The Wall Street Journal Weekly Quiz · Web viewNEENAH, Wis. -- Everywhere you look, Kleenex is under siege. Cheap generic tissue is tearing into its market share. Meanwhile, it faces

The Wall Street Journal Education Program Weekly Review & QuizCovering front-page articles from Jan 20-26, 2007Professor Guide with Summaries Spring 2007 Issue #1Developed by: Scott R. Homan Ph.D., Purdue University

Questions 1 – 12 from The First Section, Section A

Europe's Big Cars Take TollBy STEPHEN POWERJanuary 20, 2007; Page A1http://online.wsj.com/article/SB116925593551082282.html

BRUSSELS -- European Commission President José Manuel Barroso says it's time to "attack the problem of climate change."But for his own family, political Europe's chief executive owns a vehicle that's hardly saving the planet. The family ride is a Volkswagen Touareg -- an SUV that, in its most-efficient version, emits 1.6 times the average level of carbon dioxide for new cars from Europe's manufacturers. To demonstrate how powerful the Touareg is, Volkswagen recently used one to tow a 747.Despite paying sharply higher fuel taxes than Americans, Europeans are driving faster, heavier, more-powerful automobiles than they did in the past. SUV sales are rising in Europe, and amid growing price competition from Asian auto makers, buyers are demanding vehicles with weight-adding features such as air conditioning.That trend is jeopardizing Europe's green credentials and undermining its pledge under the 1997 Kyoto Protocol to reduce emissions of greenhouse gases to 8% below 1990 levels by 2012. Although the EU has cut overall greenhouse-gas emissions by nearly 5% since 1990, CO2 emissions from cars and commercial trucks in Europe have risen more than 20% -- offsetting much of the savings in other sectors. According to the U.S. government, emissions of greenhouse gases have increased by 16% in the U.S. since 1990.The auto industry's inability to cut CO2 emissions in Europe fast enough is putting it on a collision course with regulators. Next week, the European Commission is expected to consider a proposal to impose new CO2 regulations that some experts say could raise the retail price of a new car in Europe by €3,300 (about $4,300) on average -- a blow to Europe's beleaguered car makers, and a departure from the EU's traditional reliance on voluntary efforts by auto makers. Any regulations would likely also apply to U.S. and Asian car makers.The dispute in Brussels over how to reduce auto emissions is taking shape amid a global debate over how to cut emissions of greenhouse gases. It coincides with a spate of warnings that have renewed public attention to climate change, including the collapse of an ice shelf near the North Pole and the Bush administration's recent proposal to classify the polar bear as a threatened species amid concerns about melting ice.In the U.S. -- where the Bush administration doesn't treat CO2 as a pollutant as Europe does -- the newly Democrat-controlled Congress is putting climate change high on its

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agenda. The Supreme Court is weighing whether the Environmental Protection Agency has the authority to regulate car makers' CO2 emissions. California and some other states, meanwhile, are moving forward with their own plans to reduce CO2 emissions from cars.In Brussels, the next step could well be mandatory cuts intended to reduce average CO2 emissions from new cars by more than 20% from current levels, to 120 grams per kilometer over three to six years. For auto makers, that proposition -- bound to entail investments in fuel-saving technologies and reductions in sales of their biggest, most-profitable vehicles -- comes at a time when Europe's auto market is racked by intense price competition, weak demand, and underutilized factories."You can't sustain this industry and millions of jobs if you say by 2010, 120 grams is the regulated result," says DaimlerChrysler AG chief executive Dieter Zetsche.Any effort to impose CO2 regulations is likely to generate fierce resistance, particularly in Germany. One out of seven jobs in Europe's largest economy depends on the auto industry. German manufacturers -- including DaimlerChrysler's Mercedes unit, BMW AG, Porsche AG, and Volkswagen AG's Audi brand -- are particularly vulnerable because their lines are thick with vehicles that have heavy engines and churn out relatively high CO2 levels.To reduce CO2 emissions as quickly as some EU officials would like, sales of some of the heaviest, most-profitable vehicles would have to fall by 10% -- a step that would cost BMW roughly $650 million a year, according to a recent analysis by Citigroup Inc. That's more than BMW's net profit in the third quarter of 2006. Research by experts hired by the European Commission indicates the price of a new car in Europe would rise, on average, about $4,300 if the industry is required to reduce average CO2 emissions from new cars to 120 grams per kilometer by 2012. Environmentalists say those costs would be more than offset through savings at the pump from improved fuel economy.Since 1998, the European Commission has relied on an industry pledge to cut average CO2 emissions from new cars by 25% from 1995 levels by next year. At the time, European Commission officials said a voluntary approach would give companies flexibility to achieve the target in the most cost-effective way.But several trends have slowed auto makers' progress. With customers demanding more features and performance, the average weight of new cars in Europe has risen nearly 15% since 1999, while average horsepower has grown by nearly a third.Sales of SUVs -- which typically consume more fuel, and thus emit more CO2 than small cars -- are up. They account for roughly 6% of new sales in Europe and are projected to grow to more than 10% by the end of the decade, versus less than 3% in 1998. (In the U.S., SUVs account for roughly a quarter of automobile sales.)The bottom line: The industry risks falling short of its pledge. A recent study commissioned by the European Federation for Transport and Environment found three-quarters of all car brands in Europe have failed to improve their fleets' fuel economy at the rate needed to meet next year's target."We're not on track...it's absolutely necessary we have binding regulations," says Pieter van Geel, the Netherlands' state secretary for housing, spatial planning and the environment.In theory, cutting a car's CO2 emissions is as easy as improving a vehicle's consumption of fossil fuel.


But in an echo of long-running debates in Washington over promoting fuel economy, auto makers in Europe are warning of trade-offs between safety and the environment. Industry officials complain new EU safety rules have made it harder to reduce CO2, by adding weight to cars and making them less aerodynamic.Among the most ballyhooed changes is a 2005 EU rule that seeks to reduce pedestrian deaths and injuries by setting minimum heights between car hoods and engines. The rule is intended to soften the impact when a pedestrian's head hits the hood of the car. It forces manufacturers to leave more "crumple room" in designs.Industry officials say the rule undermines fuel economy by encouraging them to install features that add weight, such as collision sensors. Some environmentalists and safety experts say the industry is exaggerating the weight impact of safety rules and that weight increases have been driven more by comfort features.Europe's gasoline taxes haven't been enough to deter customers from heavier, more-powerful vehicles. Although a gallon of gas in Europe costs more than $5, compared with $2.31 in the U.S. as of last month, the cost of owning and maintaining a car in Europe has been falling for years, thanks to better-designed engines and the growing percentage of cars that run on diesel, which tend to be more efficient than those that run on gasoline.Another reason Europe's auto makers are having trouble cutting emissions: competition. Asian rivals like Toyota Motor Corp. now account for more than 17% of new-car sales in the region, compared with 14% in 1999. The competition is leading to deals on features that add weight, such as air conditioning and navigation systems. Nearly 90% of new cars sold in Western Europe now come with air conditioning, compared with 70% in 2000.Many car makers also are rushing to add SUVs to their lines, including companies better known for small cars or sporty sedans, such as Volkswagen and Renault SA."It is so nice and big, and I sit up high," Ingrid Fischer, a 52-year-old mother of two in Kamp-Lintfort, Germany, says of her Mercedes M-Class SUV. She says she doesn't dwell on the M-Class's CO2 output -- 249 grams per kilometer, compared with the average of 161 for new cars made by European manufacturers.

1. European’s are demanding features in their automobiles such asa. air conditioning Correctb. DVD playersc. sun roofsd. low CO2 outputs

2. The average weight of new cars in Europe has risen nearly ____ since 1999, while average horsepower has grown by nearly a third.a. 5% b. 10%c. 15% Correctd. 20%

Can a Re-Engineered Kleenex Cure a Brand's Sniffles?By ELLEN BYRON January 22, 2007; Page A1http://online.wsj.com/article/SB116943033699083323.html



NEENAH, Wis. -- Everywhere you look, Kleenex is under siege. Cheap generic tissue is tearing into its market share. Meanwhile, it faces mounting pressure in a consumer-products industry obsessed with infusing even humble paper products with innovation and high-tech ingredients. Olay's Total Effects cleansing wipes use a "Vitalipid system," which delivers antiaging moisturizers with vitamins E, B-5 and lipids. Pledge Clean & Dust cloths contain "antistatic agents" that promise to remove dust and allergens as they clean furniture.Where does that leave Kleenex, an 83-year-old brand so mundane it has become synonymous with tissue itself? Top executives at Kimberly-Clark Corp. are making a high-stakes bet they have an answer: Kleenex laced with a mild pesticide to fight cold and flu viruses.Kleenex's predicament can be found up and down the aisles of supermarkets and drugstores, where marketers are in a race to re-engineer the classic products of America's cupboards. Procter & Gamble Co. turned old Mr. Clean into a new line of pretreated sponges dubbed "Magic Eraser," and a line of car-care products, and its cleaning solution added fragrances such as "Sparkling Apple." Kellogg Co.'s Special K cereal recently added a line of "protein meal" bars and even "Special K20 Protein Water," in strawberry-kiwi, lemon-twist and tropical-blend flavors.Companies need to play this game because giant retailers like Wal-Mart Stores Inc. are demanding fresh choices for consumers -- and filling their shelves with their own cheap, generic lines of basics.For Kleenex, the need for change is greater than ever. With $1.6 billion in global sales, Kleenex is part of Kimberly-Clark's consumer tissue division, which contributes more than a third of the company's annual sales. But plagued by high prices for energy and pulp, it has the smallest profit margins of the company's three divisions. Launched in late 2004, Kleenex Anti-Viral now looms as an important weapon.Kimberly-Clark introduced Kleenex tissues in 1924 as a handy way for women to remove cold cream from their faces. Over the decades, the company kept its edge by thinking up new ways to use a piece of tissue paper.In the 1930s, it touted Kleenex as a disposable handkerchief. A decade later, marketers boasted that the tissues could help kill spiders, wipe up spills and be used in magic tricks. TV commercials in 1967 heralded the convenience and table-appeal of new cube-shaped boxes. In 1981, Kleenex pioneered the first perfumed tissue, with a light floral scent.Intense PressureBut lately the pressure to innovate has grown intense. The facial-tissue category has been shrinking steadily since 2001. With annual sales of $1.6 billion, the Kleenex tissue brand accounts for about 10% of the total revenue of Kimberly-Clark, which also makes Huggies diapers and Scott paper towels.Tissue sales suffered their sharpest decline in the past five years, with unit sales down 6.1% in 2006, according to Information Resources Inc. Its data measures sales through supermarkets, drugstores and mass-merchandise outlets excluding Wal-Mart, which doesn't provide sales data. Kleenex tissue sales fared worse, with unit sales down 9.7% last year. Lower-priced private-label brands gained market share. Kimberly-Clark, which declined to provide specific sales figures, says its market share last year remained about flat with the year before.


