Netflix CEO Reed Hastings joins wealth giveaway

Netflix CEO Reed Hastings and his wife, Patty Quillin, recently signed the Giving Pledge.

NEW YORK (CNNMoney) -- Netflix CEO Reed Hastings is one of the latest bigwigs to promise half of his family's wealth to charity through the Giving Pledge, a two-year-old initiative championed by Warren Buffett and Bill and Melinda Gates.

Hastings and his wife, Patty Quillin, are among the 11 families that signed the Giving Pledge in September, according to a press release on Tuhesday. The pledge now covers 92 families.

The Giving Pledge doesn't specify how the participants will donate their money, though the press release noted that Hastings and Quillin "are active in educational philanthropy and politics with a specific focus on charter schools." Hastings was the president of the California State Board of Education from 2000 to 2004.

Netflix (NFLX) spokesman Joris Evers wouldn't discuss any of Hastings' specific favorite charities, saying that "we actually keep charitable giving and other activities that are not related to work very separate here at Netflix." He did add that Hastings is "very much into education."

"We are thrilled to join with other fortunate people to pledge a majority of our assets to be invested in others," Hastings and Quillin wrote in a letter posted on the Giving Pledge's website. "We hope through this community that we can learn as we go, and do our best to make a positive difference for many."

Hastings has made a fortune in Silicon Valley, but he's a comparative pauper in the Giving Pledge ranks. The initiative says it is "specifically focused on billionaires" -- a group Hastings appears to be a fair way off from joining. He doesn't appear on Forbes' Billionaires List, and his public stock holdings are in the multi-million range.

Related story: Private equity boss signs Giving Pledge

Hastings controls around 4.4% of Netflix's shares, including stock options, according to the company's most recent annual disclosure. That stake is worth about $144 million as of Monday's closing price.

He's also an active investor in tech startups and venture funds, and owns millions' worth of stock in both Microsoft (MSFT, Fortune 500) and Facebook (FB). Hastings is on the board of directors for both companies.

Still, Gates and Buffett aren't about to turn away any donors with a mere nine-digit net worth. The Giving Pledge's mission statement says it "borrows from past and present efforts that encourage and recognize givers of all financial means and backgrounds."

The list of tech luminaries who have taken the pledge also includes Intel (INTC, Fortune 500) cofounder Gordon Moore, Facebook (FB) cofounders Dustin Moskovitz and Mark Zuckerberg, Tesla (TSLA) cofounder Elon Musk, Microsoft (MSFT, Fortune 500) cofounder Paul Allen, AOL (AOL) founder Steve Case and Oracle (ORCL, Fortune 500) cofounder Larry Ellison.

First Published: September 18, 2012: 2:04 PM ET

19 Sep, 2012

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Kohl's to hire more than 50,000

Kohl's is hiring 52,700 seasonal part-time workers, a jump of 10% from the prior holiday shopping season.

NEW YORK (CNNMoney) -- Kohl's Department Stores seems to have high hopes for the upcoming holiday shopping season.

The retail chain unveiled plans on Tuesday to hire 52,700 seasonal workers this year. That's a 10% jump in seasonal hiring compared to last year, according to Kohl's (KSS, Fortune 500).

The department store chain plans to hire, on average, 41 workers per store, an increase of 4% from last year. in In total, Kohl's has 1,146 stores nationwide.

The company, based in Menomonee Falls, Wis., also plans to hire 5,700 seasonal employees at its distribution centers and another 30 seasonal positions in "credit operations."

Kohl's said the jobs are part-time, ranging from "a few hours to more that 20 hours per week." Many of the jobs consist of unloading trucks, stocking and working the cash registers. Hiring has begun, and the company plans to fill all job openings by mid-November.

Related: 7 hot toys for the holidays

Koh's announced its hiring drive as the economy continues to struggle with persistent unemployment.

Hiring ahead of the holiday shopping season is an important barometer of retailer confidence, though Kohl's did not say anything specific about its retail expectations for this year.

Major retailers like Wal-Mart (WMT, Fortune 500) and Toys R Us have offered layaway plans this year or eliminated fees on existing plans, in an effort to drum up business.

First Published: September 18, 2012: 11:31 AM ET

18 Sep, 2012

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Bankers nabbed in bid-rigging scandal

A picture taken on September 18, 2011 shows a sign of the Swiss banking giant UBS in Lausanne.

