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SEPTEMBER 26, 2005
Edited by Dan Beucke Talk Show "We're not played out as a species." --Gregory Wray, Duke University biology professor, on two new studies that say the human brain is still evolving, to the Chicago Tribune 
KATRINA CLEANUP Don't Cry For Warren Buffett Warren Buffett's wallet may be lightened by Katrina -- but not as much as you might imagine. Sure, about 60% of operating earnings at Berkshire Hathaway (BRK ) are from insurance-related businesses like General Re, GEICO, and National Indemnity. They could suffer steep losses. In the third quarter of 2004, Berkshire had a $816 million aftertax loss from Florida hurricanes. Overall, net earnings fell 37% then, to $1.1 billion. Katrina could be crueler. But Berkshire, like other insurers, is coming off four years of rising prices. It has a capital base of $88 billion. Katrina losses are "likely to be a mosquito bite for Berkshire," says Morningstar (MORN ) senior stock analyst Dreyfus Neenan. Other investments should soften the blow. Buffett has long been a fan of homebuilding, owning paint maker Benjamin Moore, carpet supplier Shaw Industries, and Clayton Homes, the No. 1 retailer of manufactured homes. All could benefit as cities rebuild. FEMA has ordered 1,800 Clayton mobile homes to house evacuees. Clayton cut prices for the government but expects a small profit. Finally, if energy remains pricey, Berkshire has a 1.3% stake in oil producer PetroChina (PTR ). Being super rich means never having to put all your eggs in one basket. By Adrienne Carter   WIRED LIFE E-Health Gets A Shot In The Arm Silicon Valley has talked a good game about digitized health care, a sort of information superhighway for hospitals and doctors. Now big tech outfits are putting their muscle behind it. This week, Cisco Systems (CSCO ), Intel (INTL ), and Oracle (ORCL ) disclosed an alliance to subsidize adoption of technology by Bay Area doctors. If they comply with standards for automating their offices, such as using electronic records and promoting online patient education, the docs can get paid up to 5% more for treating employees of those companies. Cisco medical director Jeffrey Rideout says the aim is higher-quality care: "We believe lower costs may be a consequence, but it's not a primary goal." Still, savings estimates keep growing. A Sept. 14 RAND study, reported in the journal Health Affairs, says the proposed National Health Information Network of electronic medical records could save up to $165 billion a year, from the total $1.7 trillion U.S. health-care bill, by shortening hospital stays, encouraging tests and early treatment, and cutting administration costs. That's 50% higher than previous estimates. Skeptics like Harvard's Steffie Woolhandler and David Himmelstein say the report uses speculative economic models and that hospital-based computing is little improved over 20 years ago. Also, RAND's work was backed by tech suppliers. But with government -- and now employers -- pushing, the e-health movement is gaining speed. By Timothy Mullaney INSURANCE 
MAD AVE Building The Flock In Prime Time Faced with stagnant growth, the United Methodist Church is turning to Madison Avenue for answers. The church recently launched an ad campaign targeting Gen X professionals just starting families -- the same 24-to-44-year-olds coveted by sellers of soft drinks and cell phones. The campaign, created by The Buntin Group of Nashville and running nationally on CNN and elsewhere, plays on a "journey toward faith": in one, people follow trails of pebbles, arrows, and red yarn until they meet each other. The Methodists have dabbled in seasonal ads, but spokesperson Stephen Drachler says the new campaign is their largest outreach push. No wonder: The number of Methodist lay members fell 0.7% from 2002 to 2003, to 8.2 million. They aren't alone: The Episcopal Church is launching a smaller campaign, spurred by its own 1.6% membership decline between 2002 and 2003. Southern Baptists, meanwhile, grew by 0.4% during that time. The Methodist ads will cost $25 million over four years and will go forth and multiply via radio, print, and billboards. By Elizabeth Woyke BOMBS AWAY Staying Aloft It outlived the Cold War, did a star turn in Dr. Strangelove, and has flown in every post-World War II conflict except Korea. Now the Air Force is finding ways to keep the B-52 Stratofortress bomber aloft for another 35 years. Pentagon planners are giving the Boeing (BA )-built B-52 a bigger role in electronics jamming