, eclipsing positive buzz over the program's improved desktop search, graphics and security.

With Vista now shipping on most new computers, it's all but guaranteed to become the world's dominant PC operating system -- eventually. For now, some users are either learning to live with workarounds or sticking with Vista's predecessor, Windows XP.

Pirillo is geekier than the average user. He runs a network of technology blogs called Lockergnome, and was one of several 'Windows enthusiasts' Microsoft asked for Vista feedback early on.

Still, Vista tested even Pirillo's savvy. He fixed the hobbled printer and other problems by installing VMware, a program that lets him run XP within Vista. But when his trial copy expired, he decided the solution was too clunky -- and too expensive.

He 'upgraded,' as he called it, back to XP.

Users' early complaints aren't a threat to Microsoft's dominance in operating systems. The various flavors of Windows run 93 percent of PCs worldwide, according to the research group IDC. Last fiscal year, Windows accounted for about a third of Microsoft's total revenue of $44.3 billion.

Industry analysts say Vista adoption is plodding along as expected, with most consumers and businesses switching over as they replace old hardware with new. IDC analyst Al Gillen said he expects Vista will be installed on the vast majority of computers in about five years, the time it took for XP to reach 84 percent of PCs.

It's too early for industry watchers to know exactly how many people are using Vista. At the same time, it's hard to gauge Vista's success by comparing it to XP, because the PC market has grown tremendously in the last six years.

In early May, Microsoft said it had distributed 40 million copies of Vista, which costs $199 to $399 depending on the version. But it did not specify the number actually sold through to consumers, versus those shipped to computer makers like Hewlett-Packard Co. (NYSE:HPQ) and Dell Inc. (NASDAQ:DELL)

Analysts noted that as many as 15 million of those copies could represent upgrade coupons given to XP buyers during the holidays, before Vista went on sale. Microsoft would not say how many of those customers installed the new system, but Forrester Research (NASDAQ:FORR) analyst J.P. Gownder estimated just over 12 million U.S. consumers would have Vista by the end of the year, out of about 235 million PCs in the country.

As for the compatibility problems, 2 million devices -- such as cameras and printers -- now work with Vista, said Dave Wascha, a director in the Windows Client group.

'We are way ahead with Windows Vista right now than where we were when we shipped Windows XP,' he said.

Still, it's an uphill battle: Vista interacts differently with programs and peripherals than previous versions of Windows, and some companies have chosen not to spend time and money updating older products. Printer makers, Wascha noted, draw profits from ink cartridges and services, and have little motivation to invest in updating drivers for old hardware.
As a result, many early adopters have made a sport of grumbling about the one device or program they still can't get to work.

And they've ranted about other things, from how hard it is to open Vista's snap-together plastic retail box, to what they see as arbitrary decisions on Microsoft's part to hide common settings and features.

One of the most common annoyances: Microsoft's user account control feature, designed to protect unwitting Web surfers from spyware and viruses that would otherwise install themselves on the hard drive.

Dan Cohen, chief executive officer of Silicon Valley startup Pageflakes, bought a Vista laptop a couple of months ago. After one too many pop-up windows warning of possible threats from the Internet, Cohen switched the control feature off.

Now he gets pop-ups warning him that turning off UAC is dangerous.

'I feel more secure -- and more irritated,' he said. When Cohen went to buy his wife a new computer in April, he stuck with XP on a laptop from Lenovo (OOTC:LNVGY) Group Ltd.

Some analysts say Microsoft hasn't put enough energy into marketing Vista's benefits to consumers. But it may also be the case that Vista's biggest benefits are ones that cause average PC users' eyes to glaze over, like improved security.

'Everybody wants there to be a repeat of Windows 98 -- the excitement, the sales volume, the rate of growth and everything else,' said Michael Cherry, an analyst for the independent research group Directions on Microsoft.

At the time of Windows 98's launch, broadband access to the Internet was catching fire and consumers were pumped up about getting a faster, cheaper computer.

There's no such compelling reason to buy Vista, said Gownder, the Forrester analyst.

Businesses, like consumers, are in no hurry to upgrade. Before the business version of Vista landed late last year, a Forrester survey of about 1,600 companies found that 31 percent planned to upgrade within a year, and 22 percent more planned to be running it within two years.

Most businesses think those plans now seem too aggressive, said Forrester analyst Benjamin Gray.

While corporate technology departments are looking forward to some of Vista's security features and easier administration tools, there's little reason to switch if more secure PCs end up choking on a critical piece of software.

