Harold Maass of The Week The Best of Today's Business

NEWS AT A GLANCE

Lehman's good bank/bad bank strategy

Lehman Brothers is looking for ways to survive the credit crisis, and one of its proposals is to split itself into a "good" and a "bad" bank. Under the plan, Lehman would spin off about $30 billion of commercial real estate and mortgages into a new, "bad" publicly traded company, freeing up the "good" Lehman from the drag on its shares tied to investor concern over those troubled commercial assets. Such a strategy isn't new, and it worked for Mellon Bank in 1988. (The New York Times) The value of commercial real estate transactions worldwide was only $306 billion in the first half of this year, about half the level of the same period in 2007. "It's hard to sugarcoat what's going on," says Dan Fasulo at Real Capital. (BusinessWeek.com)

Dell switches tack on in-house manufacturing

No. 2 PC maker Dell has decided to sell all its computer factories worldwide and switch to a contract-production model, The Wall Street Journal reported. Dell reportedly hopes to have all its manufacturing plants sold in 18 months, most likely to Asia-based contract manufacturers. (Reuters) Dell for a long time has made its own products, but the switch in focus to laptops has made that business model less cost-effective. (The Wall Street Journal) "As the company moves away from its direct sales business model," said HSBC analyst Wang Wanli in Taipei, "Outsourcing production to third-party manufacturers will help them become more flexible." (Bloomberg)

Samsung eyes SanDisk

South Korea's Samsung, the world's top maker of flash memory, says it may buy U.S. rival SanDisk, which is valued at $3.2 billion. (Reuters) The merger could spell trouble for Toshiba, which already lags Samsung in the $15 billion flash memory chip market. Toshiba also has plans to build new semiconductor plants with SanDisk. Samsung currently pays SanDisk up to $500 million in patent royalties each year. (Bloomberg) In other merger news, U.S. tobacco giant Altria is reportedly in late-stage talks to buy UST, the maker of Skoal and Copenhagen smokeless tobacco, for more than $10 billion. Smokeless tobacco is one of the few growth areas for the industry. The deal could be done by Monday. (The New York Times)

A bond by any other name . . .

The typical Indiana taxpayer is not a fan of subsidizing the Indianapolis Colts' new $717 million stadium, $612 million of which is from state bonds. So to make the project more popular, the state is urging bond issuers JPMorgan Chase and City Securities Corp. to play up the connection to star quarterback Peyton Manning. "Would you rather buy some Peyton Manning bonds or some sewer bonds?" said Ryan Kitchell of Indiana's Office of Management and Budget. Not everyone's buying it, but demand for the bonds is actually quite strong. Indiana says the new stadium and adjoining convention center will bring jobs to the state. Taxpayer-financed football stadiums often fail as economic development engines. (Bloomberg)

BEST COLUMNS OF THE DAY

The Wall Street hustle

Get ready for "that exciting phase of any financial crisis," says Steven Pearlstein in The Washington Post, "when the lawsuits come fast and furious, criminal charges are lodged, and Wall Street firms agree to pay hundreds of millions of dollars for having snookered their customers once again." Major banks in recent weeks have agreed to pay $500 million in penalties and buy back $50 billion in shifty auction-rate securities. What's depressing about this is that a few years ago "these same companies reached similar settlements for defrauding many of the same investors." Wall Street's broken, deeply "corrupt culture" is responsible for today's crisis, and if it isn't mended, tomorrow's financial scandals.

Google's Chrome strategy

For years, Google has been pestering Microsoft "like a fly flitting around the kitchen," says the Los Angeles Times in an editorial. But with its new Web browser, Chrome, Google is launching a direct attack "on the heart of Microsoft's business," Windows. Browsers have always posed a challenge to Microsoft, but Chrome is designed to work more efficiently with Web-based applications, like the free ones from Google. "If you think of Chrome not as a browser but as a replacement desktop, you'll see how big a deal this could be." And even if Chrome fails, the writing is on the wall. The Web is "where computing is headed, with or without Microsoft's blessing," and operating systems "just won't matter."

GOOD DAY FOR: A name change, after California's 99 Cents Only retail chain is planning to raise prices above 99 cents for the first time in 26 years. The store is one of the few "dollar" stores left where everything is still 99 cents or less. But the chain just had two consecutive quarterly losses, as higher food, fuel, and labor costs hit the pricing structure. (Los Angeles Times)

BAD DAY FOR: A stiff drink, after British pub chain JD Wetherspoon credited a turnaround in its lager sales to the introduction of Coors Light at its 694 pubs. Coors Light is now its third most popular lager. Wetherspoon and fellow British pub chains Punch Taverns and Greene King all reported poor results, which they blame on the U.K.'s economic slump, rising prices, and a new country-wide smoking ban. (MarketWatch)

NOTED: Pacific Investment Management Co., the world's biggest bond fund manager, promoted Mohamed El-Erian to sole chief executive, effective when co-CEO Bill Thompson retires at the end of the year. El-Erian will remain Pimco's co-chief investment officer with managing director Bill Gross. (Bloomberg) Gross yesterday called for a massive intervention in the housing market by the U.S. Treasury, "to prevent a continuing asset and debt liquidation of near historic proportions." (Reuters)

This column was written by Peter Weber and edited by Harold Maass of TheWeekDaily.com.