and are thinking about buying an advanced radar system to keep it flying until 2040. At that point some B-52s would be 80 years old -- the equivalent of the Wright Brothers' plane flying until 1983. With a minimal investment, the world's sturdiest airframe continues to play a crucial strategic role -- providing a rare example of fiscal common sense inside the Beltway. By Stanley Holmes PODCAST NEWS A Bond Guru On Your iPod With nearly $500 billion under his watch, Bill Gross is one of the bond market's most powerful investors. But Gross is also a Luddite: He writes his influential monthly investment outlook with a pencil and paper. Starting in October, though, Gross will also read a podcast at pimco.com and itunes.com (AAPL ). His musings aren't your basic fixed-income slog: Recently he discussed his no-sugar diet along with rising rates. But even Gross isn't sure how it will go: "Why would you spend time listening to me instead of the new U2 album?" By Lauren Young FACE TIME Steve Ells: Now That's One Hot Chipotle 
When Steve Ells opened Chipotle Mexican Grill 12 years ago in Denver, the formally trained chef thought his little taqueria would be a cash cow to underwrite "a real restaurant" with cloth napkins and waiters. "I thought there was going to be just one Chipotle," Ells says. So much for his forecasting skills. Today, Chipotle is the fastest-growing U.S. chain, with 450 outlets and estimated sales north of $600 million. And soon it may generate even more cash. McDonald's (MCD
), which bought a stake in 1997 and now owns 90% of the company, is mulling a spin-off as it focuses on its core operations. McDonald's execs say nothing has been set, but analysts think an announcement could come in weeks.In any case, Ells, 39, says he has no intention of stepping aside as CEO. (He and his partners own 10% of Chipotle.) And he no longer yearns for that "real" restaurant. "I am more and more invigorated by Chipotle," he says. Judging by its sales, so are his customers. By Michael Arndt MARKETING For UPS, A Fashion Week Fantasy The brown shirt and pants of United Parcel Service (UPS ) delivery staff are among the most recognizable outfits in business. But that didn't stop UPS from asking students at New York's Fashion Institute of Technology to rethink the concept. Six of the whimsical designs they came up with last year were stitched into uniforms, and photos of the outfits were displayed by UPS as part of its sponsorship of Fashion Week, the annual industry fete held in New York's Bryant Park from Sept. 9-16. The looks ranged from a safari-inspired shorts jumpsuit with cargo pockets to a hooded capelet, handknit sweater, and snazzy holder for the driver's Delivery Information Acquisition Device. The color palette: browns, of course, dressed up with official UPS patches. UPS wants to expand its global logistics and supply-chain business in fashion, so the sponsorship was a natural fit. UPS won't reveal what it paid, but it gave 10 emerging designers a venue for their shows. That's a big break for the designers, since a show at one of Bryant Park's lavish tents costs $25,000 to $50,000 before models' fees and production costs. For UPS, it was purely an exercise in marketing -- don't expect new uniforms to hit the street anytime soon. By Christine Summerson LIBATIONS A Vodka From The Land Of Its Birth American drinkers have developed quite a taste for vodka, knocking back $8 billion of the stuff last year. But hardly a drop of it was made in Russia: Smirnoff has been made in the U.S. for generations by Hartford's Heublein, now part of British Diageo, while Stolichnaya, another famous brand distilled in Russia, is bottled in Latvia these days. Now flamboyant Russian multimillionaire Roustam Tariko is hoping to change that. This month, Tariko began exporting Imperia, the most exclusive variant of Russian Standard, a seven-year-old premium brand that has caught fire with the Russian jet set. Russian Standard sales in Russia climbed 20% last year, to $100 million. Imperia, which sells for around $35 a bottle, plays on Russian nostalgia with double-eagle labels that say "1894 St. Petersburg." But it faces a daunting challenge in getting noticed in the U.S. alongside such luxury brands as France's Grey Goose, and Poland's Belvedere. Tariko already has shown a knack for American-style marketing: To launch his invasion of the U.S. on Sept. 7, the tycoon rented Liberty Island, site of the Statue of Liberty, for an exclusive party. By Jason Bush 
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