'They're waiting for Microsoft to bless it with a service pack,' said Gray, referring to a major software update that fixes bugs.

The University of Pittsburgh Medical Center, a member of Microsoft's Vista Technical Adoption Program, started evaluating Vista in January 2006. Today, only 300 of the hospital's 30,000 desktop computers run the software.

Karen Malik, associate director of technical services, said the rollout is behind schedule because several key programs still aren't compatible, including patient scheduling software. Malik knows the software vendors will catch up to Vista -- someday. In the meantime, she's not rushing.

'We know eventually we're going to need to move to this operating system,' Malik said. 'It's not really an option.'


Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Ten All-American Sports Cars

Sports cars are different things to different people.
For Don Chaikin, the recently retired automotive editor of Popular Mechanics, if you look up "All-American sports car" in the dictionary, there's a picture of only one set of wheels.
"To me, it's the Corvette," he says. "The classic definition is, it's got to be front-engine, rear-wheel drive. It has to have a V8, and it has to have a true dual exhaust. It has to have two doors and two seats, and it can't be a sports coupe."

Another widely held and passionately defended definition of "sports car" is the tiny, affordable two-seat roadster. Like America the melting pot, this concept is a blend of different nationalities.
Its roots are in the post-World War II boom in tiny, lightweight, mostly British sports cars like MGs and Triumphs. They were finicky to start on a rainy day, not very practical and not even all that powerful. But when they ran, they were, and are, immense fun to drive.

"In the old days, a sports car was thought of as an open two-seater that might not even have a top," says D. Randy Riggs, editor in chief of Vintage Motorsport magazine. "Or else it had a top that you had to spend an hour putting up and down."
High costs and poor quality all but drove the British car industry out of business and into foreign ownership by the 1980s. A Japanese brand revived the British sports car concept in 1989, with the original Mazda Miata, now in a new generation. Compared with other sports cars, it's tiny and unpowered but undeniably fun to drive.

American Adopters American models, on the other hand, have plenty of muscle. To make our list, a car had to be an American brand and built in North America (the Dodge Challenger will be built across the border in Canada).
Such icons include the Pontiac Solstice, for the 2006 model year. GM added the closely related Saturn Sky for 2007.
The Ford Mustang is another All-American set of wheels, in between the bulked-up Corvette and the stripped-down Miata concept.

But since the Mustang and its competitors have four seats, some purists consider them "sport-y cars," as opposed to sports cars per se. Automotive News, the auto industry trade magazine, lumps most of the cars on our list into the larger category of "sporty cars," which are then subdivided based on price. Consulting firm J.D. Power and Associates has a similar "sporty" category, which includes most of the cars on our list that are on sale. Some of our picks aren't on sale yet, so they're not categorized.
However, Riggs points out that even classic Porsche 911s had folding jump seats for kids, and nobody would think of calling them anything but sports cars.
Bottom line: The freedom of choice, the right to different opinions, and the blending of ideas and cultures from different countries doesn't apply to just the good old U.S.A. It applies to her sports cars as well.

Source-forbes

Ten All-American Sports Cars

Sports cars are different things to different people.
For Don Chaikin, the recently retired automotive editor of Popular Mechanics, if you look up "All-American sports car" in the dictionary, there's a picture of only one set of wheels.
"To me, it's the Corvette," he says. "The classic definition is, it's got to be front-engine, rear-wheel drive. It has to have a V8, and it has to have a true dual exhaust. It has to have two doors and two seats, and it can't be a sports coupe."

Another widely held and passionately defended definition of "sports car" is the tiny, affordable two-seat roadster. Like America the melting pot, this concept is a blend of different nationalities.
Its roots are in the post-World War II boom in tiny, lightweight, mostly British sports cars like MGs and Triumphs. They were finicky to start on a rainy day, not very practical and not even all that powerful. But when they ran, they were, and are, immense fun to drive.

"In the old days, a sports car was thought of as an open two-seater that might not even have a top," says D. Randy Riggs, editor in chief of Vintage Motorsport magazine. "Or else it had a top that you had to spend an hour putting up and down."
High costs and poor quality all but drove the British car industry out of business and into foreign ownership by the 1980s. A Japanese brand revived the British sports car concept in 1989, with the original Mazda Miata, now in a new generation. Compared with other sports cars, it's tiny and unpowered but undeniably fun to drive.