One reason for tissues' misfortunes: Consumers increasingly reach for alternatives, including paper towels, toilet paper and free napkins available at coffee shops and fast-food chains."It's about using what's present, what's convenient," says Erin Fowler, a consumer-research analyst for Mintel International Group, a market-research firm. "You're not going to go through the motion of putting facial tissues on the shopping list if something else is working."Advances in cold therapies may also have taken a toll. "Over-the-counter and prescribed medicines are much better at treating the symptoms, so there is arguably some [tissue sales] erosion," says Steve Erb, Kleenex's associate marketing director.New MissionSo in 2004, marketers gave Kleenex a new mission: kill germs. That "had the potential to grow the entire category and increase household consumption," recalls Mr. Erb. "It could alter people's perceptions of what a Kleenex facial tissue could do."A germ-fighting tissue forced the company into unusual terrain. Because it uses a pesticide, for example, Kimberly-Clark needed to secure approval from the Environmental Protection Agency.Kleenex's traditional, soft-touch marketing tone would also require some tweaking. "There was discomfort over whether the power of the brand could overcome the 'killing' idea," says Mr. Erb.The company had stumbled along a similar path in 1984, when it also tried a germ-fighting tissue. Before the 1990s onslaught of antibacterial soaps, fabrics and hand wipes, the idea of a chemical-laced tissue was foreign to consumers. Kleenex's product cost 20% to 40% more than regular tissues. It had an intimidating name: Avert Virucidal. Consumers complained that the paper felt slimy and stung their eyes. Some even said it made them sneeze.After just a few months in five test markets, Kimberly-Clark pulled it from shelves. "We were way before our time," says Cheryl Perkins, Kimberly-Clark's former chief innovation officer.But the idea of adding ingredients to tissues didn't go away. In 1987, Procter & Gamble launched Puffs Plus With Lotion, the first tissue treated with lotion. Kimberly-Clark later responded with its own lotion-treated tissue as well as a menthol-scented one. Those proved popular, demonstrating that consumers would pay more for versions of Kleenex they believed had added benefits.In the late 1990s, buoyed by the new success of hand sanitizers and antibacterial soaps, Kimberly-Clark decided to re-examine the antiviral idea. The company also sensed an advantage: The only dominant antiviral products on the market were cleaning agents such as bleach and other surface disinfectants, says Kleenex brand manager Jean Maurice Boyer. Paper products targeting germs, such as hand wipes, were still relatively scarce. And those were specifically focused on killing bacteria, not viruses, Kimberly-Clark's main target.Yucky HabitCompany research pointed to one yucky habit that supported the push into germ fighting: 74% of consumers stash used tissues in places such as purses, pockets and drawers and on countertops -- often to re-use them. So a tissue capable of deactivating viruses could protect others from exposure.


At its facilities here in Neenah, Wis., Kimberly-Clark found a way to manufacture the antiviral tissue more cheaply than it had with Avert, while adding extra softness. This involved disassembling the three tissue layers to apply a mixture of citric acid and sodium lauryl sulfate, and then putting them back together. Chemical additives to the outer tiers gave the tissues a silky feel.When a sneeze or a cough hits the tissue, the middle layer traps and kills 99.9% of viruses within 15 minutes, the company claims. While antiviral drugs are hard to make, it's considered relatively straightforward to kill a virus outside the body -- such as by swabbing it with bleach.Public-health officials have worried that the widespread use of antibacterial products are contributing to drug-resistant strains, but wiping off a virus with commonly used ingredients generally doesn't raise that alarm. Kleenex's antiviral tissues target viruses that are the most prevalent causes of the flu and common cold, including rhinoviruses type 1A and 2. The antiviral tissue's active ingredients, citric acid and sodium lauryl sulfate, constitute a pesticide that destroys the virus's wall, deactivating the virus, the company says.It discovered how to make the antiviral treatment without malic acid, a previous ingredient that had caused skin irritation. Avert's old, medicinal box -- navy blue and white squares -- was scrapped in favor of a more colorful, patterned one.Some health experts remain skeptical of the tissue's health benefits. Cold viruses, as Kimberly-Clark points out, are expelled in the form of tiny droplets, can travel up to 320 miles per hour, land up to three feet away, and survive on surfaces for more than 24 hours. "Maybe this is an added level of protection," says Nicholas Stamatos, assistant professor at the Institute of Human Virology at the University of Maryland Medical Center. "But what you're achieving with this, you'll achieve better by washing your hands."Some loyal Kleenex users doubt their tissues need more bells and whistles. Diane Brabender says she always has a box of tissues on hand, keeping them in both of her bathrooms, her car and her office. Ms. Brabender, a bank trust officer from Cincinnati, says she's willing to spend more for Kleenex tissues because they are softer than generic brands. Even so, she's not willing to splurge on an antiviral tissue. "I just don't believe it's really going to make a difference to my health or anyone else's," she says. "I just need a tissue to catch my sneeze -- it doesn't have to do anything else."Kimberly-Clark didn't want to position Anti-Viral too aggressively as a preventive health product. "We knew it would hold the product back -- if it became the sick box," says Gary Keider, Kleenex's marketing director. "We knew from a sales and volume perspective that the box had to be out often, otherwise consumers would use it sparingly, and at limited times."Hedging its bets, the company decided to trumpet the tissue's antiviral properties only on the box's plastic overlay, typically removed when the container is opened. As a reminder that the tissues are treated, a liner surrounding the box's opening says "anti-viral" in small type.A Tough CallTo further distinguish the antiviral tissue from regular ones, Kleenex printed tiny blue dots on the visible middle layer, where the antiviral treatment is applied. Even this was a


tough call: Kleenex stopped making tissues with printed designs in the late 1990s in response to consumer concerns about the environmental impact of inks and dyes.In order to make its flu-fighting claims, Kimberly- Clark had to get approval for its pesticide-laced product from the EPA, rather than the Food and Drug Administration since tissues aren't ingested. After a yearlong review, the EPA approved the product in 2003, with certain caveats. The agency, for example, required that Kleenex state on its label that the product hadn't been tested against bacteria, fungi or other viruses.EPA policy placed restrictions on the box design, forbidding anything that appeals directly to children. Neither could the container portray anything edible or found in nature, including flowers -- a ubiquitous design on Kleenex boxes.For its ads, Kleenex considered a bold approach, showing a little girl blowing her nose and a message that punched up the tissue's tough side. After focus groups didn't seem to mind, the brand started running the print ads in 2005. The tagline: "Ruthless Killer."Priced about 40% more than standard Kleenex tissues, the product was launched in late 2004. Kimberly-Clark says that Anti-Viral now holds 4% of the U.S. market and has generated more than $140 million in global sales since its 2004 launch. Now in 22 countries, Anti-Viral's international shipments are expected to increase this year as the product passes various governmental clearances.In addition to targeting households, Kimberly-Clark has worked hard to gain a presence in schools. Because most teachers list a box of tissue on their list of students' necessary school supplies, back-to-school season is one of the biggest selling periods for facial tissue. A nationwide Kimberly-Clark-sponsored classroom handout titled, "What To Do When You Ah-Choo! Learning About Sneezes and Sniffles," has included buy-one-get-one-free coupons for Kleenex Anti-Viral tissues.When flu outbreaks closed schools in Texas and Michigan in 2005, Kimberly-Clark shipped them dozens of free boxes of antiviral tissues. The Lovelady Independent School District in Lovelady, Texas, put two boxes in every classroom.

3. Kleenex is facing the need to change becausea. people would rather put facial tissue on their shopping lists rather than use what is convenient and free b. giant retailers are filling their shelves with their own brands of cheap products Correctc. consumers are demanding improvementsd. it is making too much of a profit

4. The design of the new anti-viral Kleenex boxa. must state on its label that the product hadn't been tested against bacteria, fungi or other viruses Correctb. has the tag line “Ruthless Killer”c. is covered with the phrase “anti-viral” d. has the standard “Kleenex floral” design

In Climate Controversy, Industry Cedes GroundBy JEFFREY BALLJanuary 23, 2007; Page A1http://online.wsj.com/article/SB116949687307684055.html



The global-warming debate is shifting from science to economics.For years, the fight over the Earth's rising temperature has been mostly over what's causing it: fossil-fuel emissions or natural factors beyond man's control. Now, some of the country's biggest industrial companies are acknowledging that fossil fuels are a major culprit whose emissions should be cut significantly over time.A growing number of these companies are pushing for a mandatory emissions limit, or "cap." Some see a lucrative new market in clean-energy technologies. Many figure a regulation is politically inevitable and they want to be in the room when it's negotiated, to minimize the burden that falls on them.The broadening, if incomplete, consensus that fossil fuels are at least a big part of the global-warming problem signals real change in the environmental debate. The biggest question going forward no longer is whether fossil-fuel emissions should be curbed. It's who will foot the bill for the cleanup -- and that battle is heating up.Yesterday, 10 companies, including industrial giants that make everything from bulldozers to chemicals to electricity, joined environmental groups in calling for a federal law to "slow, stop and reverse the growth" of global-warming emissions "over the shortest period of time reasonably achievable." Tonight, President Bush, whose administration has rejected such caps as economically unacceptable, will deliver a State of the Union address in which he's expected to announce a bigger push for such things as low-emission alternative fuels.In the center of the regulatory cross hairs are utilities. They're the world's biggest emitters of carbon dioxide, the global-warming gas that's produced whenever fossil fuels are burned. Written one way, a cap would help utilities in the Southeast or the Midwest, which burn lots of coal, a particularly carbon-intensive fuel. Written another way, a rule would help utilities on the West Coast, the Northeast and the Gulf Coast. They use mainly natural gas, which produces lower CO2 emissions than coal, and nuclear energy, which produces essentially no CO2.Auto makers and oil producers also are worried about a potential cap, and they're lashing out at each other. The Big Three auto companies are making speeches and running advertisements calling on Big Oil to crank out more low-carbon alternative fuels such as corn-based ethanol. Big Oil, in its own speeches and ads, says the auto makers should build more-efficient cars.Lobbying on the issue is ramping up. The American Iron and Steel Institute, which opposes any emission cap, this month assigned an executive who had been working broadly on environmental issues to focus specifically on global warming. Some companies that oppose a cap argue it would raise their costs and hurt their competitiveness against rivals in developing countries such as China, where no cap exists.DuPont Co., the chemical giant, heartily endorses a cap in part because it figures it would help boost demand for energy-efficiency products the company makes.Entergy Corp., a utility that's also pushing for a cap, had a lobbyist in the room last week when Sen. Dianne Feinstein, a California Democrat, announced a carbon-cap bill. Entergy would likely benefit from her measure because the company's fuel mix includes a lot of low-carbon fuels.


