CNN IN THE MONEY
Is Age Discrimination Becoming Common in Marketplace?; Tough Economic Times Turn Vacation Into Guilt Trips; Analysis of Target Stock
Aired July 6, 2003 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: From New York City America's financial capital, this is IN THE MONEY.
SUSAN LISOVICZ, GUEST HOST: Welcome to IN THE MONEY I'm Susan Lisovicz, sitting in for Jack Cafferty, who's off being independent, something he does very well, on this Independence Day weekend. Coming up on IN THE MONEY: the young and the jobless. Age discrimination is shutting some of America's most experienced people out of the workplace. We'll look at whether it's more common than ever in today's merciless job market.
Plus, chained to the desk: workers are skipping summer vacation -- say it ain't so! Because they're scared of taking time off, paid time off. Find out why tough times are turning vacations into guilt trips.
Also ahead, how to sink a successful corporation. We'll speak with the author of a new book on the AOL Time Warner merger and why it went so wrong.
And helping me to keep the banter quotient ramped up today, a couple of other IN THE MONEY regulars. Rising to the occasion, as always, Andy Serwer, an editor at large with "Fortune" magazine, and Shawn Tully, also at "Fortune," where he's a senior writer. Welcome and happy Independence Day weekend. We tape before the holiday weekend. We'll all be off eating hot dogs, hamburgers, ice cream, and the food for thought is this is a problem.
ANDY SERWER, "FORTUNE" MAGAZINE EDITOR AT LARGE: Well, you know, obesity, everyone's concerned about it, the lawyers are going after it. And, Kraft Foods this past week said they're going to slim down their offerings and make it all healthy. Now, me, Shawn, I think they're doing this out of the goodness of their heart. I mean, Kraft really cares about Americans, and that's why they're doing it. What do you think?
SHAWN TULLY, "FORTUNE" MAGAZINE SENIOR WRITER: (UNINTELLIGIBLE) this company, Altria, has been so terrorized by the attorneys on the smoking front that they know what it's like.
LISOVICZ: The parent company of Philip Morris.
TULLY: Yes, the parent company, Philip Morris -- former Philip Morris, that they know it can happen on the obesity side, that can -- it can be another enormous litigation problem.
LISOVICZ: Well, there have been quotes from some people who are pretty influential saying that obesity is the next tobacco. Those are fighting words.
SERWER: I mean, there's a big difference. I mean, fat may not be good for you, it's not addictive, it's not only bad for you, and Kraft is 84 percent owned by Altria, which also owns Philip Morris, just wanted to get that straight. The Oreo cookies, Oscar Mayer hot dogs...
SERWER: Mallomars, the Oscar Myer Mobile, you know that thing they drive around, they can't that -- they're not going to take that to schools anymore, which I think is terrible. I love that thing -- that thing brings a smile to everyone's face, to see that thing going down the street. You know, they're depriving children.
LISOVICZ: But Andy, I know you like being a contrarian, but what's wrong with just -- you know, slimming it down a little bit? And you know, kids love sugar, they're addicted to it. What's wrong with bringing it back just a little bit?
SERWER: I don't think there's anything wrong with it, but they're doing it, like Shawn says, they're doing it to fend off the lawyers, that's number one. And, this is another interesting question, they're going to make the portions smaller. Do you think they're going to lower their prices? What are you going to answer to that one?
LISOVICZ: Well, I don't know.
SERWER: I don't think so.
TULLY: It's all part of the new altruism movement.
SERWER: Yes, yes, I think it's altruism. Yeah.
LISOVICZ: Altria sounds like altruism, right? OK. All right, we'll revisit that one for sure.
In the meantime we wanted to begin the first segment today with a viewer response to our e-mail question of the week. We asked viewers whether they were looking for a job and how long they had been looking. Most of the e-mails we received came from Americans in their 50s like Fred in Kentucky who said, "I've come to find out that all the years of experience don't count once you reach the age of 50. My telephone interviews go extremely well but as soon as they see me up close and personal, it's all over. There is age discrimination in this country."
E-mails like that got us wondering about ageism in the job market. It's no secret that it exists, but we wanted to find out how widespread it is and whether today's tough conditions for job hunters are making it even worse. For more about that we're joined from Washington by Cari Dominguez, the chair of the U.S. Equal Employment Opportunity Commission. Welcome.
CARI DOMINGUEZ, CHAIR, LLOC: Good to be with you.
LISOVICZ: So how widespread is ageism in America?