American Adopters American models, on the other hand, have plenty of muscle. To make our list, a car had to be an American brand and built in North America (the Dodge Challenger will be built across the border in Canada).
Such icons include the Pontiac Solstice, for the 2006 model year. GM added the closely related Saturn Sky for 2007.
The Ford Mustang is another All-American set of wheels, in between the bulked-up Corvette and the stripped-down Miata concept.

But since the Mustang and its competitors have four seats, some purists consider them "sport-y cars," as opposed to sports cars per se. Automotive News, the auto industry trade magazine, lumps most of the cars on our list into the larger category of "sporty cars," which are then subdivided based on price. Consulting firm J.D. Power and Associates has a similar "sporty" category, which includes most of the cars on our list that are on sale. Some of our picks aren't on sale yet, so they're not categorized.
However, Riggs points out that even classic Porsche 911s had folding jump seats for kids, and nobody would think of calling them anything but sports cars.
Bottom line: The freedom of choice, the right to different opinions, and the blending of ideas and cultures from different countries doesn't apply to just the good old U.S.A. It applies to her sports cars as well.

Source-forbes

Harry Potter film stirs up $44.8M in sales

The teenaged wizard beats 'Spider-Man 2' for the highest Wednesday single-day ticket sales in box-office history; advance orders of new book hit record.


NEW YORK - "Harry Potter and the Order of the Phoenix," a film based on the hit series of novels dreamed up by billionaire author J.K. Rowling, brought in $44.8 million on its first day in theaters.

Ticket sales for the new Harry Potter film, from Time Warner (down $0.06 to $20.64, Charts, Fortune 500) unit Warner Bros., reached the biggest Wednesday single-day gross in box-office history, according to Media By Numbers, a box-office sales tracker.

The figure includes $12 million in ticket sales for screenings that started Tuesday night, at midnight.

"Order of the Phoenix," ticket sales beat the previous Wednesday record held by "Spider-Man 2" of $40.4 million in 2004, the sales tracking firm reported.

Early orders of J.K. Rowling's seventh and final book in the Harry Potter series, Harry Potter and the Deathly Hallows, have already reached more than 1.2 million at Barnes & Noble (up $0.62 to $39.19, Charts, Fortune 500), the largest number of pre-orders for any book in the company's history, according to the book seller. Under tight security, Barnes & Noble expects to start shipping the book to its stores on July 16th.

"Harry Potter and the Order of the Phoenix" is the fifth film based on Rowling's best-selling fantasy novels, and stars Daniel Radcliffe as Harry, a teen wizard who, with his classmates, uses magic spells against the forces of dark Lord Voldemort.

"Order of the Phoenix," also stars Emma Watson and Rupert Grint as Harry's closest school friends, as well as Ralph Fiennes, Michael Gambon, Maggie Smith, Gary Oldman, Helena Bonham Carter, Emma Thompson and Imelda Staunton.

Your vacation at risk

Packed planes, jump in cancellations, force millions to scramble for flights; angered pilots cite job cuts.


NEW YORK (CNNMoney.com) -- As the summer travel season gets into full swing airline cancellations are soaring, raising questions in some quarters whether passengers are now paying the price for job cuts and other cost-saving steps taken by airlines since 9/11.

Airlines canceled nearly 100,000 flights in June, more than double the number a year earlier, according to figures from flight tracking service FlightStats, leaving millions of travelers scrambling to find seats. With airlines filling a record percentage of the available seats so far this year, that could leave some travelers waiting a day or more to make their trip.

And the problem was not isolated to June. For the first half of the year, cancellations jumped 54 percent, according to FlightStats.

The Air Line Pilots Association says a growing part of the problem is flight crews at the nation's airlines being stretched too thin, with pilots having to fly more hours under contracts reached with carries facing huge losses.

Last month the ALPA unit at Northwest Airlines (Charts, Fortune 500) gave management there a vote of no-confidence, saying that bad scheduling and an insufficient number of pilots meant the airline was losing badly-needed revenue. Northwest had more than 2,100 flights cancelled in June, or 5.6 of its schedule, according to FlightStats. That's more than seven times above its cancellations a year earlier.

The problem was worse at the end of the month, after the bad weather had passed, as pilots were unavailable for flights. On May 24 FlightStats shows Northwest canceled about one flight out of seven.

"I think there is a potential for the problem to be more widespread," said Monty Montgomery, a Northwest captain with 21 years at the carrier and a spokesman for the union there. "They can all keep cost lower by lower staffing, but it doesn't allow for flexibility in the face of weather delays, or other disruptions."