NEW YORK (CNNMoney) -- A federal crackdown is proceeding quietly against bankers accused of systematically defrauding states, local governments and non-profits.

Since 2009, federal authorities have secured 19 convictions or guilty pleas as part of the investigation, including seven since April. The cases have put a spotlight on the municipal bond market, an esoteric corner of the finance world where prosecutors say Wall Street firms have repeatedly used inside information to pad their bottom lines at the public's expense.

"[T]hese complex, seemingly uninteresting backroom deals have a real impact on taxpayers," Richard Weber, head of the Internal Revenue Service's criminal division, said following the convictions of three UBS (UBS) bankers last month.

Those implicated over the course of the investigation have come from firms including Bank of America (BAC, Fortune 500), JPMorgan (JPM, Fortune 500) and General Electric (GE, Fortune 500). Government agencies have collected more than $740 million in penalties, restitution and other fees from the institutions involved.

The probe targets bankers who have colluded about the offers they've made as they bid on contracts to invest municipal bond proceeds.

How the market works: State and local governments issue municipal bonds to fund things like road construction and school repairs. In some cases, they issue the bonds on behalf of non-profits or companies that will spend the money on projects benefiting the public.

The market for these bonds is massive, with more than $3.7 trillion outstanding as of the beginning of this year, according to the Securities and Exchange Commission.

Governments and other issuers don't typically spend all the proceeds from their bonds right away, instead investing some of the money and holding it for future expenditures.

To figure out how to invest that money, they hire brokers who advise on and manage a bidding process among financial institutions competing for their business. Bids are solicited from firms like UBS and JPMorgan, which submit the interest rates they're willing to offer on the bond proceeds.

Related: UBS whistleblower nets $104 million reward

How it goes bad: In cases like that of the UBS executives, prosecutors say the process was corrupted when bankers from different firms conspired with one another, dividing up business in advance and devising their bids in cooperation, a practice known as bid-rigging. This allowed the winning bidders to offer issuers lower rates of return than they would have secured through an honest process.

In some instances, the firms serving as brokers also got in on the act, accepting kickbacks in exchange for providing certain bidders with information about other submissions.

Investigators have been aided in building their cases by the fact that many of the institutions involved record employee phone calls, said Doug Leff, assistant special agent in charge of the FBI's New York field office. The challenge, he added, has been decoding the jargon the bankers used to hatch their schemes.

"They use certain codes -- in some ways, they're almost like the mafia or the drug dealers, except what they're trading in is much more sophisticated," he said.

A UBS spokeswoman said the bank "exited the municipal investment and derivatives business in 2008," and noted that it had reached a $160 million settlement with the government last year to resolve the issue. Other banks either declined to comment or did not respond to requests for comment.

Taxpayers take a hit: Leff said it was impossible to say precisely how much state and local governments have lost as a result of the bid-rigging, but said it was "fair to say it's in the hundreds of millions, if not billions" of dollars.

The investigation of the issue began more than three years ago and remains ongoing. The deals under scrutiny in some cases date back to the late 1990s.

The controversy bears some similarities to the Libor interest-rate-fixing scandal, in which banks are accused of manipulating key global rates used as benchmarks for everything from auto loans to adjustable-rate mortgages. A number of local governments with complex investments tied to Libor say they lost money as a result.

In the bid-rigging cases, victims range from the state of Massachusetts to a hospital in New Jersey to New Mexico's official student loan foundation.

"These defendants chose to line their pockets to other peoples' disadvantage, people who really needed these services," Leff said.

First Published: September 18, 2012: 10:13 AM ET

18 Sep, 2012

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Apple stock tops $700

Click the chart to track Apple's stock.

NEW YORK (CNNMoney) -- Apple's stock hit a new high early Tuesday, crossing $700 for the first time and marking yet another milestone for a company that has had plenty of them this year.

The stock hit an record high of $701.44 in morning trading.

The tech giant's stock has risen sharply in the past few weeks in anticipation of the unveiling of the iPhone 5. The smartphone's launch last Wednesday impressed consumers and investors alike: The company raked in a record 2 million pre-orders in the first 24 hours, double the 1 million first-day orders recorded last year by the iPhone 4S.