DOMINGUEZ: It's quite widespread, we're concerned about the -- about it reaching epidemic levels, in fact, if you look at the commission, and our responsibility as a federal agency is to take in and investigate discrimination complaints, this year 24 percent of all the complaints we took in were age-related, and it's a 41 percent increase from 1999. So, it really is reaching levels of a -- you know, epidemic levels, and I think it's something that needs to be monitored and that we all need to be vigilant about.
TULLY: Cari, it's very confusing for most people to understand exactly what age discrimination means, what it consists of. Is it -- is age discrimination related to companies that simply want to bring in younger employees to save money?
DOMINGUEZ: Well, age discrimination can take all forms of perception. A lot of times it has to do with promotional issues, it has to do with restructuring, how people perceive that their particular functions or divisions or units are being restructured or the layoff process. Each company has its own culture as you know, and it varies. But, oftentimes it does take the form, at the time of hiring and I believe that age discrimination suffers from the same biases and prejudices that race and gender discrimination did in the earlier days.
For example, we have heard many times CEOs assay that they get a better return on investment if they hire a younger worker than if they hire an older worker when the fact of the matter is that is not the case. Department of Labor statistics show that by the age of 34 the average worker has already had three -- seven to eight jobs in his or her lifetime work career and so I think older workers, because it's harder for them to get jobs, can become a much more stable, experienced workforce.
SERWER: Cari, is it wrong or illegal for a company to say they want to hire a younger-looking person and get rid of an older employee?
DOMINGUEZ: It is absolutely illegal and we have had many, many cases many litigation actions, just recently, the last couple of years that have shown that employers who actually take age as the primary driver in their employment decisions, it's -- you know, can be very costly to them. Not only in terms of monetary relief and remedies, oftentimes reaching the millions of dollars, but certainly in terms of productivity and morale for the employees that remain behind. So, it is, the Age Discrimination in Employment Act is a very important law that protects the rights of all individuals over the age of 40 and we are there to make sure that people who feel discriminated against are protected by those laws. LISOVICZ: And Cari, one of the things that you do is to watchdog this. So, here he we have a rising unemployment rate, 6.4 percent now, companies, by the day, letting go of people. I would imagine this is very difficult, though, to track, in other words, to prove your case.
DOMINGUEZ: Well, it is. As I said, we get about 24 percent, 25 percent of the charges. We get over 84,000 charges of discrimination complaints each year and what we're finding is that these charges run the gamut, a lot of employers feel so tempted because they look at an older worker who's more -- higher salaried, greater costs in health insurance and pensions and these things, and it's very tempting thought to restructure along age lines and again, I just want to caution and remind employers that in the long term it's not only materially, but morally the wrong thing to do.
TULLY: But Cari, couldn't this end up being a very big legal cost for America's corporations given that the rules regarding age discrimination are so hard to interpret and so vague in some cases?
DOMINGUEZ: Well, in fact, we just had a huge case in California. $250 million settlement in which age was considered for disability retirement benefits and so again, I do think it's a very costly situation and I want to say several months ago we had another case where this employer just openly asked their 25, 30-year tenured employees to train newer, younger, less costly employees, and that ended up costing them several million dollars.
So, I think -- I think in the long run looking at age just as the sole factor is not only the wrong -- the same misperception as we did when we looked at gender, for example, and said we can't hire women because they're going to go off and have babies and we can't hire people of certain national origins or certain races, I think the age factor can fall prey to the same biases and prejudices, which at the end of the day do not hold true in the workplace, because all of their more experienced workers oftentimes can be more dependable, as productive, if not more productive as any other employee.
SERWER: Cari. Cari, let me break in here and ask you quickly, because we have just a little bit of time left, kind of a contrarian question and that is, aren't senior citizens or older workers already empowered enough? I mean, is it really the best use of your resources to help them out as opposed to poor people or minorities or other people?
DOMINGUEZ: Well, I think that anyone who is eligible and able and willing to work should be given the freedom to compete in the workplace without any -- on a level playing field, without regard to age and without regard to color or national origin. I mean, we have example after example of some of our most productive citizens have been over age 60. So I think, again, to introduce a factor that should have no relevance in how we go about our work is something that, as the law, as the desire of the people is prohibited. And secondly, I think is also something that is just -- has not proven to be the wise thing as this is more foolhardy than anything else to do. LISOVICZ: We'll have to leave it at that. Cari Dominguez, chair of the U.S. Equal Employment Opportunity Commission. Thanks so much for joining us.
DOMINGUEZ: Thank you.
LISOVICZ: Coming up on IN THE MONEY, flights of fancy. For a lot of Americans the usual summer vacation is just a dream this year. Find out how the shaky economy is putting downtime on hold.