Northwest got the most publicity about cancellations, but it wasn't alone. AMR Corp (Charts, Fortune 500). unit American Airlines, the nation's largest carrier, saw canceled flights reach 3.6 percent of its scheduled flights, up 388 percent from a year earlier, according to FlightStats. JetBlue Airways (Charts), hurt by well known flight cancellation problems after an ice storm in February, saw cancellations soar 10-fold in June, as canceled flights reached 3 percent of its total. US Airways Group (Charts, Fortune 500) also saw 3 percent of its flights canceled, more than double a year earlier.

In fact Southwest Airlines (Charts, Fortune 500) was the only carrier among the nation's eight largest to see any drop in cancellations in June. As a group, those eight carriers have seen 2.2 percent of flights canceled in June, nearly triple the rate a year earlier.

The FAA allows pilots to have 100 hours a month of flight time, which starts being counted when the plane pushes back from the gate and runs until it gets to the gate at the next airport.

Most major airlines have a contract limit for hours that pilots would be required to fly that is less than the FAA maximum, but those contract limits have risen in recent years. But the airlines could count on having pilots fly extra hours above the contract limits for extra pay and still be within the FAA rules. As the contract requirements have risen closer to the federal limits, there's less flexibility for both the airlines and the pilots.

Northwest said its problems were due to bad weather early in June that left it without pilots with enough hours to fly late in the month under FAA regulations.

It said it is moved as quickly as it could to address the problems by scaling back on its schedule, and is now flying about 3 percent less flights and working to rehire and retrain pilots who had been furloughed as the airline went through bankruptcy.

The Air Transport Association, which represents major carriers, said most of the canceled flights were from weather and air traffic control issues, not crew shortages or changes in the contract. But it does concede airlines are now working with fewer pilots trying to cover more flights than in the past.

"The carriers are no long in position to pay crews to sit around and wait for weather to happen," said Dave Castelveter, spokesman for the trade group. "In the environment that carriers operate in today, they don't have the luxury of excess staff."

He also stressed that even with the recent increases in flight delays and cancellations, only a small percentage of flights end up being canceled. But he agreed that it can be more difficult for a passenger whose flight is canceled to make other arrangements than it used to be.

"The airlines can no longer afford to fly half-empty airplanes, just like they can no longer afford to have excess staff," he said. "They had to right-size and rationalize the fleets. That means when there is a disruption, there are less available seats."

Castelveter said the industry needs the FAA to start taking steps soon to start improving the air traffic control system and cut down on delays, not just to reduce the fuel being wasted, but also to stop delays from eating into flight time limits.

"Full implementation of that technology would be 2025, but you can begin to make a difference within a year," he said.

Meara McLaughlin, a vice president at Flight Stats, said the problem was not only flight crews being stretched thinner but pilots not being as willing to make an extra effort due to poor labor relations at many carriers. The deep pay cuts and reduced pensions the airlines have forced union pilots to accept in recent years have caused problems beyond the strict regulatory limits.

"Not only is it a lack of flight and duty time but a lack of good will," she said. "This summer is reaping the fruit of situation that has grown over a number of years."

Airline consultant Mike Boyd agreed that pilot morale is causing the scheduling problems as much or more than contractual and flight limit issues. "You're dealing with an industry with labor unions that are very unhappy campers," he said. "You have people who might have flown extra hours who didn't in June."

He said part of the problem is the industry is having an unusually tough time finding the new pilots it needs.

"United Airlines is trying to hire 400 more pilots. But it wants to merge with another carrier, and pilots know that people at bottom of the seniority list are the ones who get booted off after a merger. The starting pay in the industry at the regional carriers sucks."

Boyd said airlines are finding, like Northwest, that many pilots furloughed after Sept. 11 are passing up the chance to return to work due to cuts in pay and benefits. And hiring regional airline pilots and training them is expensive and time-consuming, he added.

"Many of them love flying, but they found other jobs that pay as well or better that don't require time away from their families," said Boyd about the pilots furloughed from different carriers. "The benefits that used to be there aren't there any more. A lot of people aren't going back."

Apple may launch Nano-based iPhone

iPhone manufacturer could release a smaller, cheaper version of the touchscreen phone later this year, JP Morgan analyst says.