Last month, Apple (AAPL, Fortune 500) became the most valuable company of all time when its market capitalization soared past $619 billion -- the record Microsoft (MSFT, Fortune 500) had held since December 1999. Apple's market cap is now $656 billion.

With new gadgets on the horizon, including the iPhone 5, the new iPad, and yet-to-be-announced gizmos like the iPad mini and a long-awaited Apple TV update, Apple has crossed the $400 billion, $500 billion and $600 billion marks -- all in 2012 -- as the stock has soared 80% this year.

The astronomical rise isn't entirely without merit. Apple's iPhone business alone now brings in more money than Microsoft. Even the iPad, which was intended to be a gap-filling product between the iPhone and the Macintosh, has itself become a multi-billion dollar product for Apple.

Analysts scramble to keep their targets ahead of Apple's price

Yet some caution that the stock is rising too quickly and is in danger of becoming overvalued.

Apple's stock is now trading at 16 times fiscal 2013 earnings estimates, which isn't all that expensive compared to some other tech companies with wild triple-digit price-to-earnings ratios, such as Amazon (AMZN, Fortune 500) and Facebook (FB). But its share price has been outpacing earnings expectations by a long shot -- shares were trading at 12 times future earnings forecasts as recently as February.

Still, investors aren't shying away. Apple has begun putting that $117 billion in cash to good use, paying out a sizable dividend to shareholders.

So how much higher can Apple's stock soar? Much will likely depend on how much future product releases impress. But with a product lineup that is expected to smash through more sales records, Apple's shares see no signs of letting up.

First Published: September 18, 2012: 10:06 AM ET

18 Sep, 2012

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Lacrosse by Jake

Jake Steinfeld on the sidelines of a Major League Lacrosse game

(Fortune) -- In November of 1977, Jake Steinfeld, a freshman lacrosse player at the State University of New York at Cortland, was standing on a field in the hail. "What am I doing?" he wondered. It was freezing, and he saw no future in the sport. So Steinfeld -- a weightlifting enthusiast since age 13 -- dropped out, moved to Northridge, Calif., and became a bodybuilder.

After winning a few small competitions, he moved over to Studio City and fell into a routine: lifting weights in the morning, working as a bouncer at night. Sandra Will, an actress, approached him one day and told him she needed someone to help her get in shape for a commercial. He trained her, she told friends about his services, and word spread. Among many other big names, Steinfeld worked with Steven Spielberg -- who later hired him to help Harrison Ford train to play Indiana Jones -- and named his company Body By Jake. He offered personal training by appointment, exercise videos, and eventually TV spots.

Steinfeld milked his Hollywood connections, grew the business, and in 1993 launched a 24-hour network, FitTV, with Tim Robertson, son of televangelist Pat. In 1998, Steinfeld sold FitTV to News Corp. (NWSA, Fortune 500) for an undisclosed figure. He had money, recognizable celebrity, and an itch to try a new venture. His mind returned to those freezing lacrosse practices.

He had read about Dave Morrow, an All-American lacrosse player who founded Warrior, a lacrosse equipment and apparel maker. On a whim Steinfeld called Morrow to persuade him to create a professional lacrosse league. No such thing existed. "He just called me out of the blue," Morrow says. "It was a 310 number so I thought it was one of my old teammates messing with me. When I called back, someone answered and said, 'This is Craig from Body By Jake,' and I almost hung up the phone." Morrow didn't, and within minutes the gregarious Body By Jake guy had convinced him.

More: Steal bases, snag sponsors?

The two former laxers, along with Robertson, funded Major League Lacrosse (MLL) by themselves. But by the end of the first season, in 2000, MLL was out of money, Steinfeld says. The trio scrounged for years. A turning point came in 2004: Morrow sold Warrior to New Balance, and its owner, Jim Davis, bought a controlling stake in the league, saving it.

Today, the league has just wrapped up its 12th season, with its championship match played on August 26 at Harvard Stadium in Boston. While the MLL is growing nicely, many American sports fans still aren't aware that pro lacrosse even exists. Dave Gross, MLL commissioner, says that's to be expected -- it seems that creating a sports league from scratch is not easy. "We are not going to be an overnight success," he says, "but nothing in sports happens that way. We're not the NFL; we're not even the MLS at this point. But we're growing it in the right way."