Plus, the red, white, and green: we'll tell you how the Target discount chain hammered an old school competitor.
Until debt do us part. The wedding season is here, and that means big money for the bridal business. We'll look at what it costs to tie the knot.
SERWER: If you're watching us on the Sunday afternoon in the middle of the Fourth of July weekend, you're probably not on vacation. If so, you're not alone, because more Americans are deciding not to leave their jobs in these trying economic times. Joining us now to explain why is Stephanie Armour, workplace reporter at "USA Today."
STEPHANIE ARMOUR, "USA TODAY": Thanks.
SERWER: I want to ask you about vacations and Americans. What is it? I mean, we already take less holidays than any other western country. Why is this trend happening?
ARMOUR: Well, not only do we take less vacation, we're taking even less now. Basically, what's happening is it's the economy. We just feel like we can't afford not to be in the office. we work so hard, and now with unemployment at a nine-year high we really feel like if we're not in the office someone else is going to be there in our place.
TULLY: Now, are -- do you think that companies and bosses are pressuring their employees to stay on and to give up their vacations?
ARMOUR: I think it's both. I think that there is some pressure coming from employers. if you look at the number of employers that are actually asking people who go on vacation to leave their itineraries and leave their contact information, that sends a pretty strong message not to take the time off. But, you're also getting pressure from clients, the people employees deal with on a day-to-day basis, clients expect to be in touch 24/7, and so there's pressure from both sides.
LISOVICZ: And Stephanie, you have some big figures here. Nearly 50 percent of executives expect to take fewer vacations in 2003, so it's coming at the rank and file as well as the muckety-mucks. ARMOUR: Right. Exactly. I think the average amount of time people are shaving back is at least 10 percent of their vacation time. So, this is -- it's really big, I mean this is really a cutback and this is after last year when people had additionally cut back just due to concerns about their own finances and terrorism. So, you're seeing cutbacks really coming at a pretty big level, you're seeing people cut back from the traditional week, two week vacation to just a couple days.
LISOVICZ: But Stephanie, does this translate into better productivity? Because, you know, obviously a burned out workforce is sometimes irritable with the public, sometimes they miss details, things like that. It doesn't always work; translate into a better corporate bottom line.
ARMOUR: Right. I think you really are getting a more burned-out work force. I don't think there's any question about that. If you look at study after study, but at the same time I think employers are actually trying to do things to make it a bit easier. They're being a bit more flexible about schedules, for example. More employers are letting employees roll over their vacation time, so that if they don't use it in one year they can actually take it the next year. I think 60 percent of employers now, let employees do that, so they're trying to make it a little less painful, but I think you're right, I think people are feeling much more stressed and much more like they have to be on tap when they'd rather get away.
SERWER: All right Stephanie, let me ask you about this question about always being in touch, because I got a problem with this. You've got your BlackBerry, your cell phone, your palm pilot, online, beeper, this, that. I'm sort of never on vacation, at least that's what my wife says, and she also says it's a bad thing. I mean, what's your take on this? Is it -- is it really like that out there and is it a good thing or a bad thing?
ARMOUR: I think from the experts that I've spoken with generally agree that it's pretty much a bad thing. People are not able to shut off, to get away the way they used to and it's becoming this 24/7 culture, where there is no ability to ever refresh yourself and come back to the office really with the new energy that you need to do a good job. And I think it's really testing employees' own ability to set up boundaries, in fact, just the other day I interviewed a business owner, and we were talking and I heard this odd noise in the background and I asked what it was and he was on the beach in Hawaii, he was just at work, so it's really becoming, I think, a serious problem for a lot of people.
TULLY: Well, even though a lot of people aren't taking their vacations or are cutting back on their vacations, there's a lot of legislation out there that's taken away some of the freedom that companies have to schedule people. For example, in California there's a new law that allows employees to take off six weeks a year, and they can do it every 12 months, and they get paid 100 percent of their pay, but it's not from the company, it's out of a fund that's funded by payroll taxes. Do you -- how do you view some of that legislation that's coming? It's kind of working in the opposite direction of this kind of voluntary cutbacks in vacations.
ARMOUR: I think that legislators certainly are getting the message that people want help, they want things in place that are going to require employers to give them more, to make more balance. But, I think at the other time -- at the other point you really have -- there's not a lot of room. There's really a need to get everyone in the office, there's a need to get productivity as high as it can be. Offices are leaner than they've ever been before and you really are finding out there's not a lot that can really be legislated in terms of making this change. This is something that's become so much a part of the American culture that I don't think it's something that people are going to be able to turn back the clock on just with a few laws.