Apple Inc. plans to launch a cheaper version of the iPhone in the fourth quarter that could be based on the ultra-slim iPod Nano music player, according to a JP Morgan report.
Kevin Chang, a analyst based in Taiwan, cited people in the supply channel he did not name and an application with the U.S Patent and Trademark office for his report dated July 8.

Apple (Charts, Fortune 500) filed a patent application document dated July 5 that refers to a multifunctional handheld device with a circular touch pad control, similar to the Nano's scroll wheel.

Apple spokeswoman Natalie Kerris declined comment.

Long lines of people turned out June 29 when U.S. sales began for the iPhone, a mobile phone with a music player and Web browser. Analysts have estimated that sales in the first weekend were as high as 700,000 units.

Chang said a way to follow up the iPhone with a cheaper version would be to convert the Nano into a phone and price it at $300 or lower. The iPhone sells for $500 and $600, depending on storage space.

"We believe that iPod Nano will be converted into a phone because it's probably the only way for Apple to launch a lower end phone without severely cannibalizing iPod Nano," he said, noting that the new phone could have "rather limited functionality."

Another analyst, Gene Munster of Piper Jaffray, said he expects Apple to bring out iPods that resemble iPhone, which features a touch-sensitive screen, later this year. Such products would help stop iPhone from eating into iPod sales.

"We believe the iPhone reveals much of what the iPod will soon be," Munster said in a note to clients, adding that "iPods with some of the touchscreen features of the iPhone should lessen the impact of cannibalization."

Kerris also declined comment on Munster's note.

ecause of the anticipated lower price for the Nano-based phone, 2008 sales of 30 million to 40 million units "is achievable," according to JP Morgan's Chang.

This would be a much larger volume than is expected of the first iPhone. Apple has targeted sales of 10 million units in 2008, which would give it a 1 percent share of the global market.

Sales of the iPhone are expected to be limited to a small percentage of the market due to its high price tag, particularly in the United States, where 85 percent of consumers tend to spend $100 or less on cell phones.

But analysts forecast that a cheaper phone from Apple, which leads the digital music player market, could pose a much bigger threat to long-established phone makers such as Nokia (Charts), Motorola Inc (Charts, Fortune 500), Samsung Electronics Co. Ltd. and Sony Ericsson, owned by Sony Corp. (Charts) and Ericsson (Charts).

Taiwan's Catcher Technology will be the "major source of metal casing" for the new phone, according to Chang, who cited an unidentified channel source.

Revenue from Apple could represent T$6 billion ($183 million) to T$8 billion ($244 million) revenue for Catcher in 2008, Chang estimated. Top of page

Sony cuts price of PS3 in North America amid weak sales

Sony (NYSE:SNE) Corp has slashed the price of the 60-gigabyte model of its PlayStation 3 game console in North
America by 100 US dollars to 499 dollars, the game unit of the Japanese electronics giant said Monday.

The new price took effect Monday, Sony Computer Entertainment Inc said.

The price cut comes as Sony struggles to recover its once-mighty position in the global video game market where competition has heated up since Microsoft Corp (NASDAQ:MSFT) launched the Xbox 360 in 2005 and
Nintendo Co introduced its Wii last November.

Earlier Monday, Microsoft Japan CEO Darren Houston said the US company has been offering competitive prices for its Xbox 360 in Japan and will continue to make the product competitive in the hotly contested Japanese market.

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Bush blasts Democrats on budget

In weekly radio address, president renews veto threat if Congress passes its spending proposals.

Escalating a budget battle with Democrats who control Congress, President Bush accused them Saturday of pushing tax-and-spend policies and renewed his veto threat.

Though he stopped short of branding them a do-nothing Congress as some fellow Republicans have, Bush complained that Democrats were "behind schedule passing the individual spending bills needed to keep the federal government running" beyond the end of the fiscal year Sept. 30.

"They are working to bring back the failed tax-and-spend policies of the past," he said in his weekly radio address. "Democrats are failing in their responsibility to make tough decisions and spend the people's money wisely."

With approval ratings driven down to lows of his presidency largely by the Iraq war, Bush is trying to turn the tables on the Democratic-led Congress. Dismal poll numbers for Congress show growing disappointment with its performance as well.

Bush's sharpened criticism reflects increased tensions with Congress, which came under Democratic control in November's midterm election, slowing his domestic agenda. Since then, Democratic lawmakers have started to challenge Bush not only on the unpopular Iraq war but with their broad authority to investigate his administration.

Bush also has had trouble keeping Republicans in line. Several influential senators have broken with him over his Iraq policy, and once-loyal conservatives contributed to last week's collapse of his planned immigration overhaul.