"It was a hand-holding, kumbaya moment," says Brent Dorsey, Entergy's director of corporate environmental programs. "Every company is going to be playing to their own strengths and weaknesses" in the regulatory battle that's breaking out over global warming, he adds.Among scientists, a broadening consensus has developed that fossil-fuel emissions are contributing to global warming; the debate has been over whether they're the main cause. In 2001, the Intergovernmental Panel on Climate Change, a United Nations body that periodically assesses climate science, cited "new and stronger evidence that most of the warming observed over the last 50 years is attributable to human activities." In 2005, representatives of scientific societies from 11 countries, including the U.S., called the science "sufficiently clear to justify nations taking prompt action."Still, uncertainties remain. Among them, the U.N. panel noted in its 2001 report, is the extent to which "natural factors" unrelated to human activity play a role in the rising temperatures. The U.N. panel is set to release its next climate-science report Feb. 2.Fossil fuels provided 80% of global energy in 2004, and they're on track to provide 81% in 2030, according to the International Energy Agency, a Paris-based energy watchdog for Western industrialized countries.Significantly curbing their emissions would require sweeping technological change, from more-efficient power plants and cars to the potential injection and burial of massive amounts of CO2 underground.Another possibility would be to reduce the rate of growth in fossil-fuel consumption by supplementing the fuel mix with alternatives, from nuclear power to crops to the wind and the sun.Outside the U.S., many countries already have modest experience in emissions caps, thanks to the Kyoto Protocol. The treaty, which hasn't been ratified by the U.S., requires ratifying nations collectively to cut their emissions 5% below 1990 levels by 2012.Several Northeast states and California already have announced plans to impose emission caps of their own. And a handful of proposed federal caps are under consideration in Congress. The least stringent is one from senators led by Jeff Bingaman, a New Mexico Democrat. By 2030, it would raise gasoline prices 12 cents per gallon, according to a study issued this month by the U.S. Energy Information Administration, and slow the rate at which U.S. coal consumption increases.The federal proposals differ in the structural details of the "cap and trade" system they would set up to regulate CO2 emissions. Under such a system, the government would set a ceiling on how much CO2 the U.S. economy -- or whichever sectors lawmakers pick -- could emit each year. It would ink a corresponding number of pollution permits, each entitling the bearer to emit one ton of the gas.Then, based on complex allocation rules it devises, the government would divide up the permits among companies. Those companies could buy and sell permits among themselves on a greenhouse-gas market like a Kyoto-related one already under way outside the U.S. Companies that decide it's too expensive to cut their own emissions enough to comply with their government cap would go to the market and buy extra emission permits from companies that ended up with more than they needed. The theory behind the market is to create an economy of scale that reduces everyone's cost.Other regulatory structures are possible, including a straight tax on CO2 emissions. Politically, a cap-and-trade system is more popular than a tax. Environmentalists like the


severity of an absolute ceiling on the amount of CO2 companies can emit. Industry likes the flexibility of a market in which permits to pollute can be bought and sold.And cap-and-trade systems already are in use. The U.S. has had one for more than a decade to curb the pollution that causes acid rain, a regulation widely viewed as successful.Still, Steven Rowlan, director of environmental affairs for Nucor Corp., one of the biggest U.S. steelmakers, warns U.S. industry is in for a shock if Washington follows Europe and imposes a global-warming cap. The U.S. steel industry already has gotten more energy-efficient in recent years, he says, so it would be unfair to require it to make further emission cuts while its competitors in the developing world, where emissions are rising fastest, remain free from a cap. The steelmaking process itself emits large amounts of CO2.A smarter tactic, he says, would be for the U.S. to slap trade restrictions on developing-world steelmakers requiring them to meet minimum environmental standards as a condition for exporting their products to the U.S."The biggest hammer that the United States has is its market," Mr. Rowlan says. "And that, more than anything we do domestically, will have the greatest impact on greenhouse gases." Nucor, based in Charlotte, N.C., is considering running ads to drive this point home.DuPont, on the other hand, is actively promoting an emissions cap. It thinks a cap would help its business. DuPont makes materials used in such devices as solar cells, wind turbines, fuel cells, and lightweight automobiles -- all of which are likely to be in higher demand in an economy in which CO2 emissions carry a cost."We think there is a lot of market opportunity," says Linda Fisher, a former U.S. Environmental Protection Agency official who's now DuPont's chief sustainability officer.

5. The world's biggest emitters of carbon dioxide are a. automobilesb. livestockc. utilities Correctd. rain forests

6. Fossil fuels provided _____ of global energy in 2004.a. 75% b. 80% Correctc. 85%d. 90%

As China Booms, Millions of Children Are Left BehindBy LORETTA CHAOJanuary 24, 2007; Page A1http://online.wsj.com/article/SB116959002141185426.html



YINGSHANG, China -- In a sparsely furnished farmhouse, about a half mile from a main road in the poor, rural province of Anhui, 16-year-old Zhao Yan has lived on her own for more than two years.She goes to school, tends to the family rice farm and waits for her father's periodic visits home. "I miss my dad a lot," says the teen, dressed in jeans and a lime-colored hooded sweatshirt.Chinese authorities estimate that 22 million youngsters in China have been left at home while their parents migrate to cities to find work. The numbers of the so-called liushou ertong, or "left behind children," are growing steadily in China's vast rural areas. They represent a personal toll of China's explosive growth.As China's economy booms, some 200 million farmers are moving to cities to pursue opportunities. China's laws make it almost impossible for migrants to school and care for their children where they find work. With little money, many simply leave them behind and hope for the best.Zhao Yan's father, Zhao Changliang, a farmer, left his land and only daughter two years ago. His wife died when Zhao Yan was a little girl. When she was old enough to cook for herself, he paid 200 yuan, or about $25, for a ride with neighbors to Shanghai, joining more than eight million migrants who have left Anhui to find work in China's urban centers.Many of the left-behind children stay with one parent. But over 30% of the children of migrants are left with grandparents or with other relatives with little or no supervision, according to a 2004 survey by the China National Institute for Educational Research.The problem is tearing apart families and creating a generation of children who grow up with limited contact with their parents and little adult supervision. Teachers in provinces such as Anhui say it is common to visit or call a student's home only to find there is no adult in charge.In one Anhui compound where a cluster of families have created a small community, an elderly man and his wife are the guardians of five children under the age of 6, whose parents work year-round in Shanghai."Most of the children are still too young to know the difference, but the oldest one cries every New Year when they leave," he says, pointing to his granddaughter. "There's no choice in the matter. This is the way things are these days."Wu Peigen, a 14-year-old middle-school student in the same county, says his father left to find work when he was in first grade. After working several years in a neighboring province, his father's health began to deteriorate. Last July, Peigen's mother went to care for him. Peigen now lives with his grandparents."I didn't totally understand at the time. I was just sad," says Peigen, who especially misses his mother on weekends. He says his parents "told me to listen to my grandparents. My mom was sad and she cried. I don't know when I'll see her again." His parents call about twice a month to ask him how he's doing in school.On most days, Zhao Yan wakes early, then takes a 30-minute bicycle ride to school. She returns to an empty home to cook for herself. Her dogs run out to the road at the sound of her voice when she gets close to her small brick house. They sit by her as she begins her daily ritual of lighting a fire in the large brick oven she uses to cook.An elderly woman who lives next door occasionally visits, and sometimes Zhao Yan has friends over. But the dogs and a borrowed black-and-white television are often her only


companions. The middle-school student does her homework by the glow of the screen and listens to music videos in the unheated house."There isn't much to do when my father isn't here," she says.Even though she enjoys her literature class and thinks it would be fun to be a teacher, she has difficulty keeping up with school. Several days a semester, she has to skip classes to work on the family farm. Going to high school isn't likely; it would cost at least hundreds of dollars a year, which is more than her father can afford.

7. Chinese authorities estimate that _______ youngsters in China have been left at home while their parents migrate to cities to find work.a. 12 million b. 15 millionc. 22 million Correctd. 25million

8. Many of the left-behind children stay with one parent. But over ____ of the children of migrants are left with grandparents or with other relatives with little or no supervision, according to a 2004 survey by the China National Institute for Educational Research.a. 10% b. 20%c. 30% Correctd. 40%

U.S. Car Makers Stand to Gain From Bush PlansBy JOHN D. MCKINNON and MIKE SPECTORJanuary 25, 2007; Page A1http://online.wsj.com/article/SB116969452776887202.html President Bush's broad new proposals to change the nation's health-care and energy policies have an important but little-noticed common thread: White House aides hope they will boost the ailing American auto industry, whose pleas for help have largely been ignored by Washington in recent years.The question now is how much chance those hopes have of becoming reality, particularly with the Democratic majority in Congress controlling the fate of Mr. Bush's agenda.The energy proposals -- crafted in a way that would erase some of the advantages enjoyed by the U.S. industry's Japanese competitors -- appear to have a shot at becoming law. The health program, which critics say could help auto companies but hurt auto workers, seems unlikely to gain traction anytime soon.One thing is certain, however. No industry would be directly affected more than the auto sector by the domestic program the president laid out in Tuesday night's State of the Union address. "The president obviously recognizes some of the challenges the domestic auto makers have been facing," Joel Kaplan, a White House deputy chief of staff, told reporters in advance of the speech.Still, industry executives, whose calls for aid have been spurned repeatedly by the Bush administration, cautioned that any benefit Detroit derived from the proposals would depend on how the final rules were drafted and how they were implemented.



"We agree with the president in that there's a clear need to cut America's dependence on foreign oil. However, it's our belief the decision should be one of customer choice," said David Elshoff, a spokesman for DaimlerChrysler AG. The president's health-care proposal, Mr. Elshoff added, "clearly addresses the uninsured and the underinsured. But it doesn't address the need to level the playing field for companies who have made the commitment to provide health care for their employees."While Mr. Bush used Tuesday night's speech to tout the overall health of the economy, Democrats were quick to point out Americans' widespread anxiety about the security of their jobs and benefits, fears heightened by the struggles of many U.S. manufacturers, particularly auto makers.With their U.S. operations in the red, General Motors Corp. and Ford Motor Co. have eliminated a total of more than 70,000 jobs during the past year -- largely through employee buyouts -- and plan to close more than two dozen North American factories between them as they shrink to adapt to declining U.S. sales.Japan's Toyota Motor Corp., meanwhile, is on track to overtake Ford as the No. 2 auto maker in the U.S., perhaps as early as this year, and is gunning to replace GM as the world's leading auto maker shortly thereafter. DaimlerChrysler's Chrysler Group, which previously appeared healthier than its two Detroit rivals, is now in the red, too. Next month it is expected to roll out a restructuring plan calling for plant closings and job cuts.Though many factors have contributed to the industry's woes, soaring health-care costs are a big part of the problem. The Detroit giants are paying the price for years of buying labor peace by agreeing to provide rich health-care and other benefits to their unionized workers. GM, for example, has said its health-care costs average as much as $1,200 for each car it sells in the U.S.At a White House meeting with Mr. Bush in mid-November, chief executives of the Big Three auto makers made a special plea for help controlling runaway health-care costs. White House officials said this week that Mr. Bush's proposal would do that."In general, anything that can reduce the cost of health care is positive for the industry," said David Cole, head of the Center for Automotive Research in Ann Arbor, Mich.Mr. Bush's chosen method for promoting wider health coverage, however, could hurt some employees -- like auto workers -- who get especially generous health benefits from their employers. And that reduces the chance of Congress enacting his proposal.The Bush proposal would tax the value of employer-provided health benefits in excess of $15,000, and give tax breaks to people with less-generous plans. The administration says most workers would get a tax break under the plan. But because some union policies are worth more than $15,000, those workers would face a tax increase.Sen. Debbie Stabenow, a Michigan Democrat re-elected in November with strong backing from the United Auto Workers, said in an interview that the Bush plan would "tax health-care benefits for middle-class families....It's absolutely the wrong direction for them to go."Alan Reuther, legislative director for the UAW, said the plan also could encourage younger workers to desert employer-provided plans, leaving them with older and sicker people to cover.In addition to the toll taken by health-care costs, the Big Three have lost ground to Japanese rivals, especially as demand for more-fuel-efficient cars has grown in recent years. The Bush energy proposals could tip the balance more in Detroit's favor.


One way is through the proposed reform of fuel-economy rules. Under the current Corporate Average Fuel Economy, or CAFE, system, auto makers need to meet a fleetwide minimum average requirement of 22.2 miles per gallon for light trucks and 27.5 miles per gallon for passenger cars sold in the U.S. That means that companies selling larger, less fuel-efficient cars need to sell more small, fuel-efficient cars to bring up their average.Detroit auto makers, whose big cars are more profitable and competitive than their small cars, say the current system handicaps them against Toyota and Honda Motor Co., which have sold more-fuel-efficient fleets in the past and can use credits amassed under the system to offset less efficient, larger vehicles.The president's plan would make a significant change in the way passenger-car fuel economy is regulated, and one much desired by the Big Three. The new system would assign fuel-economy targets to car models based on their size, instead of mandating a fleetwide average. A car like the full-size Chevrolet Impala, for example, would be required to meet the standard for its size class. Such a change has already been adopted for light trucks. Depending on how the rules were written, the change could give Detroit more freedom to sell its more-profitable lower-mileage cars without having to rev up sales of smaller less-profitable models.The UAW may oppose that change, however. Union leaders argue that the current laws encourage Detroit to make small cars in the U.S. Absent the fleetwide rule, they fear those small-car factories would close.One uncertainty for auto makers is how much the administration might increase fuel-efficiency standards as it overhauls them. "The key for us is we're going to have to see the details and how it all flushes out," said Paul Ballew, GM's top market analyst. "It's one thing to go to categories. It's another thing to go to categories and change the standard."