LISOVICZ: You know, Stephanie, it's interesting, everyone's been bemoaning the fact that companies aren't reinvesting in their companies, capital investment, and here you have the statistic, workers handing over more than $21 billion in unused vacation. Maybe there could be a silver lining to this; maybe this could get the economy back on track.
ARMOUR: Right. It is pretty stunning if you think about it, how much employees are giving back, that $21 billion figure is staggering. But in fact, employers don't want employees to take vacation right now, they don't want them gone. They can't afford them to be gone, so that's why you're seeing them being much more lenient and saying, well, we'll let you take it next year or the next year, so you have all these employees who have weeks and weeks of time racked up, and that's actually becoming a financial liability for companies, too.
SERWER: All right. We'll have to leave it at that. Stephanie Armour, a reporter with "USA Today." happy holidays to you, right?
ARMOUR: Thanks. Exactly.
LISOVICZ: You're right. Thanks a lot.
SERWER: Up next on IN THE MONEY a retail wrestling match. We'll tell you how Target left one of America's top chain stores pinned to the mat.
Plus, getting together and falling apart. We'll hear from the author of a book on the AOL Time Warner merger and how that corporate match wreaked havoc on a media empire.
LISOVICZ: Time to look at the week's top stories in our "Money Minute." It seems like nothing can cool off the red hot real estate market. Applications for mortgages rose more than 5 percent last week, even as rates edged higher. Americans rushed to get home loans before rates increased even more. And they're smart.
Kraft Foods says it will decrease portion sizes and provide more nutrition information in an effort to freeze rising obesity rates. The nation's largest food company also says it will eliminate all in- school marketing to kids.
And here's a shocker. Lawyers are making more money than ever, revenue at the nation's 100 biggest law firms rose eight and a half percent last year, bringing the total take at those firms to $38 billion. Partners at those firms made an average profit of $847,000. Not bad.
SERWER: In what seems like a major sign of the times, Target has now overtaken Sears as the fourth largest U.S. retail chain. Target has been outperforming its competitors in the retail and discount sector for years, all at a time when similar chains like Kmart, Montgomery Ward, and Woolworth's were all fading from the scene. That makes Target our stock of the week, and you know, guys, it's not just Woolworth's. Ames, E.J. Korvettes, Kresge, Caldor, Bradley's, Zayres. Sound familiar? I mean, does this company have what it takes?
LISOVICZ: Well, you know Target made cheap chic and that's why we call it "tar-jay."
SERWER: Oh, I thought we could get through a whole segment without saying "tar-jay."
LISOVICZ: It's been able to really carve out a niche in that big discount arena, there's Wal-Mart, the 800-pound gorilla, nobody can beat it on price, but Target's much hipper, it's trendier, it's got these designers
SERWER: Great marketing, right?
LISOVICZ: Roy Orbison. Do you know your Roy Orbison?
SERWER: No, quote for me.
LISOVICZ: Anything you want.
SERWER: OK, that's enough.
LISOVICZ: That's their new advertising campaign.
SERWER: Yes, all right, that's good.
LISOVICZ: Fun, multigenerational, good graphics.
SERWER: A lot of colors, a lot of stuff. See, I really don't think this company does anything different except for marketing and keeping their stores cleaner. But, maybe that's enough. I mean the stock's been moving, right?
TULLY: The stock's been actually pretty flat since around 2000, it's been up and down slightly, but that's a good performance since 2000.
SERWER: All right, 2000. Now, but listen here, I did a little work on this stock. Over the past five years the stock is up 50 percent while Sears, the company just passed, is down 50 percent. And it's true, it has sort of slowed down and it was sort a superstar previously, but people love this company. They love the chicness, like you said.
LISOVICZ: And Sears -- I mean, remember, Sears was a Dow 30 company, in the last five years or so it was removed from the Dow 30 list, because it just really couldn't play with the big boys anymore. It's really had a problem, the softer side of Sears not only an advertising campaign.
SERWER: Right. Yeah. The "big store" they use to call it out of Chicago. What's interesting also, about Target is that, is that -- you know, it's not a new company. I mean, it was Dayton-Hudson, Marshall Fields, and what they did is they started Target, and that became the star part of the company...
LISOVICZ: And they renamed it.
SERWER: ...renamed the company Target. Right? They've got that Michael Graves stuff in there. Like I said, I don't think there's a whole lot of different stuff there, they just sweep the aisles.