Bush and Congress sparred for several months this year over a war-funding bill and now are headed for a showdown on measures to fund items from homeland security to health care. Bush has proposed a $933 billion spending cap for the fiscal year starting Oct. 1 and has vowed to enforce it.

Democrats have sketched out a budget blueprint $22 billion higher. They say Bush's insistence on heavy spending on Iraq has starved domestic programs and they also accuse him of fiscal irresponsibility for pushing through large tax cuts in 2001 and 2003, which they say have mostly benefited the rich.

Bush seeks to make those tax cuts permanent while Democrats want to let tax reductions for the wealthiest expire. Bush accused Democrats of proposing in the next five years the "biggest tax increase in history" though he gave no details how he reached that conclusion.

"I have made clear that I will veto any attempt to take America down this road," he said.

Bush's fiscal policies also have come under criticism by conservatives furious that he allowed spending to surge when Republicans led Congress.

Ford, utility join to promote plug-in vehicles

Ford Motor Co and power utility Southern California Edison will announce an unusual alliance on Monday aimed at clearing the way for a new generation of rechargeable electric cars, the companies said.

Ford Chief Executive Alan Mulally and Edison International Chief Executive John Bryson are scheduled to meet with reporters at Edison's headquarters in Rosemead, California, the companies said.

The two chief executives will announce a "joint initiative" that represents a first-of-its-kind tie-up between a major automaker and a major utility in the area of "plug-in" hybrid vehicle technology, representatives of both companies said.

Further details were not immediately available, but environmental advocates said the tie-up showed the momentum building for developing rechargeable hybrid vehicles as a way to reduce oil consumption and greenhouse gas emissions.

Environmental advocates, particularly in California, have been pressing automakers to roll out such plug-in vehicles that would be capable of running on electricity for short distances and recharging at a standard electric outlet.

"I think they're all realizing that the handwriting is on the wall," said Sherry Boschert, a plug-in vehicle advocate and author.

Southern California Edison, which supplies power to some 13 million people in the area around Los Angeles, has been a vocal advocate for the development of electric vehicles and proposed tax incentives and rebates to speed their development.

SCE has said that its existing power-generation facilities would be capable of supplying millions of vehicles if they were recharged at night when demand is low.

Experimental technology being tested in northern California on a small fleet run by Web search giant Google Inc. also allows parked plug-ins to transfer stored energy back to the electric grid, opening a potential back-up source of power for the system in peak hours. ord became the first American car maker to introduce a hybrid vehicle when it released the Escape in 2004.

But faced with declining U.S. market share, Ford later backed off ambitious sales targets for hybrids and was criticized by environmental advocates for having lost momentum in the race to develop alternatives to combustion engines.

In June, an executive for Ford said it was developing new hybrid vehicles but saw deep-seated engineering problems with plug-in vehicles.

Ford Executive Chairman Bill Ford Jr., who led the automaker until last September, said last month that he regretted that Ford had not moved faster to seize the lead in addressing environmental concerns.

Led by Toyota Motor Corp's Prius, the current generation of hybrid vehicles uses batteries to power the vehicle at low speeds and in stop-and-go traffic, delivering higher fuel economy.

General Motors Corp. has already begun work this year to develop its own plug-in hybrid car, designed to use little or no gasoline over short distances.

GM showed off a concept version of the Chevrolet Volt in January and has set 2010 as a target for production.

Analysts have said pending legal and regulatory changes could speed the adoption of hybrid technology.

The U.S. Senate last month approved sharp increases in fuel economy standards and is considering a package of tax credits for consumers who purchase plug-in vehicles and the companies that make them. Democratic presidential candidate Sen. Barack Obama is one of the sponsors of that legislation.

Xbox repairs cost Microsoft $1B

Microsoft will take a $1B charge due to an 'unacceptable' number of repairs under an extended warranty program.

LOS ANGELES (Reuters) -- Microsoft Corp. said Thursday said it would take a more than $1 billion charge to fix "an unacceptable number of repairs" to its Xbox 360 video game consoles and had missed shipment targets for the end of June.

Microsoft (Charts, Fortune 500) is under pressure with mounting complaints about Xbox 360 failures on the Internet and growing expectations that Sony Corp. could slash the price of its rival PlayStation 3 console at a video game exposition next week.o far Microsoft has the lead on Sony in the battle for high-end video game machines, but it shipped only 11.6 million 360s by the end of June, compared with a target of about 12 million, Chief Financial Officer Chris Liddell said during a conference call with analysts Thursday.