9. No industry would be directly affected more than the ______ by the domestic program the president laid out in Tuesday night's State of the Union address.a. auto sector Correctb. health care sectorc. housing sectord. banking sector

10. GM has said its health-care costs average as much as _____ for each car it sells in the US.a. $200 b. $1,000c. $1,200 Correctd. $2,200

Big Three Face New Obstacles In RestructuringBy JEFFREY MCCRACKENJanuary 26, 2007; Page A1http://online.wsj.com/article/SB116904576369978969.html



Detroit's big three auto makers spent last year shedding tens of thousands of workers, overhauling their marketing and shaking up their managements. Now, it's becoming clear that even more-drastic action may be needed to turn them around.Yesterday, Ford Motor Co. announced losses of $5.8 billion for the fourth quarter and $12.7 billion for all of 2006, the deepest deficit in the 103-year history of the nation's No. 2 auto maker. Also expected to report losses for the year are General Motors Corp., which yesterday said it will delay announcing its fourth-quarter financial results, originally scheduled for release Tuesday, and DaimlerChrysler AG's Chrysler Group. That would make 2006 the first year since 1991 that all three companies were in the red.

CEO Alan Mulally on Ford's priorities for restructuring its automotive business: In 2007, this will mean further progress on reducing our operating costs while also strengthening our presence in key segments, such as our crossovers and our passenger cars.

For all their efforts last year, the three U.S. auto makers continue to labor under heavy cost burdens, including hefty obligations to their union workers. But their real challenge is how to stop burning cash in futile efforts to manage decline. They can no longer rely on the cost-cutting and sales-boosting strategies of the past, such as squeezing parts suppliers for discounts, pressuring dealers to accept excess inventory and demanding higher prices from consumers.Today they face suppliers who are less likely to give in to their demands, consumers who want less costly and less profitable but more-fuel-efficient vehicles, and auto dealers who are less dependent on a single Detroit brand. At the same time, foreign rivals are stealing away market share."It is a tougher environment to restructure," said Ford Chief Financial Officer Don Leclair, in an interview. "The dealer body is stressed and suppliers are stressed, and to a large degree that's reflective of our own issues here."

Ford's $5.8 billion loss in the fourth quarter and how cost-cutting alone won't bring the company back to profitability.So far, Wall Street has been willing to finance Detroit's losses. Yesterday, Ford executives highlighted the $33.9 billion in cash on hand in the company's automotive operations. GM bolstered its balance sheet last year by selling a 51% stake in its profitable finance arm -- a business long held to be a core operation.But in a fresh blow to its credibility with investors, GM late yesterday cited a series of new accounting issues. The No. 1 auto maker said it expects to restate financial results for 2002 through the third quarter of 2006 because it overstated certain deferred tax liabilities. It also said it is reviewing its accounting for certain hedging activities and "other miscellaneous adjustments." In after-hours trading, GM shares were down 19 cents from their 4 p.m. close of $33.14 in composite trading on the New York Stock Exchange.GM said it expects to be profitable in the fourth quarter of 2006, with record revenue, but it gave no figures. The company, which said it ended 2006 with $26.4 billion in cash, added that it expects to file its annual report with the Securities and Exchange Commission by March 1, and will provide more information on its financial reporting during the week of Feb. 5. GM had been scheduled to release results Tuesday.


Yesterday's disclosure adds to a string of accounting problems GM has reported since 2005. Last year it restated its results from 2000 to 2005 to correct accounting errors. In November, it named Nick S. Cyprus, a former AT&T controller and chief accounting officer, as its controller and chief accounting officer, effective Dec. 1.

For Ford, the pain looks even further from over. Despite a strong U.S. economy, Ford expects to burn through another $17 billion in the next three years as it shrinks its North American operations to adjust to lower sales.Ford said yesterday it expects its $2.8 billion operating loss in 2006 to grow in 2007 and doesn't foresee a profit until 2009. In 2005, Ford had a profit of $1.4 billion. In 4 p.m. NYSE composite trading yesterday, Ford shares slipped two cents to $8.22.Detroit's troubles begin with consumers. Car buyers, accustomed to looking for the best dealer incentives, continue to do just that, taxing attempts by GM and Ford to wean themselves off costly sales promotions such as rebates and low-interest financing. Ford estimated that lower prices, mostly in the form of sales incentives, cost it about $1.9 billion more in 2006 than in 2005. Ford's automotive operations lost $5.2 billion in 2006, compared with a $1 billion loss a year earlier.Ford said that despite its costly push to leave the money-losing rental-car business, which involves discontinuing the Ford Taurus sedan and Ford Freestar minivan, it will likely see flat to lower prices again this year.The rise in multibrand auto dealers has made it more difficult for the Big Three to lean on their dealer networks to accept more cars and trucks than they need, a tactic the car makers once used to prop up revenue. Chrysler, for example, faced a near revolt by its dealers last year after it pushed them to take models such as the Jeep Commander that weren't selling nearly as well as projected.Many dealers have added Asian auto brands such as Toyota or Honda to their mix, making them better able to resist Detroit's demands. The creation and growth of big dealer chains such as AutoNation Inc. and Group 1 Automotive Inc. have also given dealers more leverage.As a result, all of Detroit's auto makers had to cut production in late 2006 while dealers cleared their lots of unsold vehicles. Ford said yesterday it will cut production in the first quarter of 2007 by a further 10,000 vehicles. Ford closed assembly plants in Atlanta and St. Louis last year and will continue closing plants over the next few years.On the manufacturing front, the auto industry's parts and commodity suppliers are increasingly unwilling to accept Big Three demands for price cuts. Several of the biggest parts makers, such as Delphi Corp., Dana Corp. and Collins & Aikman Corp., have filed for bankruptcy-court protection since 2005, and moved to reject contracts or demand price increases as is common in bankruptcy proceedings.

Parts suppliers that have emerged from bankruptcy reorganization recently are frequently doing so with backing from big private-equity funds, which are loath to offer price concessions or take business at a loss, a common practice among suppliers over the past decade. Equity funds also appear more skeptical of Big Three sales projections, which have often been too optimistic and have cost suppliers that expanded on the basis of those projections.


"They have gone to the supply base for years, and the well has been emptied now," said Van Conway, senior managing director of Conway, MacKenzie & Dunleavy, a turnaround consulting firm in Birmingham, Mich. "There's no loyalty any more."Both GM and Ford expect their commodity costs to jump by $1 billion or more in 2007, in part due to rising costs for steel -- an industry that was overhauled in the bankruptcy process auto makers are trying to avoid. In September, Ford had to back off its goal of $6 billion in commodity-cost savings by 2010. Ford, which spends $90 billion a year world-wide on parts and services, said it now hopes to achieve that savings no later than 2012.Not all of Detroit's auto makers are in equal straits. GM, which previously reported a loss of $10.6 billion for 2005, is expected to report a profit in 2007. But the company has warned investors that its cash flow will be negative. To bolster its cash reserves, GM said yesterday it is considering the sale of its Allison heavy-duty transmission unit.Chrysler had been the one profitable Detroit auto maker until late in 2006, but is now slated to roll out a restructuring plan in mid-February.Ford Chief Executive Alan Mulally's efforts to nurse his company back to health are only made tougher by the fact that GM, whose vehicles compete most directly with Ford's, is further along in its turnaround effort. Moreover, in confronting one problem, Mr. Mulally, who has held his job just shy of four months, often risks creating another.Mr. Mulally is trying, for example, to stem an exodus of management talent at Ford, whose 37,000 salaried workers include about 300 senior officers and about 2,000 director-level executives. He confirmed yesterday that Ford is considering paying bonuses to its salaried workers, something it has done just twice in the past five years.However, the possibility of bonuses for salaried workers has caused turmoil within Ford's union work force, which has agreed to billions of dollars in givebacks in retiree health-care benefits and substantial changes in work rules to ease the company's cost burden. Those rule changes are expected to save Ford at least $750 million a year.Mr. Mulally said he "absolutely thinks" he can get the UAW to understand the need for salaried bonuses at the same time he is asking union members to make concessions now and probably later this year when national contract talks begin."We are in a turnaround situation and we need the absolute best, skilled and motivated team in all of the positions, and so that is the way we are looking at it," he said.Mr. Mulally said he remains optimistic the auto maker can return to profitability. "We aren't frustrated at all. We are just dealing with the way it is and pulling all the levers," he said. "We can do this.

11. 2006 is the first year since 1991 that all of Detroit's big three auto companies were __.a. in the black b. in the red Correctc. not laying off workersd. not introducing new models

12. Despite a strong U.S. economy, Ford expects to burn through another ____ in the next three years as it shrinks its North American operations to adjust to lower sales.a. $170 million b. $1.7 billionc. $7 billion


d. $17 billion Correct

NBA in China Gets Milk To Sell HoopsBy ADAM THOMPSON and SHAI OSTERJanuary 22, 2007; Page B1http://online.wsj.com/article/SB116943248427683343.html

The National Basketball Association built itself into a multibillion-dollar enterprise partly through alliances with corporations such as Anheuser-Busch, Coca-Cola and Nike. But a new partner may turn out to be more important than it seems -- Mongolian milk.The NBA will announce today in Beijing an extensive marketing deal with Mengniu Milk, China's top producer of milk by sales volume. The league's presence in China has increased steadily since the Washington Bullets played the national team in exhibition games there in 1979. It is raising its profile further in the run-up to the Olympic Games next year with a local partner that markets aggressively all over the country.The dairy will promote its products during the broadcast of NBA games on about half of the league's 51 Chinese television partners, including CCTV, which airs games nationally. It also will conduct promotions connected to the league's Web site and at retail establishments, and participate in the NBA Jam Van, a traveling promotional show that reached 20 Chinese provinces last year.Aside from the money the NBA will receive from this multimillion-dollar deal -- the league won't disclose the exact amount -- it hopes to achieve a closer association with a company the Chinese view as homegrown. Many of the NBA's current partners in China include world-wide giants like Anheuser-Busch. With health programs aimed toward children, the league also has a chance to hook fans at a young age.Mark Fischer, NBA China's managing director, says the league "is becoming more and more a part of the Chinese lifestyle instead of just a foreign import."For Mengniu, which means Mongolian cow, the deal represents a victory in the Mongolian milk wars. Its rival, state-owned Inner Mongolia Yili Group Industrial recently scored the dairy-products sponsorship for the 2008 Olympiad.The deals underscore the explosive growth of milk-drinking in China, which has been jump-started by improvements in transportation and technology. To take advantage, both Mengniu and Yili have been promoting the benefits of milk -- especially to young people. Mengniu, for example, sponsors a television show called "Among the Cities" that will capitalize on China's pre-Olympic frenzy by searching for the country's best amateur athletes. The program's slogan: "Drink more milk and play more sports -- everyone will be his own health champion."The NBA campaign will combine elements of American glitz -- retired NBA great George Gervin will attend the news conference -- with a grass-roots effort to create more milk drinkers. The company will provide a free carton of milk to children at 500 schools in poor and rural areas of China, along with educational materials promoting its products.The league continues to ramp up its presence in China with an eye on starting a league there, and it says more than 20% of the traffic on its Web site comes from Chinese fans. Ten NBA-only stores will open there in 2007.