LISOVICZ: Well, you know, it's also going to be very tough for Kmart now that it's out of bankruptcy to compete with those two, to really -- you know, made one of the fatal mistakes, trying to compete with Wal-Mart on price, fell back. It's still got Martha Stewart, though. The Martha Stewart line...
SERWER: Well, that's a marriage made in heaven.
LISOVICZ: And, Jaclyn Smith and Kathy Ireland.
SERWER: Target and Martha Stewart might be made for each other, right?
TULLY: It's unbelievable, when you go into Kmart, the stuff they're giving away there, the prices, the discounting. Actually, they also have this system where you can just use your credit card or check out yourself and pay at a cash machine.
SERWER: That sounds dangerous.
LISOVICZ: You can do that at airlines, too. They do it in grocery stores.
SERWER: Well, Kmart might be joining our list, I mean, they went into bankruptcy and came back out. But you know, it's so tough, there's so much capacity out there, I mean, there's so much stuff. You go into these stores, battery prices, film prices, Cheetos, cookies, and the prices aren't going up. It's very hard for these companies to make money.
LISOVICZ: Well, it's not only -- remember, the prices. They want good service, they want well lit, well stocked.
SERWER: Swept! Sweep the floors. That's what Target does. I keep going to that. That's what Target does, they sweep their floors.
LISOVICZ: So, would you buy the stock?
SERWER: Would I buy the stock? I would say over time Target will continue to do well. I'm going to leave it at that. I'm going to be a little standoffish.
TULLY: I wouldn't buy the stock and I think -- we hit on some of the reasons. Unfortunately the stock, like a lot of stocks, is just expensive. The P.E. is well over 20, and it just can't grow that fast.
LISOVICZ: And remember, Shawn Tully, we have to give him his due, because you sold your Time Warner stock on the day the merger...
SERWER: Forget about Warren Buffett, I mean, this guy, he knows.
LISOVICZ: We salute you.
SERWER: We're not worthy.
LISOVICZ: We salute you.
Still ahead on IN THE MONEY one plus one equals trouble. We'll speak with the author of a new book on the AOL Time Warner merger and how it shook up the media empire and a few employees along the way.
And here comes the bride, there go the savings. Wedding season is here and we'll tell you what it costs.
LISOVICZ: Welcome back. The merger of America Online and then CNN parent, Time Warner, was once called the perfect marriage of new and old media, but now the outlooks is something less than perfect to say the least. Nearly all the top executives involved in the deal have stepped down. The company has lost billions of dollars in market share, and the U.S. government has started not one, but two investigations into its accounting.
Our next guest it an expert on the merger and what seems to have gone wrong. Joining now from our nation's capital Alec Klein, author of the book, "Stealing Time." Welcome, Alec .
ALEC KLEIN, AUTHOR: I am happy to be here.
LISOVICZ: There are so many things that we can talk about, the difference in the corporate cultures, the clash of big egos. You see that actually in a lot of mergers, and they work it out. But the accounting is where you really came in. That's what brought you to the forefront, the shady kind of accounting that appears to have been done on America Online's part, and that is something that really could have stopped this in the process.
KLEIN: Well, it's interesting. It started as a classic newspaper story. I got an anonymous tip from somebody who said I ought to check something out, and I began to look into it, and it took me about a year, but "The Post" ended up putting out a story -- a series of stories, showing how AOL had inflated its advertising revenue at a critical time, both before its merger and after the merger, and once the stories came out, as you know, the two investigations by the government were launched, the company ousted Bob Pittman, the COO. They revamped the company. They admitted that they had improperly inflated $190 million in revenue, and that number may still grow.
SERWER: Alec, yes, interesting stuff. I know that you did lead to those two investigations -- your stories led to those two investigations, but I wanted to ask you to take a step back. We hear a lot about AOL Time Warner, but why should anyone really care about this company? I mean, what is so important about AOL Time Warner?
KLEIN: Well, basically, it touches all of us, right? We are talking about the largest media company in the world. We are talking about Time; CNN; Warner Brothers, a music division that touts Madonna and Jewel. You know, on the AOL side, they are talking about 30 some odd million subscribers. It is pretty much dominant throughout the world, and as consumers, we are all touched by it.
But we are also touched by it as investors. Investors throughout the world have been affected by this merger. Many, many people have lost millions of dollars, you know, on top of which the Time Warner employees, many of those who had invested in the stock of the company, lost their retirement savings. So, we are talking about a merger -- the largest merger of our country and the devastating impact that it had.