Robbie Bach, president of Microsoft's entertainment and devices division, said the timing of the announcement about the charge for the quarter ending in June and a new extended warranty were unrelated to any potential move by Sony.

"This is just one of those things that happens when it happens," Bach said in an interview. "We reached our conclusion early this week and because it's a financially meaningful issue we had to announce it immediately."

The hardware issue has marred a string of successes for Xbox 360, which has built an early lead over the PlayStation 3 with Microsoft's strong lineup of games and popular online service.

But it is also finding increasing competition for some parts of its business, such as Apple Inc.'s incursion into television shows delivered over the Web, which is also a feature of the Xbox online service.

Red flashing lights

Microsoft said it had investigated the sources of hardware failures indicated by three red flashing lights on the console and had identified "a number of factors" that can cause such failures.

Bach said many of those factors took time to show up in the consoles, explaining why the number of repairs had grown in the second year of the Xbox 360's release. He would not say exactly how many Xbox 360s had been returned due to hardware issues except that "the number is too large."

The company said it would extend warranty coverage to three years to cover the problem and would reimburse customers who had previously paid for repairs related to the three-flashing-lights error message. It also said it has made improvements to the Xbox 360 console.

The charge will be in a range of $1.05 billion to $1.15 billion, before taxes, for the quarter ended June 30, Microsoft said.

Microsoft had already cut its forecast for Xbox 360 shipments in January. It had previously forecast shipments of 13 million to 15 million by the end of June.

"What you have to ask yourself as an investor is, should Microsoft be in the hardware business?" said Kim Caughey, senior analyst at Fort Pitt Capital Group, which oversees about $1.2 billion, including Microsoft shares, for clients.

She added, however, that the charge should not be a concern for long-term investors.

"It's a lot of money, let's not say it isn't," Caughey said. "But if you're a long-term holder, I don't think it's going to have that great an impact."

Bach said the new warranty would not impact the Xbox division's plan to turn a profit in fiscal 2008, which started this month.

He was also mum on the issue of whether Microsoft would announce a price cut for the Xbox 360 console if Sony made a similar move.

"We will assess what we do with pricing and other aspects of our business based on our own business," he said.

Microsoft shares dropped slightly to $29.91 after closing at $29.99 on Nasdaq

Coke considers swallowing Snapple

As part of a push into tea drinks, Coca-Cola may be interested in deal for the iced tea maker owned by Cadbury.

GENEVA, Switzerland (Reuters) -- Coca-Cola Co. is evaluating whether to make a bid for Snapple, the iced tea division owned by Cadbury Schweppes Plc, as part of Coke's push into tea-based drinks, Coke Chief Executive E. Neville Isdell told Reuters.

"That is a valuation that we undertake - whether it (Snapple) is of interest to us or whether we can do it on our own," he said in an interview Wednesday.

Coke (Charts, Fortune 500) also aims to expand its palette of tea-based drinks using a revived pact with Nestle and recently met with officials from the Coke-Nestle joint venture, Beverage Partners Worldwide, to advance their plans, Isdell said.

"You're going to see more value-added products from the tea platform," he said.

New products with Nestle or a possible tea acquisition from Cadbury (Charts) would serve Coke by accelerating its efforts to expand its offering of healthy drinks, juices and waters.

Isdell rejected the notion that the market for carbonated soft drinks like Coke was in secular decline, and pointed to the quick rise in market share that followed the rollout of the group's new beverage, Coke Zero - billed as the company's most successful brand launch in 20 years.

When asked what Coke Zero would do to the group's published growth targets, Isdell said, "It will help it. I'm not going to give you a new prediction but it will help it."

Coke last said it expected long-term growth of 3 percent to 4 percent in volume and 6 percent to 8 percent in ongoing currency-neutral operating income.

Coke Zero had already grabbed market share of 3 to 5 percent for carbonated soft drinks in key markets such as France, Germany and Japan, Isdell said.

Snapple could be a real thing for Coke

Cigarette tax hikes lead the pack

Tobacco taxes in many states have risen in the last year while gas and sales taxes have held steady, says a new nationwide survey.

Smokers have seen even more of their money go up in flames as state cigarette taxes continued to rise over the last year, according to a new survey.

Sales and gasoline taxes have mostly held steady, however, said the report by CCH, which provides tax and accounting information.