The NBA has accelerated its push into international markets since the 1992 Barcelona Games. That year the U.S. men's basketball team replaced the college players it had used in the past with such professional stars as Michael Jordan, Larry Bird and Magic Johnson."In some ways we think that the Beijing Olympics will be the closing of the parentheses to the 1992 Dream Team," commissioner David Stern says. "This is globalization."The deal also exemplifies how the league hopes to move beyond Chinese megacities like Beijing and Shanghai. When Mr. Fischer made his first business trip to Hohhot, Inner Mongolia's capital, three years ago, he says he took a dinner meeting with milk executives in a yurt.Very little milk was consumed in China for years, but the dairy sector is expected to increase by more than 20% last year, according to investment bank BNP Paribas. Sales are expected to rise even faster, by 30%, in the higher-profit-margin area of yogurt.Mengniu was founded in 1999 by executives from Yili. Both companies are based in Inner Mongolia, northern China's province known for grasslands and coal mines. Mengniu posted sales of nearly $1.4 billion in 2005, up 50% from the previous year. Revenue rose another 59% in the first six months of 2006. Yili posted revenue of about $1.6 billion in 2005, up 39% from the previous year.In the 1990s, poor national transportation and a lack of refrigerated trucks meant that fresh milk had to be made locally. Late in the decade, Mengniu cleared that hurdle by selling UHT-treated milk. UHT, or ultra-high temperature, milk didn't need to be refrigerated and could be shipped from Mongolia, where cows are plentiful, to customers in such cities as Beijing or Shanghai. Mengniu milk was cheaper and quickly dominated its local competitors.Even after UHT became more common, Mengniu held its position thanks to aggressive marketing, which dwarfs its spending on research and development. Merrill Lynch estimates Mengniu spent a billion yuan, or about $129 million, for the full year in marketing, far outpacing its rivals. It owns no dairy farms, instead contracting out to 3,000 suppliers and focusing on creating buzz around trendy drinks like Suan Suan Ru, a sour-milk beverage popular among Chinese teenagers.In 2005, the company sponsored the runaway television hit "Supergirl," a Chinese reality television show similar to "American Idol." The show's success was especially good in building Mengniu's brand image with the younger viewers. It even sponsored astronaut Yang Liwei."They really propelled the brand, and it's still benefiting from that," says Denise Chai, an analyst for Merrill Lynch. Last year, Mengniu bought a blizzard of advertising spots during broadcasts of soccer's World Cup matches.China has never been a milk-drinking culture, and in many corners of Asia lactose intolerance is a common problem. Still, recent history in South Korea and Japan demonstrates that such countries can learn to drink milk. Per capita consumption in South Korea is now around 139 pounds of dairy products a year -- more than three times the average consumption in China.

13. It was difficult to transport fresh milk in China a. because of poor national transportation b. until the introduction of UHT, or ultra-high temperature milk that didn't need to be refrigerated


c. because of the lack of dairy cowsd. Both a and b Correct

Rise of False Deadline Means Truly Urgent Often Gets Done LateBy JARED SANDBERGJanuary 23, 2007; Page B1http://online.wsj.com/article/SB116949374746183999.html

In many offices, setting false deadlines has became as chronic as breaking them.Molecular biologist Christine Martens has had more than her share of deadlines set to an artificially early date. One of her former bosses set a do-or-die deadline of Thursday afternoon for a research summary report. After she met the deadline, she discovered he had taken off both Friday and the following Monday. "Nobody took his deadlines seriously after that," she says.Another boss, anticipating lateness, routinely moved all deadlines up. "If there are no consequences to being late -- because you aren't really late, because the deadline wasn't real -- you'll be late again next time," Ms. Martens says. Making matters worse, that boss made everyone use project timeline software, a graphical representation of a project's progress. Ms. Martens updated it weekly but says, "Wasting time on timeline software didn't seem very productive to me, especially if all I had to do was move the little bars around to be in compliance again."False deadlines are just that: moving little bars around. There are certainly legitimate reasons to impose early deadlines. Some people have never met one they didn't bust, for example. And certain office archetypes, such as people whose work won't turn out right until the ninth iteration, can invite early deadlines that aren't necessarily false but seem that way.Sometimes the difficulty of predicting work flow can make deadlines seem earlier in retrospect than they needed to be. "There are only two types of estimates: lucky and lousy," says Jim Johnson, chairman of Standish Group, a research advisory firm specializing in project measurement. His firm has found that in 2006, the North American software industry spent $86 billion on software requirements that were never used. "People do impose things that are not needed," he says. Much of that isn't necessarily a false deadline -- just a costly failure.But like false fire alarms, high-priority emails (!) and "Urgent" voicemails, false deadlines can dilute a sense of urgency, making everything seem like a top priority so nothing really is. "Over and over again, people say that urgencies crowd out the important stuff on a daily basis," says time-management consultant Julie Morgenstern. "You need an intervention because they can wreak havoc on an organization."Jason Taub, vice president of sales for a point-of-purchase display company, says he just assumes people set their deadlines at least a day early for him. Consequently, "If I'm a day or two late, I'm still on time," he says. He often tries to calibrate his clients' deadlines, believing there is always a cushion built into them. But if a client says there isn't any play, he will meet the deadline and try not to believe it is false, even if it is. Says Mr. Taub: "It's perhaps a state of Zen or an advanced form of cynicism."David Davis once worked in the Pentagon, which he says was "false-deadline heaven." He argues that you can learn a lot if you question whether a deadline is hard and fast, but



you also take a risk. "If you ask someone to provide the 'real' deadline and they come back with the same original date, you have probably established a reputation as someone who needs to be 'managed' in order to get your response in on time," he says.The most nettlesome of false deadlines are those imposed by a manager whose next breath appears to depend on the deadline being met but who, once it has been, behaves as though the work was less important than the office's NCAA betting pool.But it isn't entirely the boss's fault. This era of high-velocity communications doesn't grant the breathing space that the sluggish postal service once did, and interruptions can easily obliterate daily agendas. That means most managers can control a staffer's schedule better than they can control their own.There also is comfort for managers and clients in having the option to do work, which can be better than doing it. In addition, "the early collection process gives them the impression they're actively engaged in whatever it is they're responsible for without actually engaging," says Murray Berkowitz, the president of an ad-sales firm.Some clients ask Mr. Berkowitz to get data "in their hands in 24 hours" even though, he later learns, they don't need it for a month. "How can you lean forward in the saddle when nothing ever happens?" he asks. "We often go into slow motion when we discover we are being buffaloed. What's the point of going crazy when we know we've got more time to do this?"Unfortunately, the justification for early deadlines -- better work product -- can actually result in the opposite. Barton Evans, a former executive at an analytical-instruments maker, says a top executive would ask for a product in 12 months, quietly expecting he would get it in 18. Mr. Evans says the time constraint meant engineers would start by identifying what couldn't be included in the product, rather than what could.

14. False deadlines tend toa. dilute the sense of urgency b. make employees go into slow motion when they discover they are being buffaloedc. speed up some people who do not like to get their work done quicklyd. All of the above Correct

Gap Needs a CEO, And Many Qualify; Will Any Apply?By AMY MERRICK and JOANN S. LUBLINJanuary 24, 2007; Page B1http://online.wsj.com/article/SB116960959730285921.html

The job pays well and has plenty of perks. There's just one hitch: You have to be the next chief executive officer of Gap Inc.The successor to former Gap CEO Paul Pressler, who resigned Monday, must contend with unpopular products, falling sales and profits, anxious investors, problematic store leases, fleeing executives, and rivals gobbling market share. There's also an influential founding family that might balk at a restructuring the CEO might favor -- all or any of which might give a contender pause.No simple solutions are at hand. For instance, the San Francisco retailer's board has said it wants the new CEO to understand both fashion and finance -- a rare combination. After joining Gap in 2002, Mr. Pressler demonstrated his financial chops by cleaning up Gap's



troubled balance sheet -- but fell short on design matters. By contrast, his predecessor, Mickey Drexler, considered one of retail's most creative minds, sometimes let operations slide.

15. Gap's board has said it wants the new CEO to understand both ____.a. operations and finance b. manufacturing and financec. sewing and financed. fashion and finance Correct

Soccer, Samba and Outsourcing?By ANTONIO REGALADOJanuary 25, 2007; Page B1http://online.wsj.com/article/SB116969359056887190.html

SÃO PAULO, Brazil -- Robert Lazarski, a computer programmer from Denver, met a Brazilian girl on a train in Europe. Soon they married and moved to a beach city on Brazil's northern coast, and Mr. Lazarski was looking for work.So he hung out a shingle on the Internet: outsourcing.Mr. Lazarski, who is 38 and sports shoulder-length blond hair, says his business writing software for small U.S. companies is doing well after a slow start -- and he enjoys Brazil's "better weather and a better quality of life. Everything has worked out quite well."Outsourcing seems to be working out well for South America's most populous nation, too. With a spate of information-technology deals, Brazil appears poised to be Latin America's big winner in the global outsourcing boom. Last year, Gap Inc. moved computer work to Brazil as part of a 10 year, $1.1 billion contract with International Business Machines Corp. Whirlpool Corp. manages corporate data here, and some smaller companies are using Brazil to try outsourcing for the first time.With time zones and a culture closer to those of the U.S. than Bangalore or Beijing, small operators such as Mr. Lazarski and multinationals including Accenture Ltd. and IBM are betting that Brazil could quickly become Latin America's major hub for inexpensive corporate support work, and a top-five location world-wide.Brazilian-owned firms, which are tiny by global standards, are also trying to get business in the U.S. Two years ago, Politec Ltda. launched a "near-shore initiative" to get work from U.S. corporations and says that so far it has several small contracts worth $1 million each but expects 2007 to be a banner year.Brazil's chances in the outsourcing market are a spillover of India's success. While Brazil isn't as cheap as India, wages here are still substantially lower than in the U.S. Major Indian firms such as Tata Group made doing computer and office work for less abroad into a huge business. Now the $47 billion market is ballooning at more than 20% a year, too fast for India to keep pace, according to the Everest Group LP, a Dallas-based consultancy that advises companies on how to outsource.Brazil's major selling point is that its big cities are just one to three hours ahead of New York, depending on the time of year. That compares with 11 or 12 hours for India. Another pitch heard frequently is "shared values," a reference to cultural mismatches that



have sometimes gummed up projects in Asia. " 'Yes' in Brazil typically means 'yes.' In India, it may mean 'no,' " says Peter Bendor-Samuel, Everest's chief executive.Unlike India, Brazil already has a large domestic market for computers and services, worth about $7.7 billion a year, according to estimates. That means many big technology companies already have a Brazilian presence. Now some are quickly redeploying to capture international jobs. For instance, in 2004 IBM began putting $100 million into its Brazil operations, based principally in its former computer factory outside of São Paulo, Brazil's commercial capital.Staffing has grown quickly since them -- IBM added 2,000 people last year in Brazil to bring its total to 10,000 -- mostly to handle new work from clients such as Whirlpool. The appliance maker had been paying IBM to provide desktop support in Portuguese for its Brazilian division. So when it decided in 2005 to outsource management of some of its U.S. computer operations, that work also landed in Brazil, says Brent Glendening, a Whirlpool vice president for global information systems. Whirlpool didn't answer questions about U.S. layoffs associated with the deals.Outsourcing companies say their biggest stumbling block is that the only things many Americans have heard about Brazil are its soccer prowess and its samba music or its violent slums. "The first question is 'Is it safe?' The second is 'When do we go to Rio?' " says James Bergamini, a former Lucent Technologies executive who recently started a software firm, Daitan Labs, outside of São Paulo.To burnish Brazil's profile, the government and a new trade organization, Brasscom, paid consulting firm A.T. Kearney Inc. to create a road map for Brazil's industry and launched a series of presentations at conferences and for companies last year in the U.S. Now industry consultants are starting to talk up Brazil and predict 2007 will be the year it gains recognition as an outsourcing destination.Ironically, Brazil's technology sector got a big boost from its chaotic past. During the 1980s and 1990s, a ban on importing some business computers spurred domestic manufacturing. And to cope with runaway inflation, big banks had to develop sophisticated computer systems. "The government would call on Friday and say that on Monday the currency will have three less digits," says Ricardo Saur, executive director of Brasscom.As a result, the country has more programming talent available than regional rivals. Skilled Mexican workers tend to drain northward to the U.S., and Chile's citizenry, though well-educated, numbers only 16 million, compared with Brazil's 190 million. That leaves Brazil as the top choice for staffing big "factories," industry lingo for the campus-like centers where workers monitor computer systems, write software or handle calls.Recently, Indian firms have started making moves in Brazil, as well. In June, Wipro Technologies, a division of Bangalore's Wipro Ltd., paid $50 million for a Portuguese software company, taking on 70 staffers in Brazil. Sudip Banerjee, Wipro Technologies' president for enterprise solutions, says plans call for the Brazilian foothold to rapidly grow to 200 people.Brazil brings its own national quirks to the globalization game. Brazilian executives kiss and hug one another in the office. In a video produced by IBM for visiting Americans, viewers are cautioned that Brazilians are likely to be late to meetings. Make a lot of eye contact and don't try to make business points with "charts and data," the video advises.