Mike Stone, a midfielder for the Boston Cannons (2011 champions), says recognition isn't why the players are in it anyway. "Right now, with the state of the MLL, you're doing this because you love the sport," he says. "We all know nobody is making a killing at it, and it's a grind for everybody." Indeed, pros make only $13,000, on average, per season; thus they all have regular jobs. The season is short -- 13 weeks -- and falls in summer. Still, guys like Stone get paid to do what they love, all thanks to Steinfeld, whose name graces the playoffs trophy.

More: How the NBA dominates pro sports

The Body By Jake boss is now focusing his time on beefing up the league's size and reach: He helped launch the program Inside the MLL, which began airing this season on CBS Sports Network. He has people working on technology that will make it easier for a casual fan to watch the sport. TV footage will now highlight the player who has the ball, much like in video games, and akin to what Fox tried to do with pro hockey when it highlighted the zooming puck in the late 90s.

The MLL has sponsorship deals with beverage bigs like Powerade, Coke Zero, and Bud Light. This year two expansion teams debuted: the Charlotte Hounds and the Ohio Machine. The latter, in a June game against the Denver Outlaws, pulled a crowd of 30,128, the biggest in MLL history. And it will continue to expand: The MLL plans to add two more teams in Florida, Texas, or Atlanta by 2014. After that, it's shooting for four new teams on the West Coast, which would bring the total to 14.

"We're getting close," Steinfeld hopes, "to the tipping point." And Hollywood still beckons: Lionsgate bought Take a Shot!, a book by Steinfeld and Morrow about creating the league, with plans to make it into a TV Drama series.

On starting a company

Dive in. "Don't get ready, don't get set. Just go," Steinfeld says on starting his league. "Sometimes the smartest people are the most paralyzed."

Find people you trust. "People you know will always have your back, not when you're standing on top of the mountain but in the deepest ditch."

Constantly adapt. "Keep reinventing yourself; that's the only way you survive. Also, it's important for your sanity."

A shorter version of this story originally appeared in the September 24, 2012 issue of Fortune.

First Published: September 18, 2012: 6:06 AM ET

18 Sep, 2012

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3 strategies to dominate a scary economy

By Geoff Colvin, senior editor-at-large

General Mills headquarters in Minneapolis

FORTUNE -- Gloom has become a menace. The drumbeat of distressing news -- Europe, the fiscal cliff, China -- is enough to rob anyone of hope. It's a nasty, insidious force that's undermining the native optimism that buoys up businesspeople everywhere.

Resist! The reality is that even in today's uncertain economy, some companies are winning big. Growth and success are always possible if we adapt to the times. Three strategies are helping smart companies dominate.

They manage for value -- not for EPS, Ebitda, gross margin, revenue, cash, or anything else. That sounds obvious, but in difficult times, managers get seduced into value-destroying moves. For example, accounting rules say that R&D and marketing are expenses, so if you cut them -- and they're easy to cut -- reported profit jumps. Who doesn't want higher profits now? But in reality those costs are investments that pay off for years, so cutting them destroys value.

A company that understands that is Qualcomm (QCOM), maker of the chips that power mobile phones. In the recession its profits fell in 2008, then fell sharply in 2009 -- yet the company increased R&D, sometimes substantially, every year through the downturn and beyond. The complaint that mindlessly short-term-obsessed investors punish such behavior just isn't valid; Qualcomm's stock has been surging for more than three years.

Other companies manage for value in other ways. Intel (INTC) launched billions of dollars in new plant construction when its industry was on life support and credit markets were traumatized. Coca-Cola (KO) never let up on brand building. Those companies are thriving.

They keep developing human capital. Every company claims that "people are our most important asset," but few mean it. In tough times most companies slack off on leadership development. Training costs money, and moving high-potential managers into developmental assignments feels like a luxury that can wait for better times. But the best-performing companies know that human capital truly is a business's most valuable asset, the scarcest resource, no matter what kind of business it is. Look at highflying IBM (IBM), No. 1 in our latest ranking of the world's top companies for leadership development. It hasn't even considered cutting back its Corporate Service Corps, which sends teams of promising employees around the world to work with local organizations on local problems. Former CEO Sam Palmisano liked to observe that calling IBM a hardware or software or services company was wrong in each case. "We're a people company," he said. Or consider General Mills (GIS), prospering in the fiercely competitive food industry. Its famously demanding leadership culture hasn't wavered, and the company ranks No. 21 on Glassdoor.com's new list of the 25 companies where it's hardest to get hired.