Ten states have raised their rates on cigarettes over the last year, it found. Arizona had the largest cigarette tax increase - a boost of 82 cents to $2.00.

There are now 8 states that charge more than $2.00 per pack, and New Jersey's $2.58 rate is the highest in the nation. A majority of states now have rates over 80 cents per pack.

"Cigarettes continue to be targeted for some hefty tax increases," CCH State Tax Analyst Dan Schibley said in a statement. "By contrast, the vast majority of states are standing pat on gas and sales taxes."

Seven states raised their gasoline taxes compared to a year ago, with the largest being a 2-cent hike in Washington state.

The lowest per-gallon tax was found in Georgia at 7.5 cents, while Washington has the highest at 36 cents per gallon. More than half of states have a rate less than 20 cents per gallon.

Sales taxes remain the largest revenue generators for states that have them. Mississippi, New Jersey, Rhode Island and Tennessee have the highest rates at 7 percent. Colorado has the lowest at 2.9 percent.

Only five states - Alaska, Delaware, Montana, New Hampshire and Oregon - do not have a sales tax.

Cheap states for cheapskates

Some states use their lower tax rates to stand out from their neighbors. Residents on the Michigan-Wisconsin border can save $1 per pack if they buy the cigarettes in Wisconsin.

On the East Coast, it's $20 cheaper per carton to buy cigarettes in Delaware compared to New Jersey.

Washington state has high taxes on gas and cigarettes, so some people opt to buy the same items in neighboring Idaho and Oregon.

But it doesn't usually make sense to drive across state lines to find a better rate on the gas tax.

"With gas averaging close to $3 a gallon nationwide, your car would have to get phenomenal mileage to justify driving any distance just to save a few cents per gallon on the gas tax," said Schibley. Top of page

Pension plans face more cuts

Defined benefit pensions, which have been on the decline for years, still cover roughly 44 million workers and retirees. But they may become less generous and available to even fewer workers over the next two years, according to an analysis by the Employee Benefit Research Institute (EBRI) and Mercer Human Resource Consulting, which surveyed 162 plan sponsors.
he survey revealed that in the next two years close to 40 percent of pension sponsors expect to close their plans to new hires, while 27 percent plan to freeze benefits for all participants, which means no further benefits will accrue beyond those earned to date. Many workers will need to save more to compensate.

Twelve percent said they plan to reduce the level of pension benefits provided. And 10 percent plan to switch to hybrid plans, which are like 401(k)s except that only the employer contributes to the plan and often guarantees employees a rate of return.

Only 3 percent, meanwhile, said they will terminate their plan, which generally means they will convert the plan's existing assets into annuities for plan participants, and no further benefits accrue.

The Pension Protection Act of 2006 now imposes more stringent contribution requirements on pension sponsors. What the Mercer/EBRI analysis found was that "the higher the expected increase in contribution, the more likely a company is to freeze or close its plan," said pension expert Jack VanDerhei, an EBRI fellow and Temple University professor.

Another major factor influencing companies's plans to change their pensions are new rules from the Financial Accounting Standards Board (FASB), which for the first time required companies to report any pension funding surplus as an asset, or conversely, any underfunding as a liability.

Plan sponsors also are awaiting a second set of changes from FASB, which if they go through are expected to alter the way they calculate their pension assets and liabilities, a move that is likely to increase the volatility in earnings.

"Even for those employers with overfunded plans that don't care about the level of cash contributions (required under the Pension Protection Act) ... you take a 10 percent equity hit (to your pension assets) and that can wipe out a company's operating income overnight," VanDerhei said. "You'll be dead on your bottom line."

On the plus side, said EBRI senior research associate Craig Copeland, when companies do freeze or terminate their plans they often increase their contributions to workers' 401(k)s. Of the employers that have changed their pension plans in the past two years, almost half increased or initiated an employer match, while roughly 33 percent added or increased a non-matching employer contribution, according to the Mercer/EBRI analysis.

Those who said they plan to freeze or terminate their plans also said they would make their defined contribution plans more generous, Copeland said.

The second-phase of the Mercer/EBRI analysis will involve weighting the plans in the survey to better reflect their distribution in the pension world at large.

While the weighting may change the percentages of companies that are likely to freeze their plans, close them to new hires or reduce pension benefits, Copeland doesn't expect them to change that much given how high the unweighted responses were.

"It looks like more and more defined benefit plan sponsors will be changing their plans, certainly for new hires," he said. Top of page