Mr. Lazarski, who started his software company, Brazil Outsourcing LLC, two and a half years ago, says he did it as a way to earn U.S. dollars overseas. He charges $25 an hour to create Web pages and database programs for several U.S. clients. That is about twice what he could earn locally but less than half what a U.S. programmer would cost. "I am making twice as much money, and they are paying 50%," says Mr. Lazarski, who lives near the beach in Fortaleza.Brazil isn't as inexpensive as it once was, however. The value of the real, the Brazilian currency, has climbed steeply against the dollar since 2003 as Brazil's economy has stabilized. Factor in rising wages and Brazil's punishing taxes, and some companies think the picture is mixed. "Will it still be a competitive offshore destination? Over time I see that changing," says Stephen Heidt, vice president of service-delivery operations at Electronic Data Systems Corp., a business-service company with $20 billion in revenue. The Plano, Texas, company has 10,000 people in Brazil but is hedging its bets by expanding two centers it operates in Argentina.Analysts who are bullish on Brazil think the country can be highly competitive and can capture as much as $10 billion in international outsourcing work by 2010, up from about half a billion today. Others, like Mr. Lazarski, who gets most of his work through ads on Internet search engines, prefers not to grow too fast. He thinks it could be risky, and "now I can take time off when I want," he says.

16. Reasons why Brazil has become a new center for outsourcing includea. it already has a large domestic market for computers and services b. its culture and time zones are closer to the United Statesc. it is even less expensive than Indiad. Both a and b Correct

Aiming to Clean Up, P&G Courts Business CustomersBy ELLEN BYRONJanuary 26, 2007; Page B1http://online.wsj.com/article/SB116977518541388447.html

CINCINNATI -- A sold-out night at the Millennium Hotel here generates between 8,000 pounds to 10,000 pounds of dirty linen and 872 dirty rooms."For my staff, every minute counts," says Terri Muran, the hotel's director of housekeeping. That's why when Procter & Gamble Co. researchers approached her last year with an offer to analyze the way her staff worked, she agreed. "They even helped clean the rooms," she says.

For decades, P&G has honed its products and marketing by scrutinizing women washing laundry, scrubbing floors and cleaning toilets in their own homes. But with consumer brands struggling to find significant sales growth inside households, Cincinnati-based P&G, among other consumer-products giants, is intent on expanding its professional division.Toward that end, P&G is increasingly reaching out to janitors, fast-food workers, maids and launderers. At the Millennium here, P&G researchers tackled laundry. Rather than the five different industrial chemicals the hotel staff used to launder towels and sheets,



P&G's suggested method required two: its Tide detergent and its Downy fabric softener. That shortened the washing-machine cycle times by five to seven minutes, Ms. Muran says.Using fewer chemicals also meant the linens got worn out more slowly, reducing the 4% of laundry normally lost to wear and tear each year to about 1%, Ms. Muran says.P&G researchers noticed something else: Housekeepers were struggling to clean rooms that had been refurbished with more glass and stainless-steel fixtures, requiring several different cleaning products. So P&G recommended its Spic and Span three-in-one professional cleaner, allowing workers to spray and wipe glass, stainless steel and furniture without the hassle of switching bottles."I can work much faster with fewer bottles," says Annette Davis, a longtime housekeeper at the hotel, who typically cleans about 16 rooms during her eight-hour shift. P&G researchers have followed the seasoned cleaner during her shifts, looking for clues on how to make her job more efficient.At the Millennium there was also the issue of fragrance, long the critical indicator of a freshly cleaned room. Hotel guests, many of whom use P&G products at home, would be comforted by the familiar scent of Tide, Downy and Febreze freshener in their hotel room, the company promised, says Ms. Muran, who was swayed. "It's that home-away-from home feeling," she says, adding that the Downy scent helps mask the "iron smell" sheets sometimes get after being cleaned and pressed in the hotel's industrial-grade machines.Along with products specifically developed for commercial use, P&G sells adaptations of its well-known consumer products. For example, Dawn dish soap was adapted for high-power industrial dishwashers, including making the formula less sudsy, so it doesn't overwhelm the system.P&G senses a big business opportunity: The U.S. market for janitorial and housekeeping cleaning products is a steadily growing one, currently totaling about $3.2 billion, according to Kline & Co., a consulting and market-research firm. That's up from about $2.8 billion in 2002. The food-service cleaning-supply market, which includes dish soap, disinfectant and other surface cleaners, totals about $1.8 billion, while the laundry services business is $850 million, Kline estimates.Other consumer-products makers with professional lines include Kimberly-Clark Corp., Clorox Co., Colgate-Palmolive Co. and closely held Henkel KGaA. But altogether, the consumer-products companies hold just 15% of the janitorial cleaning-products market, while institutional and industrial brand-name suppliers, such as Ecolab Inc. and JohnsonDiversey Inc., control about 55%, according to Kline & Co. estimates. Private-label brands and local suppliers constitute the rest of the market.Another challenge: Consumer-products companies are accustomed to hawking products through clever advertising, snazzy packaging and performance boasts, while buyers of professional products typically favor a no-nonsense approach.

17. Cincinnati based P&G, among other consumer products giants, is intent on expanding its _____ division.a. consumer b. professional Correctc. international


d. carpet

Should You Buy Your Own City?By MICHAEL HUDSON and JANE J. KIMJanuary 20, 2007; Page B1http://online.wsj.com/article/SB116925103203182079.html

Individual investors are increasingly trying to cash in on hospitals, highways and bridges -- even the city sewer system.Municipal bonds, those issued by states, cities and other arms of government (think water districts) to fund improvements, are a hot commodity. The size of the market is at a record level, totaling some $2.34 trillion, or roughly half the size of the entire market for U.S. government debt.Small investors are snapping up this debt: Open-end municipal-bond mutual funds ballooned in size to a record $335 billion as of late last year.The reason for the bonds' popularity: Their tax-free status, which is appealing to the growing ranks of retiring baby boomers, particularly wealthy ones in states with high taxes, such as New York and California.This special status means that their after-tax yield often tops Treasuries and other bonds. A five-year muni yielding 3.6% would have an effective after-tax yield of 5.5% for an investor in the 35% federal bracket. By contrast, the five-year Treasury note is currently yielding less than 4.8%."If you're in an exceptionally high tax bracket, municipals often make sense," says Gary Schatsky, a New York financial adviser. But in lower tax brackets, they can be a bad deal.Dabbling in munis isn't for the novice. It can be tough for all but the most sophisticated investors to spot a raw deal, partly because brokers' transaction fees are hidden in the price of the bonds, making price comparisons difficult.But in the past few years, the playing field has started to level. Regulators are pushing for changes to make the pricing of bonds clearer. The Municipal Securities Rulemaking Board, a self-regulatory organization created by Congress, is expected to propose new rules soon that will, among other things, make munis' "official statements" -- the equivalent of a company prospectus -- available online.Discount brokerages are also expanding their businesses. Last fall, Fidelity Investments, for example, began offering more types of municipal bonds as part of its effort to boost its online bond trading.

18. _______issued by states, cities and other arms of government to fund improvements, are a hot commodity.a. Double bonds b. Stock bondsc. Concrete bondsd. Municipal bonds Correct

Interest Rates And Oil Prices Control Stocks



By E.S. BROWNINGJanuary 22, 2007; Page C1http://online.wsj.com/article/SB116941752552983063.html

For months, the bull market has enjoyed two strong underpinnings: falling oil prices and the hope that the Federal Reserve will start cutting interest rates this year.Now, there have been surprises on both fronts, and stock investors are worrying how to react.Hopes for an interest-rate cut by spring or summer have virtually evaporated, in the face of stronger-than-expected economic and wage data. That is a big disappointment because low interest rates reduce borrowing costs for businesses and consumers, helping stocks.Meanwhile, oil futures, which had been floating around $60 a barrel, have suddenly dived even lower. Despite a sharp gain Friday, futures finished the week at $51.99. Crude is down 15% this year alone, 33% below the U.S. record $77.03 hit July 14.Some investors are talking about the possibility of $40 oil, something the market hasn't seen in more than two years. For stocks outside the oil business, and for most consumers, that is good news, because it restrains inflation and frees up money to spend.The market has to figure out how to respond to unexpected good news about oil and unexpected bad news about interest rates.In the short term, it is dithering, with stock indexes bouncing up and down near their recent highs. The Dow Jones Industrial Average finished Friday at 12565.53, less than 20 points below the record 12582.59 hit earlier last week.Many money managers remain quite bullish."I am seeing gas below $2 a gallon here. It is down more than 33% from the summer highs. That translates into more money in consumers' pockets, more discretionary spending," says Keith Wirtz, president of Fifth Third Asset Management, which oversees $23 billion for Fifth Third Bancorp in Cincinnati.Falling demand for oil is contributing to the price declines. Oil consumption in 30 leading industrial countries fell last year for the first time in more than 20 years, the International Energy Agency reports.

19. The market has to figure out how to respond to unexpected good news about ______ and unexpected bad news about _____.a. oil, interest rates Correctb. interest rates, oilc. wage data, interest ratesd. bears, interest rates

Maybe They're All Maxed Out On ComputersBy VAUHINI VARAJanuary 23, 2007; Page C1http://online.wsj.com/article/SB116951730700884444.html

The technology sector, after a hot stock-market start this year, is looking much cooler now -- and not in a hipster way.




Many companies are finding they have enough hardware and software to run their businesses. As their technology investments have matured, corporate spending in this sector has become increasingly tied to growth of the overall economy, says Goldman Sachs analyst Rick Sherlund. That could restrain tech earnings this year, particularly for companies that depend on sales to businesses.The 'Half-Empty Crowd' Has the Upper HandIt often isn't the news that counts on Wall Street, but how investors react to the news. When investors feel upbeat, they focus on news that supports a rosy outlook. If sentiment is negative, they see half-empty glasses and look for cracks.This earnings season, reactions have been more dyspeptic than delighted.Yesterday, pharmaceutical giant Pfizer beat analyst per-share-earnings expectations, but investorsbit their nails over expenses, job cuts and revenue growth and drove the shares down. Concerns about rising costs weighed on shares of Citigroup after it beat analyst earnings forecasts Friday. And then there was IBM's stock decline on jitters over hardware sales.Investors are wise to be concerned about rising expenses and softening sales. Yet such blemishes tend to get overlooked when moods are buoyant. When sentiment turns sour, warts get magnified into major wounds. Sentiment seems to be turning sour now.