TULLY: Right now Dick Parsons says, my God, what were we thinking? Everyone admits this was a horrible mistake. When you just put a pencil to the number, and you saw the kind of premium that AOL was paying for Time Warner, it looked just mathematically, given what the two companies were earning together, there was no way this deal could enrich anybody. What went wrong here? How could so many smart people have been so wrong?
KLEIN: Irrational exuberance. I mean, we are talking about AOL, which had about a quarter of the revenue of Time Warner when the merger was announced, and yet AOL was the acquirer. I mean, it's sort of stunning when you think about it today. But we were at the height of the dot com boom, and everyone thought that this was our future, the media was the Internet.
And so the idea was that AOL was at the vanguard, and it would bring Time Warner, this stodgy old firm, into this new era. And obviously, we now see that things have turned out differently than that.
LISOVICZ: Alec, you talk about the irrational exuberance, and your book is full of anecdotes that show the kind of fast money and people who really hadn't been working out in the corporate arena very long, you know, the rabbis praying for AOL stock to rise, or the woman, the AOL executive, who had her Stairmaster moved, I guess at company expense, from hotel to hotel when she was traveling on business.
KLEIN: Right. Well, what happened was she used her Stairmaster wherever she went. She forgot it on one particular business trip. She couldn't find one in the hotel, so she just went out and bought one, used it, and left it at the hotel and kind of went on her merry way.
LISOVICZ: Hey, Alec, does she still have a job?
KLEIN: Well, I didn't disclose who she was in the book. I didn't want to embarrass her. But suffice it to say she a was a critical member of the company who really helped it grow.
So, but what's interesting is not so much who she was, but the fact that many people at the company were affected by this incredible wealth. You know, suddenly they had these stock options which made them millionaires. We are talking about the secretaries who were retiring, people coming into the company with airplanes and Ferraris, and things got a little bit out of hand. There were company trips to the West Coast to visit strip clubs. It got out of hand.
And some people said that, you know, what happened was, when you have that kind of wealth, you sort of lose perspective. It's the whiff of power and money, and AOL was sort of feeling like they were writing the rules, or that there were no rules, and so they felt they could do these things, even though today it seems ridiculous.
TULLY: Alec, one thing that you did. You have all of our respect here as business journalists. You did a lot of forensic accounting work to uncover the problems that everyone else was missing, and it was some very -- numbers that weren't even that enormous that really made this whole thing unravel and brought out the truth. How did you get enough advice, or how did you kind of -- who guided you through those numbers? Because that's really tough for any financial journalist.
KLEIN: Yes, well, first the people I would like to thank are the people at AOL who gave me these internal company documents, these confidential documents, and then walked me through it. These are people risking their careers, you know, believing that "The Washington Post" would protect them and that we would tell the story because they felt something wrong was going on.
But the numbers were mind numbing. The deals were incredibly complex, and I went to numerous accounting experts, legal experts, but it really depended on the people within the company, AOL, to show me where the skeletons were. And fortunately, we did that.
It's interesting -- before the stories ran, AOL said, you don't understand the numbers you are looking at, you don't understand our confidential documents, and you've got it all wrong. They came around afterwards, as we now see, and have admitted that, in fact, we were correct and that the numbers were inflated.
SERWER: OK, we have to leave it there. Alec Klein, reporter for "The Washington Post" and author of "Stealing Time." Thanks very much. We look forward to your book.
Coming up on IN THE MONEY, something old, something new, and something borrowed, plus something green? Weddings don't come cheap. We will tell you how the thrill of a lifetime time can mean the bill of the lifetime.
Plus hot numbers will tell you about the combination that turned out to be worth $100 million for a Maryland lottery winner.
LISOVICZ: It's July, and that means we are in the middle of high season for weddings. While some people just see the romance of it all, many others are consumed with the huge cost people can face, even for a modest affair. Joining us now to talk about all that is Antonia van der Meer, editor-in-chief of "Modern Bride" magazine. Welcome.
ANTONIA VAN DER MEER, EDITOR-IN-CHIEF, "MODERN BRIDE": Hi, thank you.
LISOVICZ: You know, this is one is business that truly is recession proof.
VAN DER MEER: It's tough to beat it. We are finding that people obviously -- they fall in love no matter what's happening, no matter what the economy, no matter whether we are at war, and they will proceed with their weddings, and they want certain things for those wedding.
LISOVICZ: We really saw it after September 11 that people didn't shy away. In fact, some people were committing, tying the knot, precisely because of it.
VAN DER MEER: That's right. They were. I think, especially in bad times, people want these feel good events. They need them. So, they are even more committed to gathering together with their family and friends and doing the wedding of their dreams.