They get radically customer-centric. Most companies don't even know what that means. They have no idea how much money they make or lose with each customer, and they don't craft genuinely different offers for different customers or customer segments based on those customers' needs. But top-performing companies do.

Amazon (AMZN) is the reigning champ, achieving its long-declared goal of being "Earth's most customer-centric company"; the stock just keeps climbing. In a much different industry, Wells Fargo (WFC) has become America's most valuable bank, with a customer-centric strategy since 2003. Wharton professor Peter Fader notes that "the average Wells Fargo household has over five different bank products, roughly twice the industry average."

These three strategies are a bit contrarian in today's world. Following them demands courage. Fear not. They work. Be brave, adopt them with enthusiasm, march confidently into the gloom, and smile.

This story is from the September 24, 2012 issue of Fortune.

18 Sep, 2012

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What it takes to be 'Made in USA'

Athletic shoe maker New Balance says stamping Made in USA on its labels draws in customers.

NEW YORK (CNNMoney) -- With so much talk about the need to revive U.S. manufacturing and create jobs, more companies are touting their American-made roots in order to lure customers.

The notion that buying something made domestically will boost the economy has become an article of faith during the economic crisis. And many businesses are trying to capitalize on that by attaching a "Made in USA" label to their products.

Buying American-made goods has become personal, according to Dave Schiff, chief creative officer at Made Movement, a website that markets and sells only American-made products. Shoppers believe that supporting businesses that manufacture domestically could help them in return.

People are looking for "Made in USA" labels because they know that's how jobs are created, he said. They think, "My son who is unemployed could benefit if I pay attention to a label. The economy at large gets a shot in the arm."

But before a company can use the iconic label, it must comply with a complex set of rules that dictates its use.

The Federal Trade Commission has a dizzying 44-page rulebook that lays out the guidelines -- and the specifics are enough to make your head spin.

For instance, domestically-made textiles, wool, fur or automobiles must, by law, have a "Made in USA" label. Companies aren't required to disclose country of origin for most other products, but many choose to tout their American-made status in order to appeal to customers.

Companies looking for that boost from the label have to be able to prove that their final products are assembled or processed in the United States, according to the FTC. The agency doesn't spot-check items that claim to be made in the United States, but it does investigate complaints.

Related: 7 hot Made-in-the-USA toys for the holidays

Of course, many manufacturers now rely on global supply chains, which makes it much harder to determine when a company can rightly make the claim. Regulators try to assess how much of a product's total manufacturing cost comes from the United States.

For goods that have parts made in many different countries, the FTC relies on what it calls a "one step removed" rule. For instance, if a shirt is made with fabric from overseas, but sewn together in the United States, it can't be labeled "Made in USA."

But if a manufacturer uses U.S.-made fabric that is sewn together domestically using thread made overseas, it would be permitted to use the "Made in the USA" label.

Companies that can't get all of their component parts domestically can use what the FTC calls qualified "Made in USA" claims, such as "Made in USA from imported parts" or "Assembled in the USA."

Related: The manufacturing jobs boom is for real

While the distinctions may be minor, a failure to follow the rules can cost businesses a ton of money.

If the FTC finds a label to be deceptive, it can file a lawsuit and ask for a court-ordered fine or consumer redress. According to Matt Wilshire, an FTC staff attorney, fines go as high as $16,000 per mislabeled item sold, or for every day that the item was advertised.

"This could become a very large figure very quickly," he said, citing one case that ended up costing a business nearly $400,000 in fines.

As costly as a labeling mistake could be, many feel like the regulations protect smaller businesses in the long run.

Brian Meck, who co-owns Fessler USA, a private-label manufacturer that makes clothing for retailers like Urban Outfitters (URBN), says that the regulations reward companies who pay higher costs to manufacture domestically by safeguarding the Made in USA claim. Without the rules, he said, big brands could benefit from the label while sourcing cheaper imported materials to cut costs, without anyone knowing the difference.

Meck also said that the regulations not only protect businesses, but also help consumers. "They give [consumers] the ability to know where their dollars are going and what they're really supporting."

Related: Best Places to Launch

For New Balance Athletic Shoe, which is the last U.S.- made athletic footwear brand, the pros of manufacturing domestically outweigh the drawbacks.