20. Many companies are finding they have enough _______ to run their businesses.a. hardware and software Correctb. engineersc. accountantsd. tax software

The NYSE: Faster (and Lonelier)By AARON LUCCHETTIJanuary 24, 2007; Page C1http://online.wsj.com/article/SB116961010890785937.html

For some traders left working on the floor of the New York Stock Exchange, it appears the Big Board has dimmed the lights.The exchange, a unit of NYSE Group Inc., is scheduled to finish today its long push to have its 3,618 securities traded almost exclusively electronically, a move that is translating into speedy service for investors. But for the employees who work on the NYSE's iconic trading floor it means fewer jobs and the biggest change to the way the Big Board has traded stocks in its 214-year history.Every day, more of the human brokers disappear. Big brokerage firms like Lehman Brothers Holdings Inc. and J.P. Morgan Chase & Co. have let go some floor brokers in recent weeks, between five and 10 people each. Merrill Lynch & Co. has discussed with its brokers the possibility of transferring off the exchange.Goldman Sachs Group Inc.'s Spear, Leeds & Kellogg trading unit, one of the NYSE's elite "specialist firms" that match buyers and sellers on the floor, is expected to announce layoffs of at least 10 staffers this week, according to a person familiar with the matter. Van der Moolen Holding NV, the Dutch company that owns a specialist firm on the NYSE, said yesterday it cut 30% of its U.S. staff, or about 50 people.



Bank of America has started plans to cut about 100 of its roughly 220 people at its specialist unit, and LaBranche & Co. has already reduced staff on the floor to about 85 people from 190 before the NYSE started rolling out electronic trading in October."It's been a very painful" few months, says Michael Rutigliano, a longtime NYSE floor broker. "I understand why it's happening, but it's not pleasant when people you have admiration for are losing their jobs." Last week, traders gave departing colleagues standing ovations on about a dozen occasions when the laid-off employees left the floor for the last time.As for investors, their trades are being executed much faster, which means they will more often be able to buy and sell at the price they see advertised. Right now, the market reverts back to human brokers bidding aloud, or "open outcry," only when stocks experience big moves, which happens about 1% of the time, versus almost all the time not long ago when only certain trades were executed electronically.

But short-term volatility in stocks has risen a bit, meaning some investors are finding it harder to buy a stock at a predictable price through the day.It's nothing short of a "monumental" change for the markets, says Mark Gurliacci, NYSE's vice president of strategic market analysis. He recalls that when he first started at the exchange in 1998, it was too crowded to visit the floor during the first and last hours of trading. Now, he says, dropping by anytime isn't a problem.NYSE officials say because of the automation they can now handle far more trades. The specialist firms now handle far more stocks at each panel than they used to, because many of the bottlenecks created by human intervention are gone. Now, specialists, instead of overseeing trades in a handful of stocks, supervise computer programs that spit out thousands of trades a minute. One sign of the change: Specialist clerks that collectively banged their keyboards 45 million times a day have cut that to fewer than 20 million keystrokes."Everyone on the floor sees this as a negative, but this automation is a positive," argues Steven Grasso, a floor broker at the exchange who isn't related to former NYSE chief Dick Grasso. "It's a smarter and more-efficient business."

The changes for investors are meaningful. In the securities where NYSE has already turned on the expanded electronic trading, the average time to complete a trade on the Big Board has fallen sharply -- to about three-tenths of a second from nine seconds before. It hopes to reduce the average trading time by an additional 90% this year. This week, the NYSE adds the final 100 or so securities to its list of electronically traded stocks.Electronic trading has proved popular since the NYSE removed the restrictions in the fall that have existed for years on the size and frequency of automatic orders. (The maximum size grew from 1,099 shares to one million.)In stocks where the restrictions have been lifted in the past 16 weeks, 80% of the share volume is now electronic, up from about 19% before the change.One potential side effect: higher volatility for stocks in short time frames. NYSE says the average $100 stock trading electronically is moving 12.12 cents over a five minute period, up 7% from the 11.33-cent trading range in the 30 days before the stocks went electronic.


21. The exchange, a unit of NYSE Group Inc, is scheduled to finish its long push to have its 3,618 securities traded almost exclusively _____.a. electronically Correctb. by investorsc. by floor tradersd. by staffers

Apple iPhone Is No Reason To Hang Up on RIM SharesBy JESSICA E. VASCELLAROJanuary 25, 2007; Page C1http://online.wsj.com/article/SB116968827007987044.html

Since the day Apple Inc. showed off its new iPhone, shares of BlackBerry maker Research in Motion Ltd. have been taking a beating. The logic: Apple's new smart phone, capable of sending and receiving email, could eat into the market for RIM's electronic-messaging devices.But it is too early to count out RIM. Indeed, many investors say that RIM, whose share price has nearly doubled in the past six months, may still have some growing to do. Its corporate wireless email device and service -- the cornerstone of its business, making up 92% of revenue -- are poised to expand in markets outside North America, and has become practically indispensable at many large corporations.And the Waterloo, Ontario, telecommunications-equipment maker has opened a second-front: the consumer market. Its first foray into that territory, a stylish wireless email phone with a built-in camera named the Pearl, is selling well and a new line-up of devices geared toward both business users and consumers is coming soon.Expected to be priced far below the iPhone's $499 starting price, the new and already available RIM devices serve a different market segment, investors say. The iPhone is expected to appeal to high-end consumers seeking to upgrade their iPods. Others may be put off by some of the iPhone features such as its touch-screen keyboard, limited battery life and camera, a feature often banned by corporations.What's more is that RIM has a cozy relationship with some 225 network operators globally, who make large profits selling BlackBerry service. By contrast, Apple has decided to work with a single operator in the U.S., AT&T Inc.'s wireless unit, the former Cingular Wireless.Investors believe RIM's easy-to-use technology and solid brand awareness make it uniquely positioned to increase its market share on multiple fronts. "I am willing to give them the benefit of the doubt that they will continue to come up with competitive offerings on the consumer side and I think they have more room to grow even on the enterprise side," says Martin Hubbes, chief investment officer for AGF Funds Inc. of Toronto. AGF holds some 800,000 RIM shares or roughly 2.1% of its C$5 billion (US$4.2 billion) fund.RIM's share price has dropped 10% from its close of $142.16 on Jan. 8, the day before Apple's iPhone announcement. In 4 p.m. trading yesterday on the Nasdaq Stock Market, RIM's shares were up 98 cents to $127.73, giving the company a market value of about $23 billion. RIM rival, Palm Inc., maker of the popular Treo, also saw its shares fall on



the heels of the iPhone announcement. But Palm posted disappointing earnings last quarter and is considered more vulnerable to iPhone competition than RIM.Shares of RIM, whose current fiscal year ends March 3, trade at 28 times estimated per-share earnings for fiscal year 2008, according to Thomson Financial. That is in line with Apple's price/earnings ratio of 27 times estimated per-share earnings for its fiscal year 2007, which ends in September.

22. Since the day Apple showed off its new iPhone, shares of BlackBerry maker ___ have been taking a beating.a. AGF b. BPhonec. RIM Correctd. AT&T

The Mutual-Funds EraserBy DIYA GULLAPALLIJanuary 26, 2007; Page C1http://online.wsj.com/article/SB116978024214988611.html

Singer Tom Petty once warbled that the waiting is the hardest part. Now that wait is finally over for many mutual-fund managers.That is because 2007 marks a milestone that could greatly help their funds: It will have been five long years since the late-2002 bear-market bottom. This means that five-year performance numbers no longer will reflect the market's steep slide. Instead, they will capture the market's upswing since then.Five-year returns are among the closest-watched measures of fund performance, and many fund managers are highly aware of the pending turnaround in their numbers. They say the topic is already coming up in marketing presentations with clients.Some mutual funds report a flood of calls from pension consultants and others who have noticed their funds suddenly showing up as strong performers, as 2002 no longer drags down their average. Other funds are reporting renewed intake of investor cash after years of selling, as well as new interest from overseas clients.Until recently, "the consultant and adviser community would say, 'No one wants to talk to you, because of your five-year number.' " But now, "we're at this real inflection point" where there is interest on sales calls, says Kevin Divney, a manager of the $4.7 billion Putnam New Opportunities Fund. It swung from an average 5%-a-year loss for the five years through December 2005, to a 3.9%-a-year gain for the five years through the end of December.Meanwhile, U.S. diversified stock funds went from 2%-a-year annualized returns for the five years through 2005 to 7%-a-year for the five years through December, according to fund researcher Morningstar Inc.For investors, the change makes it increasingly important to review a fund's performance carefully before making a new investment. They should compare the five-year and other figures in last year's annual reports with more-recent results and should look at 2001 and 2002 results to gauge how hard and fast the fund fell during the bear market, which could affect volatility going forward.



Investors shouldn't "get either too excited or too disappointed" by any one time period's returns, says Jeff Tjornehoj, an analyst at Lipper Inc.In particular, the disappearance of 2002 is lifting funds that focus on technology and other rapidly expanding, or "growth," companies, which have struggled relative to other fund categories in recent years. The $377 million Seligman Global Technology Fund, for instance, is seeing net new money for the first time in three years.The fund has been aware "for some time now" that its numbers would improve as 2002 receded, says Richard M. Parower, a manager for the fund.The 20 worst-performing U.S. diversified stock funds with over $1 billion, ranked by five-year annualized returns through 2005, were mostly growth funds. They had big negative returns around this time last year but are posting positive results for the same period through December.Among the most dramatic: the $3.8 billion Fidelity Aggressive Growth Fund, which had a negative 13%-a-year five-year return through the end of 2005, but a 0.39%-a-year gain for the five years through Dec. 31.Of course, it isn't just the absence of bear-market turmoil that has benefited such funds. A Fidelity spokeswoman says factors like the fund's aggressive positioning relative to its peers also has helped. Other funds say they have made various improvements in recent years, but the performance boost from saying goodbye to 2002 still helps."You can tell people you've made changes to your research process and reduced fees" but they "still like to see the proof in the validation of returns," says Gary Wendler, director of product strategy at AIM Investments.The $2.3 billion AIM Large Cap Growth Fund has gone from a negative 6.7% five-year annualized return at the end of 2005 to a nearly 4%-a-year gain at the end of 2006. Many other AIM funds have seen similar improvement, although investors continued to yank money last year.Financial advisers agree returns are just a preliminary way to spot good funds. We "aren't going to significantly revise portfolios because of an anniversary date," says Curt Weil, a Palo Alto, Calif., financial planner. Still, the impact is already starting to help funds because big fund customers use software to forecast coming-year rankings.Funds took the brunt of the dot-com bust at different times. January 2002, for instance, was a particular low for Old Mutual Focused Fund, which had a sinking, large position in Adelphia Communications Corp., a cable company that eventually filed for bankruptcy-court protection.