LISOVICZ: Antonia, how big is this business, and is it growing? What are sort of the vitals of this thing?
VAN DER MEER: It's big. This is a is $120 billion industry.
VAN DER MEER: Huge. If it were a Fortune 500 company, it would be listed number six.
TULLY: There are nightmares about the cost overruns of weddings, and people ending up spending much more than they ever budgeted for or imaged that it would cost them. Can you go online and just get competitive bids? Is there anyway that the Internet or any way that you can get your cost down for a wedding and make it competitive>
VAN DER MEER: Well, brides are very tech savvy right now, and so they are going online, and they are doing some of their shopping online, or at least they are shopping around. They are reading magazines like "Modern Bride" and going online by dot come, and they are finding out how much things cost. They are budgeting very carefully for this because although we are seeing this is a very recession resistant business, it is one where people care deeply about what they are spending. The average wedding is about $22,000.
LISOVICZ: That's a downpayment!
SERWER: I've got two daughters...
LISOVICZ: Look out!
VAN DER MEER: Yes!
SERWER: I mean, are there program? Are there programs? Forget about college. Are there programs for dads to start saving for their daughters? I mean, is there a business of that?
VAN DER MEER: Here some good news for you because dad are not paying all the time anymore. Yes, we've seen a big change in that.
LISOVICZ: That's because of the age of brides has been...
VAN DER MEER: The age of the bride has elevated to about 27 now. But who's paying is the bride and groom are paying themselves, actually, about 30 percent of the time. And about half the time, the bride and groom are paying with the help of either their parents or the groom's parents, so we are only seeing, you know, a much smaller percentage, about 17 percent of people who are going to daddy for the money.
LISOVICZ: It's interesting, Antonia, because brides and grooms are so much more pragmatic these days. "The Wall Street Journal" just had an article the other day about how invitations are going out by e- mail, and a lot of people are...
LISOVICZ: No, actually, there were some etiquette experts who said no.
VAN DER MEER: Can we talk about that?
VAN DER MEER: We find, actually, that people are more involved in doing really unique, creative invitations, and, in fact, that -- the formal aspect of the invitation is growing. I do not see the e- mail invitation as being a popular trend.
SERWER: Good. I'm old school. VAN DER MEER: I think that that's too informal for people. You are spending a lot of money on this wedding, and you do want it to be really special, and I'm sorry, but it's much more special to get a beautiful, creative invitation in the mail than to get an e-mail invitation, and we have even seen things like boxed presents. I mean, they are doing beautiful things with these invites.
LISOVICZ: But what about the pragmatic approach that so many brides and grooms are taking with, for instance, the registering at Home Depot or L. L. Bean, or you can help pay off their mortgage, things like that.
VAN DER MEER: We are seeing very creative registries right now. I think this is one way that brides and grooms are responding to the economic times.
SERWER: I have to tell you, the registering online thing is one of the greatest things ever to happen in the history of mankind. You just sit there on your PC. A friend is getting married, and you just point and click, and it's so -- that's such a wonderful thing, isn't it
VAN DER MEER: It is. It's made it so much easier, and the bride and groom can go on, and they can shift the things around and buy more bowls, and you will see the big registry thing, too, guys are very involved, like look how much he loves it, you know, something, because he can go online, and they love the fact that in the store, there's the registry gun, you know, the scanner gun? Very big. Very big. Very good boy toy.
TULLY: Do you advise people to do all this wedding management on their own or bring someone in to do the management for them?
VAN DER MEER: A number of brides will choose to work with an event planner, and they can -- they usually make up their cost by being able to get you a reduced price on vendors and things, and that's very effective for brides and grooms who are very busy and can't be doing it all themselves or who want that extra attention and extra help.
SERWER: You know, the cakes these days. I mean, everything has just gotten so bigger. That's the way to put it. Everything has gotten so much more fabulous. How much do some of those really big, fancy wedding cakes cost nowadays?
VAN DER MEER: You can -- it really depends whether you have, you know, you are trying to feed 100 people or you are trying to feed 400 people. Some of these cakes can cost you know, $500. Some can cost thousands of dollars. So, it's big.
And the average dress, for example, is about $800, but you are going to accessorize because there's the shoes and the veil and the jewelry, and averages are also funny things. People will spend thousands of dollars on their wedding dress, $4,000 or $5,000.
LISOVICZ: Hello, Vera Wang. SERWER: Yes, that's right. All right, we have to leave it at that. Thanks a lot, Antonia van der Meer of "Modern Bride."
VAN DER MEER: You're welcome.
