The news at a glance
Microsoft’s answer to the iPad; Executive salaries are still rising; Consumer sentiment remains shaky; Supreme Court backs drug companies; Nokia announces large layoffs
Tech: Microsoft’s answer to the iPad
Microsoft burst into the hardware business this week with its first-ever computer: a tablet designed to challenge Apple’s iPad, said Shira Ovide in The Wall Street Journal. The Surface, which has dimensions similar to the iPad’s, will run a variation of Windows 8, Microsoft’s latest operating system, providing users access to office tools like Microsoft Word and Excel. The tablet also has a built-in stand and a magnetic cover that doubles as a touch keyboard, allowing the Surface to be converted into a laptop. CEO Steve Ballmer said his company wanted a device that would offer “Windows without compromise.”
The Surface marks a major shift in strategy for Microsoft, said Dina Bass in Bloomberg.com. The software giant has long relied on partners to make and market machines that run its Windows software, but its rival Apple has soared with the integrated hardware-and-software approach of its iPhone and iPad. That said, the decision to make its own tablet “threatens to sour Microsoft’s relationship with some PC makers,” like Dell, Lenovo, and Hewlett-Packard, which are reportedly developing their own tablets to run on Windows 8. “It’s a bold move, but it’s a very risky one,” said analyst Michael Gartenberg.
CEOs: Executive salaries are still rising
Despite being the No. 1 complaint about big business, “executive pay just keeps climbing,” said Nathaniel Popper in The New York Times. Last year, the median pay of the 200 top-paid CEOs in the U.S. was $14.5 million, 5 percent higher than the year before. Corporations say they are taking steps to tie executive compensation more directly to company performance. But corporate pay experts say that kind of incremental change won’t be enough to quell popular anger over CEO salaries, particularly given the country’s “stubbornly high unemployment and declining wealth for many ordinary Americans.”
Economy: Consumer sentiment remains shaky
More signs emerged last week that the “economy’s recovery is on shaky ground,” said Jason Lange in Reuters.com. New data indicated that U.S. factory output shrank for the second time in three months, and U.S. consumer sentiment fell in early June to a six-month low. The economy has shown signs of cooling in recent months, with employers slowing their hiring for four straight months and retail sales declining in May. “It’s more convincing evidence that the economy is stuck in low gear,” said market analyst Joe Manimbo.
Pharma: Supreme Court backs drug companies
The Supreme Court ruled this week that pharmaceutical companies don’t have to pay their sales representatives overtime, said Robert Barnes in The Washington Post. The 5–4 decision, which will save the drug industry billions of dollars, found that the country’s 90,000 drug company reps qualify as “outside salesmen,” which means their employers are exempt from paying them overtime under federal labor rules. Drug reps had argued that they should get overtime because they do not sell drugs but only convince doctors to prescribe them.
Telecom: Nokia announces large layoffs
Ailing cellphone-maker Nokia seems “to have run out of steam,” said Matti Huuhtanen in the Associated Press. The Finnish company, the world’s second-largest manufacturer of mobile handsets after Samsung, announced that it would cut 10,000 jobs by the end of next year and close a number of its research and manufacturing facilities after losing more than $1 billion in the last quarter of 2011. Once the “bellwether of the mobile industry,” Nokia has suffered from heavy competition in both the higher-end smartphone sector and in the low-end market.