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Five Things You Need to Know for Wednesday

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What you need to know (and what it means).

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Five things you need to know to stay ahead of the pack on Wall Street.

1. Hasta la vista, Vista

Microsoft says it will have to delay the launch of its Windows Vista operating system for consumers until January, missing the crucial holiday season.

  • What is Microsoft Vista?
  • Microsoft Vista is the name of the next release of the Windows operating system.
  • Although it is being touted for its security features, Vista will reportedly require more than twice as much memory as its predecessors.
  • Microsoft has not overhauled its Windows OS in four years.
  • Consumers will not be able to purchase Vista until January 2007.
  • Businesses should be able to purchase Vista in November.
  • The delay means box makers such as Dell (DELL), Gateway (GTW) and Hewlett-Packard (HPQ) could see their consumer sales affected during the crucial holiday season.
  • Apple (AAPL) on the other hand, may actually benefit from the delay since the company's system runs independent of Windows with its own operating system.
  • Consumers account for about 38% of total PC sales and a greater portion of overall purchases in the fourth-quarter than businesses.
  • Also potentially affected are chip makers Intel (INTC) and Advanced Micro Devices (AMD), both of which have been counting on Vista to boost sales.
  • PC sales had already begun to slow as customers wait for the new Windows operating system.


2. Mind the Gap

In recent conversations with both the Wall Street Journal, Treasury Secretary John Snow has acknowledged that there are new political battle lines being drawn relative to the inequality gap between the rich and the poor. Interestingly, however, this "gap" is also on the international radar as well, being discussed in countries such as China, Italy, France, Iran, South Korea, Britain and others.

  • A study released in late January by the Centre on Budget and Policy Priorities and the Economic Policy Institute found that the gap between the highest-income families and poor and middle-income families is significantly wider than it was 25 years ago.
  • Meanwhile, Treasury Secretary John Snow told the Wall Street Journal recently that the increasing income gap between the rich and poor is simply a function of earning power determined by the labor market: More productive workers earn more than less productive ones.
  • China recently announced several sales taxes on luxury goods citing a need to address the growing gap between the rich and the poor.
  • Buyers of yachts, golf balls and golf clubs will face a 10 percent tax, while luxury watches will be taxed at a rate of 20 percent, according to the new rules.
  • Italian Prime Minister Silvio Berlusconi continues to trail opposition leader Romano Prodi in the polls by about five percentage points. Prodi has made redressing the gap between the rich and the poor a cornerstone of his campaign.
  • Iranian President Mahmoud Ahmadinejad last week said that the gap between the rich and poor countries is one of the major challenges facing the world of today.
  • The topic of an increasing gap between the rich and the poor has been discussed on the 'Ville for a number of years now by Professors Todd Harrison, John Succo, Kevin Depew, and Fil Zucchi, among others.


3. Wal-Mart Goes Posh

In its boldest effort yet to target upscale shoppers, Wal-Mart is opening a new store this week with an expanded selection of high-end electronics, fine jewelry, wine, and even a sushi bar.

  • The single upscale Wal-Mart store is set to open in Plano, TX.
  • Wal-Mart says it won't duplicate this format anywhere else, but select items could be added to WMT stores in other areas.
  • With about 3,700 U.S. stores, Wal-Mart has nearly saturated the market, and analysts such as Minyanville Professor Jeff Macke say future growth depends on boosting sales by offering a better shopping experience.
  • Some analysts have noted, however, that it took Target (TGT) years to shift its image to that of an upscale retailer from a pure discounter.
  • The new store won't sell guns, will not have a McDonald's and no layaways.


4. We said no ferner's, dangit!

Dubai and US officials are growing nervous at the prospect of another congressional uprising against a second acquisition of US assets by a Dubai-controlled company in the wake of the Dubai Ports World debacle, the Financial Times reports this morning.

  • Dubai International Capital recently paid $1.2 million for Doncasters, a privately held British aerospace manufacturer that works on some US weapons programs, including the Joint Strike Fighter.
  • Robert Kimmitt, the deputy Treasury secretary, said this month that the Dubai deal would undergo an extensive 45-day investigation, prompting a delay of the deal until as late as May.
  • Doncasters generated 35 percent of its sales in the US in 2004.
  • Dubai International Capital is the third-largest investor in DaimlerChrysler.
  • Dubai Holdings, the state company of Dubai, already owns the Helmsley Building, the Essex House, and Madame Tussauds Wax Museum.
  • The UAE and US negotiators agreed this week to meet again at the end of April after talks were delayed the day after the US blocked the Dubai Ports World acquisition.


5. GM Makes a Deal

General Motors (GM) will announce today an early retirement deal with the United Auto Workers union, according to Reuters.

  • The deal may include payouts starting at $35,000 for as many as 35,000 employees.
  • It may also allow many workers at Delphi Corp., GM's bankrupt former subsidiary, to return to GM.
  • An earlier report in the Detroit Free Press indicated GM may offer most of its 113,000 blue-collar workers in the United States incentives up to $100,000 to retire as part of a massive effort by the automaker to downsize its workforce.
  • At the end of 2005, GM had 105,000 active hourly workers in the United States, down from 133,000 in 2000.
  • GM has 71,000 jobs overall in Michigan, including white-collar jobs.
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