SERWER: Appreciate it. Still to come on IN THE MONEY, how to draw $112 million. We will tell you about a lottery winner who did it by the numbers.
And is something stuck in your craw? Send it our way. Our e- mail address is email@example.com. First though, time for this week's edition of "Fortune Fundamentals."
SERWER: You often hear people talk about short selling, but what exactly is it? Well, short selling is simply making a bet that a company's stock price will decline. Let's say you are convinced that shares of company ABC are going to drop. What would you do is borrow 1,000 shares of ABC from a broker. Then you sell those shares, which trading for, say, $55 each, giving you $55,000. Now lets say ABC follows your script and falls to $45 a share. You would then buy back those 1,000 shares for $45,000 and return the 1,000 shares to the broker, giving you a $10,000 profit before fees.
It sounds simple, right? Well, actually, it isn't, and that's because stock prices usually go up over time. And remember, you always have to return those 1,000, and if the stock is moving higher, the sky is the limit for what you might have to pay.
SERWER: A part-time postal worker and pet sitter is America's newest mega millionaire. Baltimore's Bernadette Gietka stepped forward Wednesday to accept her hundred and --$183 million, excuse me -- I don't want to shortchange her -- jackpot from the June 20 Mega Million drawing. After taxes, she will get 76 million bucks. Not bad. Gietka says she will still work part-time. I am not sure I get- ka that. I mean, she still works. Why do you work when you have that much money?
LISOVICZ: She likes her job.
SERWER: I like my job, but if I get a lot of money, I am not working any more. I mean, it's very simple.
LISOVICZ: Well, you know, I think history has proven big lottery winners don't always spend their fortunes wisely.
SERWER: Oh, we know that one.
TULLY: And you probably have relatives descending on you.
(CROSSTALK) LISOVICZ: ... swarming on you. This woman needs to get out of town quick. And she's unmarried. Somebody tells me she's unmarried.
SERWER: You know what they should do is make a reality TV show. They should make a reality TV out of this, find a husband for her. I mean, that would be great, right?
LISOVICZ: I think they already have about five of those on the air, Andy.
SERWER: But this is real. I like this idea.
LISOVICZ: But you know, I think the most surprising part of this story is that she sat on the secret for so long, right?
SERWER: Why do they do that?
LISOVICZ: It was a month ago.
SERWER: Why is she working? I still don't get that part. Why is she going to continue to work at the post office and sitting pets? I'll take care of your St. Bernard.
LISOVICZ: IN THE MONEY our next guest, next weekend, why don't we have her?
SERWER: Yes, let's see her.
LISOVICZ: She can answer all of these pressing questions.
Now let's get to e-mail because we have a lot of them. Chuck from Iowa wrote in about our segment on the growing rate of personal bankruptcies. "One way to turn the corner on this issue would be to require all students to get some education on how to use credit cards." Another concept. "That curriculum should be made uniform throughout the United States." And you know who should pay for it? Probably the credit card companies.
SERWER: Yes, or the woman in Baltimore.
LISOVICZ: John from Virginia had this novel idea on how to deal with telemarketers who protested the new national do not call list. "The next time you get one of these guys representing the telemarketing industry and he says people don't mind telephone solicitations, challenge him on the spot to give out his personal home telephone number live on CNN."
SERWER: That's a new wrinkle, live on TV. I'd like that.
LISOVICZ: Yes, I'd like that. And Rick from Colorado had this to say about investing in Krispy Kreme doughnuts. "Fast food joints are already looking down the barrel ludicrous obesity litigation. Doughnuts are next. When all the lawyers dies, I'll come out of my cave." But, you know, Krispy Kreme shareholders have done pretty well.
SERWER: The stock keeps moving up, but it is true, if the fat police run riot across this land, it's going to be bad news for that company.
LISOVICZ: Bad, very bad new.
Now time for our e-mail question of the week. On this July Fourth weekend, we are asking you, what does it mean to be a patriotic American today? Send your answers to firstname.lastname@example.org, and Andy Serwer will wave the red, white, and blue as we read them on the air next week.
SERWER: Yes, OK.
LISOVICZ: And that's all for this Fourth of July weekend edition of IN THE MONEY. My thanks to my co-anchors, "Fortune" magazine editor-at-large, Andy Serwer, and his "Fortune" colleague, senior writer, Shawn Tully.
Our fearless leader, Jack Cafferty, will be back next weekend, and we'll be back with IN THE MONEY at 1:00 p.m. Eastern time on Saturday and 3:00 p.m. Eastern time Sunday, and we'll be taking roll, as Jack likes to say. See you then.
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