"From a cost perspective, you add different burdens -- regulatory schemes, wage and benefits -- compared to competitors," said spokesman Matt LeBretton. "But the feedback that we get is pretty outstanding, so we do everything to make that continue to work."

First Published: September 18, 2012: 5:48 AM ET

18 Sep, 2012

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Tesla may need to slow down electric car production

Tesla is ramping up production of electric cars such as its Model S. But one investing strategist is worried that Tesla is boosting production too quickly.

NEW YORK (CNNMoney) -- John J. Licata is the founder and chief energy strategist for Blue Phoenix Inc., an independent research and consulting company focused on next generation energy. Neither Licata nor his firm has an investing position in Tesla Motors.

Tesla is showing that is getting the knack for making cars. At least that is what one can infer from a recent tweet by chairman and CEO Elon Musk.

Over the weekend, Musk said the luxury electric vehicle maker made 100 vehicle bodies for the first time in the company's history. I want Tesla (TSLA) to succeed but I do have concerns. How can a very young automaker, one so meticulous in its efforts to make the perfect car, actually boost production levels at such a fast rate in the next few months and still maintain its high standards?

Let's look in the review mirror. During the company's most recent earnings call, Musk said Tesla made 10 vehicles per week (40 in total). Musk also gave Wall Street some meat to chew on by declaring Tesla would dramatically increase production in the coming months. Still, Musk's, declaration via Twitter that Tesla made 100 vehicles may turn some heads. Some analysts were thinking Tesla's production would jump to only 40 vehicles a week.

Shares of Tesla were up 5% Monday morning. In addition to the production news, the stock got a lift from an upgrade by analysts at Morgan Stanley.

Looking at the road ahead though, producing 100 vehicles a week shows the company's huge ramp-up in production timetable may be happening earlier than expected. Yet more work needs to be done in short order for the company to produce enough vehicles to be above the 20,000 per year production clip the company has been aiming for. Musk has stated that by 2013, Tesla will boost production to "at least 20,000 units".

Tesla Model S review: A good first impression

In fact, to meet that goal Tesla would have to produce over 400 cars a week by the fourth quarter. At the current rate of 100 units per week, Tesla would be on a path to produce just 5,200 cars a year. So the company would have to nearly quadruple its production rate to meet the 20,000 a year goal.

Going from producing 10 cars a week to over 400 in two quarters is quite monumental for any car company, never mind an automaker that is as young as Tesla. That could mean quality control will become a sticky situation. With such a robust growth rate in store for Tesla, I think Musk would be challenged to inspect many of the cars himself (as he tries to do now) and simultaneously maintain full responsibilities as the CEO.

So Tesla may need to downshift its rapid growth rate from 5th gear if the electric car company wants to maintain high quality control standards. Musk may also want to focus more on just being Tesla's chairman and bring in a seasoned auto veteran as CEO to oversee the daily operations of the company at this stage of the company's life cycle.

With two crossovers, a more affordable sedan, second generation Roadster and the Model S planned for the next three years, Musk may have too much to handle. And investors might be getting just a little too excited given that Tesla is still losing money.

First Published: September 17, 2012: 11:01 AM ET

17 Sep, 2012

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UnitedHealth bumps Kraft from Dow

NEW YORK (CNNMoney) -- Insurer UnitedHealth Group will bump food giant Kraft Foods from the Dow Jones industrial average, the index owners announced Friday.

UnitedHealth (UNH, Fortune 500) is the first health insurer in the blue chip index of 30 major stocks, which is considered a snapshot of the nation's diversified economy. The shift will take effect after the close of trading on Friday, Sept. 21.

The index managers said that the decision was prompted by Kraft's decision to spin-off its North American grocery business. The new business will be called Kraft Foods Group, while the remainder of the company will be renamed Mondelez International.

The index managers said its committee "believes that Mondelez's reduced market capitalization and projected lower percentage of revenue generated from the U.S. makes the company less representative of the U.S. large cap market space."

It said it also wanted to reflect the growing importance of health care spending in the index.

The only health care companies now in the index are pharmaceutical companies Merck (MRK, Fortune 500) and Pfizer (PFE, Fortune 500), along with Johnson & Johnson (JNJ, Fortune 500), which in addition to prescription drugs makes medical devices and over-the-counter health care products.