23. Many mutual-fund managers are happy that five-year performance numbers will no longer reflect _______.a. the late-2002 bull-market b. the late-2002 bear-market Correctc. late-2002 interest ratesd. late-2002 sales rates

The New BlackBerry AddictsBy ANJALI ATHAVALEYJanuary 23, 2007; Page D1http://online.wsj.com/article/SB116951624034884415.html



Unlike most people who are hooked on their BlackBerrys, Casey Williams doesn't use the email device to keep up with his boss or clients. Instead, he uses his new BlackBerry Pearl to check email from his professors and send text messages to his friends when he is out at a noisy bar."It's pretty much my lifeline," says Mr. Williams, a student at Texas State University who ditched his Motorola Razr phone late last year and bought the $199 Pearl.Wireless email devices used to be largely the domain of harried executives and professionals. Now, the so-called CrackBerry effect is beginning to afflict the masses. The BlackBerry has become ingrained in daily life, much like the cellphone and computer. The result is that a new demographic of obsessive users -- everyone from stay-at-home parents to college students -- is depending on BlackBerrys or similar email devices for basic daily tasks, such as checking sports scores, finding directions, emailing the children's baseball coach and keeping in up-to-the-minute touch with friends.In the past year, cellphones that come with extra features such as email and keyboards -- known as smart phones -- have made major inroads into personal lives. Last year, U.S. sales for the month of November were 787,507 units, compared with 220,796 units in November 2005, according to NPD Group, a market researcher in Port Washington, N.Y. Smart-phone "manufacturers and carriers have started to offer more mainstream prices and mainstream devices," says Neil Strother, research director of mobile devices for NPD -- a result of lower prices, smaller, sleeker designs, and improvements in software.A host of new smart phones are hitting the market. This month, Apple Inc. announced it will launch a media-playing cellphone with email capability in June. The iPhone -- which has a base price of $499 in addition to a two-year contract with AT&T Inc.'s Cingular Wireless unit -- will target high-end consumers. Palm Inc. recently released the Treo 750, its fourth smart phone to be rolled out in the U.S. in the past year, on Cingular's network. Motorola Inc. and Nokia Corp. have also launched new smart phones. Also this month, T-Mobile USA, owned by Deutsche Telekom AG, brought down its price for the BlackBerry Pearl to $149 from $199. The Pearl -- Research in Motion Ltd.'s first consumer-focused BlackBerry device -- is now available in white."The Pearl has attracted a lot of people to BlackBerry who we would not have otherwise attracted in the retail setting in the past," says Mark Guibert, vice president of corporate marketing for Research in Motion, of Waterloo, Ontario. Unlike other BlackBerry devices, the Pearl has a built-in camera and multimedia player -- features that help increase its broad appeal. "We are seeing people who are buying the Pearl with personal use in mind as the primary use," he says.The growing appetite for smart phones is in part fueled by demand from independent contractors or small-business owners who don't receive wireless email devices from employers. Josh Hallett, a 34-year-old social media consultant who has his own business, says that while he bought his Pearl for work, he uses it to check sports scores and snap pictures for fun. "Occasionally you'll come across something bizarre that you'll just want to document," says Mr. Hallett, of Winter Haven, Fla.Recently, he used it to snap a photo of the mountains behind his cabin while vacationing in North Carolina. He wirelessly posted it that same day to the photo-sharing site Flickr.com.


People are paying a higher price for personal use. While employers usually cover the monthly cost of smart phones for corporate users, consumers are paying for their own data plans, which let you send emails and surf the Internet, in addition to their voice plans. That can tack as much as $40 onto the monthly bill.Many consumers say the extra cost is worth it. Tina Gill, 35, a stay-at-home mom in Austin, Texas, uses her BlackBerry 7100g to keep up with the fluctuating schedules of her two children. She often receives email updates from her children's golf and baseball coaches on where practice is being held that day. She also uses it to look up directions to the locations of her daughter's Girl Scout activities and respond to emails from her friends while she is running errands. "I'm on the road more than my husband, who has his computer in front of him," Ms. Gill says.As the demand for on-the-go access to email and Web search grows among consumers, device makers are scaling up efforts to market their gadgets to the masses. Sunnyvale, Calif.'s Palm, for example, launched a $25 million campaign last year to generate mainstream awareness for its Treo smart phones.Smart phones -- especially those designed to be slimmer and more lightweight -- have caught the attention of young consumers. Jessica Sellers, 21, a student at Louisiana State University at Alexandria, bought a Palm Treo 650 in August. "My friend had one, and at the time, it was the coolest phone out there," Ms. Sellers says. "I decided to get one, too."She has found creative uses for her Treo. For instance, a month ago, Ms. Sellers asked a friend to send her a message while she was having coffee with a blind date to check how it was progressing. If the date was going badly, the friend had planned to give Ms. Sellers a fake emergency phone call so that she could bolt. Fortunately, the date wasn't too painful. "I texted her back saying, 'it's OK,' " she says.

24. Unlike other BlackBerry devices, the Pearl has a. features that help increase its broad appealb. a built-in camera and multimedia playerc. features that make it appealing to college students and soccer momsd. All of the above Correct

Why You Should Think Twice About Investing in Real EstateBy JONATHAN CLEMENTSJanuary 24, 2007; Page D1http://online.wsj.com/article/SB116959562212885601.html

Real estate may be getting cheaper. But homes are always expensive.Like any good knee-jerk contrarian, my enthusiasm for the property market grows as the bad news piles up. Only last week, the Federal Reserve's "beige book" report on regional economic conditions noted that housing markets continue to soften, with sluggish home sales and falling prices in some areas.So is it time to buy the vacation home you've always wanted? Should you trade up to a larger place? It is tempting. But if your sole goal is making money, it's mighty hard to justify.



• Counting costs. When analyzing the payoff from homeownership, it is critical to remember two key points. First, home-price appreciation has historically been modest and certainly nothing like the heady gains enjoyed earlier this decade.According to home-finance corporation Freddie Mac, U.S. house prices climbed 6.2% a year over the past 30 years, versus 4.3% for inflation. Beating inflation by 1.9 percentage points a year is (pun intended) nothing to write home about. To make matters worse, after the current decade's blistering performance, even slimmer returns may lie ahead.Instead, as you toy with whether to trade up to a larger place or purchase a second home, your real focus should be the dividend. This dividend is the rent you receive or, if you live in the house yourself, the "imputed rent" -- the rent you would have paid if you didn't own the place. This rent might be worth 7% or 8% of a home's value each year, though the figure will vary depending on the location.That brings us to the second key point. Homeownership is horribly expensive. In fact, it's comparable to owning a mutual fund that not only charges 3% or so in annual expenses but also levies a 5% or 6% back-end sales charge.The back-end sales charge is the commission you will likely pay to sell your home, while the 3% annual expenses reflect the triple hit from property taxes, homeowner's insurance and maintenance costs.Your annual expenses would be even higher if you add in home improvements and monthly mortgage costs. But arguably, neither should be included: Home improvements are optional expenditures, while a mortgage is a borrowing cost, not a cost inherent in homeownership.• Collecting rent. What's the implication of all this? If you subtract the costs of homeownership from your price appreciation, you are unlikely to keep pace with inflation -- and you might end up under water. True, if you have a mortgage, you could enjoy leveraged gains. But leverage can also bite. Indeed, from current levels, price gains may fall short of the 6.4% interest rate now charged by a 30-year fixed-rate mortgage. What about the mortgage-tax deduction? Even if you figure in the tax savings, the leverage may still not work in your favor.All that said, this could be a wonderful time to invest in real estate -- and, no, I am not making a market prediction. Frankly, it isn't that important whether property prices climb at 4% or 6% a year.Rather, what really matters is the long-run dividend. As savvy landlords will tell you, the key to a successful investment property is finding a place that will attract good tenants who deliver a steady stream of rental income.But what if you have no desire to be a landlord? What if, instead, you're thinking of trading up to a larger house or buying a vacation home for your own use?In that case, all bets are off. You won't collect any rental income and, after all costs, you probably won't make much on the price appreciation.That doesn't mean you shouldn't buy that charming country cottage, assuming you have the financial wherewithal and you will get a lot of pleasure from the place. And clearly, it's better to pay 2007's prices than 2005's. But don't kid yourself: You aren't investing in real estate -- you're consuming it.


25. According to home-finance corporation Freddie Mac, US house prices climbed ____ a year over the past 30 years, versus 4.3% for inflation.a. 2.6% b. 6.2% Correctc. 16.2%d. 26.2%

Time on Your Side: Rating Your Boss's Flexible SchedulingJanuary 25, 2007; Page D1http://online.wsj.com/article/SB116968655023686974.html

The flap over Wal-Mart's move into computerized scheduling of its employees is the latest of many signs that work hours are in upheaval.Mobile-office technology, the 24/7 economy and computerized scheduling are making work hours more flexible. So why are some workers celebrating while others are howling in protest? At SAS Institute, a software concern with 10,000 employees in Cary, N.C., 20,000 eager jobseekers swamped its Web site with applications after a "60 Minutes" newscast publicized its flexibility. At Wal-Mart, nimbler scheduling has drawn worker petitions and protests.With employers from big law firms down to the local pizza joint promoting "flexible schedules," how can you size up these pitches? This column sets forth a new way to tell how well an employer is managing time. I see companies in three stages, from the least employee-friendly to the most. My yardstick is based on three measures: How much control do employees get over their time? What is the employer's purpose? And is flexibility being allocated fairly?Stage one: Employer takes all. At this stage, companies use flexibility to benefit the company. The purpose is to cut labor costs or match staffing to fluctuating customer demand. Your company is probably in this stage if your schedule changes often but you have little say in when you work. Also, these employers tend to apply flexibility only to hourly workers, while salaried people's time is managed differently.Wal-Mart this year is rolling out to all 3,400 stores an automated scheduling system that has computers, not managers, creating workers' shifts. This helps the company match staffing to customer traffic, says Celia Swanson, a senior vice president.While some Wal-Mart workers say they like the system, the bottom line is that Wal-Mart's purpose is to improve customer service and cut costs. Many workers will get less control over their time, because the human factor -- a store manager who might be moved by a worker's pleas for personal or family time -- plays a diminished role. And workers must make sacrifices to gain a measure of control, agreeing to work weekends and nights to get first dibs on the schedules they want.Stage two: The policy stage. These companies are light years ahead of Stage One. They adopt written flexibility policies, mainly to attract and retain skilled workers. Usage, however, is low, and many setups are handed out on an ad hoc basis, risking perceptions of unfairness. Your company may be in this stage if only a few employees work nontraditional schedules while the rest labor a standard 8-to-5 and longer.



In response to employee surveys "clamoring" for flexibility, Bristol-Myers Squibb in 2000 began offering six alternative setups, from job-sharing to compressed workweeks, says Stacey Gibson, a senior director. Later, "we heard from employees there was no equitable process for getting these," she says. Some managers were afraid to say no, while others turned down requests that probably should have been approved, she says. The company is moving beyond this stage by training managers to weigh flexible-work requests wisely and to view them as a productivity tool. Two-thirds of employees now say in surveys they have enough flexibility to manage their time well, and "we're going to keep pushing it," Ms. Gibson says.Stage three: Culture change. Flexibility becomes a way of working at this stage, and companies have two purposes. They want to improve productivity or service, and they want employees to have enough control over their lives to stay healthy and happy. Your company is probably in this stage if flexible work hours are the rule rather than the exception. At Communispace, a Watertown, Mass., online market-research concern, all 110 employees, from the office administrator on up, have flexible hours. Employees appreciate the flexibility, which enables them to be responsive to clients in the evenings without working burnout hours. Flexibility isn't just an accommodation, says CEO Diane Hessan, "it's mission-critical for the business."

26. Flexibility in work schedules can a. allow employees to have enough control in their lives to stay happy and healthy b. be used to cut costs and improve customer servicec. be perceived as unfair if most employees are still working traditional schedulesd. All of the above Correct


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The Wall Street Journal Weekly Quiz · Web viewNEENAH, Wis. -- Everywhere you look, Kleenex is under siege. Cheap generic tissue is tearing into its market share. Meanwhile, it faces