TOP 10 STORIES OF 2000

1. Price of Energy Soars: Energy worries returned with a vengeance, as rising demand trumkcped constrained supplies to boost every key commodity to 10-year or even all-time highs. American consumers were forced to think about energy--and reconsider their seemingly insatiable thirst foxr it--in ways unseen since the oil shocks of the 1970s. Californians suffered perhaps most of all, enduring what one observer called “a three-ring circus” of woe. Long accustomed to rough treatment at the pump, residents saw gasoline statewide flirt with the $2-a-gallon mark. The threat of rolling blackouts remained a daily menace at year-end--and higher consumer bills a near-certainty--as regulators struggled to fix the deregulated electricity market. And during this first weekend of winter, the 90% of California homes that heat with natural gas are racking up bills at least 50% higher than those of a year ago.

(Henry Fuhrmann)

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2. Stock Market Boom Turns to Bust: The Nasdaq market’s year may best be described using astronomy terminology: From January to mid-March, technology stocks’ boom resembled a supernova. The Nasdaq composite index, after soaring 85.6% in 1999, surged an additional 24% from Jan. 1 to March 10. Then the collapse began, as investors finally realized that many of their beloved highflying Internet companies might never turn a profit. Nasdaq sank 37% by late May before stabilizing. With autumn, however, came the collapse--the supernova imploding into what has lately begun to resemble a black hole as the “dot-com” shakeout intensifies. By Friday’s close of 2,517.02, Nasdaq had lost 50% of its value from its peak. Though not on Nasdaq’s scale, much of the rest of the market also has slumped, reflecting weakened corporate earnings amid a slowing economy, soaring energy costs and rising competition. The $12-trillion question: Have stocks fallen enough?

(Tom Petruno)

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3. AOL, Time Warner Move to Merge: America Online kicked off the year with a bold plan to use its Internet-inflated stock to buy old-media giant Time Warner, the biggest merger ever attempted. The deal would marry AOL’s online expertise with Time Warner’s stable of movies, music and magazines as well as the nation’s No. 2 cable network. Initial expectations were that the deal would win quick antitrust approval. But rivals led by Walt Disney Co., Microsoft Corp. and EarthLink Inc. rallied against it, saying that a combined AOL-Time Warner would monopolize the Internet. To save the merger, AOL Time Warner had to agree to lease its cable lines to AOL rivals and abandon a separate acquisition of music label EMI Group. Wall Street’s enthusiasm waned throughout the drawn-out deal, causing the value of the transaction to sink to less than $100 billion from the original $164 billion. The companies hope to close the merger in January.

(Edmund Sanders)

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4. Tire Recall Rattles SUV World: In one of the largest safety recalls in history, Bridgestone/Firestone in August offered to replace an estimated 6.5 million tires after reports of tread-separation tire failures linked to accidents. According to unverified reports, at least 200 deaths and hundreds of injuries in the United States and abroad have resulted from the tire-related crashes, mostly involving Ford Explorer sport-utility vehicles fitted with the three models of 15-inch tires. Although scrutiny has focused on the Japanese tire maker and Ford Motor Co., the recall drew attention to the problem of tire failures generally and the instability of SUVs, which are more prone to rollovers than passenger cars from tire blowouts. Ford and Firestone face scores of lawsuits from crash victims and survivors.

(Myron Levin)

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5. Fed Tempers Searing U.S. Economy: Federal Reserve officials worried during much of the year that the economy was overheating and on the brink of triggering harmful inflation, so the central bank engineered a series of interest-rate increases that helped cool it down. In all, the Fed boosted short-term rates six times between June 1999 and May of this year. Last week, the Fed shifted its emphasis and declared that the risks of a slump now exceed the risks of inflation, leading many analysts to believe that the central bank will start cutting interest rates in January. Bolstering that stance was the latest gross domestic product report, showing that the economy expanded at its weakest pace in four years in the third quarter while inflation eased.

(Stuart Silverstein)

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6. Cigarette Makers Lose Landmark Case: The tobacco industry suffered the biggest loss in the history of civil litigation in July when a Miami jury awarded $144.8 billion in punitive damages to an immense class of current and former Florida smokers. The crushing verdict came in the landmark Engle case, the first class-action suit on behalf of sick smokers ever to go to trial. The verdict, amounting to more than two years of U.S. cigarette sales, is not even the full tab for the industry in the Engle case. The punitive damages would be divided among smokers who also win compensatory awards for lung cancer and other smoking-related diseases. The tobacco companies have challenged the verdict, and many experts believe it will be modified or reversed on appeal.

(Myron Levin)

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7. Microsoft Breakup Ordered: In the biggest antitrust case since the breakup of AT&T; in the early 1980s, a federal judge in June found that software behemoth Microsoft Corp. violated state and U.S. antitrust laws, Judge Thomas Penfield Jackson ordered that the company be split in two for at least 10 years and imposed tough sanctions on its business practices. Microsoft won an important reprieve in September when the U.S. Supreme Court declined to immediately hear the landmark antitrust case. Instead, the high court sent the case to a pro-business appeals court. The change of venue gives Microsoft a potentially more sympathetic panel of jurists to hear the case and more time to reposition itself in a fast-changing industry.

(Jube Shiver Jr.)

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8. Human Genetic Map Decoded: Two teams of scientists announced in June that they had each produced a draft version of the human genetic code. It was a milestone in creating a complete genetic manual for our species, which is expected to launch a new era in fighting disease, maintaining health and perhaps extending the human life span. The months leading up to the completion of the rough drafts were marked by a high-stakes and sometimes acrimonious competition between a publicly funded group of scientists known as the Human Genome Project and the private-sector company Celera Genomics. Although the two groups cooperated at the end and shared credit for the feat in a trans-Atlantic news conference with President Clinton and British Prime Minister Tony Blair, the prominent role of the profit motive--complete with initial public stock offerings and presentations to Wall Street investors--in such a vast international research project signaled a new era in science.

(Bill Loving)

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9. Airline Industry Woes Snarl Traffic: For airline passengers, it was a year to forget. The summer became a nightmarish travel season as tens of thousands of flights were delayed or canceled altogether. The culprits: A refusal by United Airlines’ pilots to work their normal overtime hours, owing to a contract dispute; bad weather in much of the nation; an aging air-traffic-control system; and a record number of airline passengers. The problems, though not as severe, continued into the busy holiday season as labor spats broke out at several airlines, which accused their mechanics, pilots and other employee groups of carrying out work slowdowns to put pressure on their own contract talks--slowdowns that the workers’ unions denied. Regardless, the situation grew so dire that President Clinton issued an executive order to create a new unit in the Federal Aviation Administration that will look at traffic control and other issues to help reduce the delays.

(James F. Peltz)

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10. U.S. Normalizes Trade Relations With China: In spite of fierce opposition from labor and environmental groups, Congress passed legislation in September to permanently normalize trade relations with China, paving the way for the world’s most populous nation to join the World Trade Organization, the Geneva-based group. Once China’s WTO membership is finalized, which is expected to occur sometime in 2001, the Asian giant must abide by global trade rules and open up protected sectors such as telecommunications and farming.

(Evelyn Iritani)

Fun -- for a While

TheStreet.com DOT index of 24 Internet-related stocks, including CMGI, E-Trade and Yahoo, packed a lifetime of memories into a few years.

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Monthly closes and latest for the DOT Internet stock index

Source: Bloomberg News