Related: Dow closes at 5-year high

Kraft (KFT, Fortune 500) has only been in the index since 2008, when it replaced insurer American International Group (AIG, Fortune 500), which was removed after a federal bailout left the U.S. Treasury with a majority stake in the firm. The index managers said at that time it wanted more representation of the food industry -- McDonald's (MCD, Fortune 500) and Coca-Cola (KO, Fortune 500) are the only food companies left in the index with this move.

There had been calls for Apple (AAPL, Fortune 500) to be added to the index, since it has become the most valuable company in U.S. history. But besides the fact that there are already five other tech companies in the index -- IB (IBM, Fortune 500)M, Hewlett Packar (HPQ, Fortune 500)d, Cisco System (CSCO, Fortune 500)s, Inte (INTC, Fortune 500)l and Microsof (MSFT, Fortune 500)t -- the way that the index is calculated would give extra weight to a company with a high stock price like Apple. It would likely need to split its shares in order to be added to the Dow.

First Published: September 14, 2012: 9:31 AM ET

14 Sep, 2012

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Is this man ready to run Ford?

Mark Fields

FORTUNE -- Ford is undertaking leadership succession that could be tricky, fraught with drama and ultimately decisive as to Ford's competitiveness.

The company's board is reportedly considering Mark Fields, 51, to succeed Alan Mulally as the automaker's next chief executive officer. Fields's main task will be to prove he can perpetuate the change in corporate culture initiated by Mulally, 67, who is approaching retirement. Since 2006, when he was hired from Boeing, Mulally has imposed a collaborative management style for Ford's top executives, a departure from the automaker's history of internal combativeness.

Fields, who is reportedly about to be promoted to Ford's chief operating officer, is being chosen in part for his willingness to lead according to the new cultural norms, which have helped the automaker regain financial stability after near-bankuptcy in the 2008 financial crisis. Fields is currently running Ford's business in the Americas, which has been profitable.

MORE: 10 classic cars worth reviving

Ford has declined to confirm widespread reports that the board was preparing to name Fields to a new post, positioning him as Mulally's successor. Ford also has sidestepped questions about Mulally's retirement, except to quote executive chairman Bill Ford's invitation to stay indefinitely.

For directors and major shareholders, Mulally's retirement would be a loss – yet failing to provide a transparent succession plan carries hazards as well. In any event, Mulally's impact on the organization has been profound.

"Mulally replaced the 'great leader' model of CEO for the 'wise coach' model," said David Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Michigan. "Ford's board of directors has to be certain that the culture doesn't revert to the old way of bickering that characterized the old regime."

Fields was Ford's top executive when it was affiliated with Japanese automaker Mazda and earlier served in South America. One of the oft-told tales about the early days of Mulally's tenure is that Fields was one of the first to be willing to admit operational difficulties in front of the CEO and other executives. Prior to Mulally, such an admission would have been interpreted as weakness and possibly career-damaging.

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"One of the interesting aspects of Fields is that he was part of the old system," said Robert Pasick, an Ann Arbor-based psychologist and executive coach. "It wasn't clear that he was going to survive Mulally. He must have proved his worth."

One news report from Reuters, citing an unnamed source, says that Mulally could serve on the Ford (F) board for some period as non-executive chairman after Fields takes over as CEO. The board would risk alienating Fields and create uncertainty as to who was running the company.

A Detroit-based automotive consultant who declined to be identified said "it's hard to say when Mulally is leaving, but being as thoughtful as he is you can be sure there is a plan and he's going to execute it flawlessly."

The plan, said the consultant, likely entails a resolution of Ford's troubled European operations, which lost $404 million in the second quarter and are likely to lose more through the end of 2012. "He wants to be sure to set up the next guy for success," said the consultant, noting that Ford has been able to put in place a plan for action in China that can make the company more competitive there.

Equity analysts have told Ford that its shares are selling at a significant discount to their potential because the automaker hasn't proved it can avoid multi-billion dollar losses in Europe. Once that continent is fixed, Alan Mulally could be in a position to hand the keys to Mark Fields – while both enjoy a much richer price for Ford stock.

17 Sep, 2012

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Source: http://rss.cnn.com/~r/rss/money_news_companies/~3/UxlwzMpq18E/
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