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Recent Press Releases (U.S. and international) for magazine issues and staff changes may be found below. Please note that for many issues there exists only a highlights sheet, while for others there may also be a full press release. The cover of FORTUNE's current issue is pictured at right. Please contact the appropriate communications staff member with any questions.
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Highlights of the September 3, 2007 Issue of FORTUNE
SPECIAL REPORT: MARKET SHOCK 2007 RISK RETURNS—WITH A VENGEANCE, by Shawn Tully, page 50 For the past five years risk has been the invisible man on Wall Street. Banks, hedge funds, and lenders behaved as if home prices always rise, borrowers never miss a payment, and companies never blunder into bankruptcy. Now a crisis of confidence that began with subprime mortgage defaults is sweeping the Street, and risk is invisible no more. Banks are wobbling, markets are quaking and ordinary investors are wondering how badly they'll be hurt. Risk, as always, will exact revenge. Already signs of carnage abound. Nervous lenders have driven up interest rates on all debt other than U.S. Treasuries, making it hard for many financial companies to fund their operations. The Federal Reserve has made extraordinary injections of more than $62 billion into the financial system to keep credit flowing. The European Central Bank has pumped in almost $300 billion. The real worry is that a more drastic meltdown may lie ahead. It might begin, for example, with the collapse of a marquee hedge fund. The banks that extended the billions of dollars in loans to the fund would suffer deep losses. Other lenders, girding for a wave of defaults, would turn off the tap. That's when the crisis would jump from the markets to the economy at large—crimping business investment and consumer spending and bringing on a painful recession, with job losses, sharper stock market drops, and even steeper declines in home values. For the moment that's still the worst-case-scenario, not the most likely one. Now one knows when the market turmoil will end or where it will lead, but FORTUNE's special report will tell you everything you need to know to understand the market shock and its potential consequences. CRISIS COUNCIL, page 59 Will the subprime lending meltdown and credit crunch send us into financial free fall? We asked a baker's dozen of the sharpest minds in business to share their reactions to the downturn and their insights on the road ahead.
SUBPRIME ON THE RHINE, by Peter Gumbel, page 71 In the highflying world of European finance, Düsseldorf-based IKB Deutsche Industriebank was hardly in the big leagues. But in 2002, IKB began branching out into arcane areas of finance. Everything changed. Dirk Röthig had just taken over as head of the securitization business for IKB, and he and IKB were dubbed "the usual suspects" because they could be counted on to buy securitized assets — including those backed by packages of U.S. subprime mortgages — on a regular basis. Today IKB is by far the biggest international victim of America's subprime mortgage crisis — and a clear example of how the repercussions are extending far, far away around the globe. Röthig and a colleague quit IKB in early 2006 to set up their own financial boutique in a dispute partly related to pay. Röthig says his dispute involved a refusal by superiors to allow him to back off his aggressive strategy. Instead, chief executive Stefan Ortseifen went gangbusters. He pushed hard to expand the bank's activities — just as the U.S. subprime crisis was starting to break. As late as June of this year, even as the delinquency rate by mortgage holders was soaring, IKB set up a second off-balance-sheet vehicle, called Rhinebridge, which invested massively in what's known as collateralized debt obligations, or CDOs. Then it all blew up. HOUSING MARKDOWN, by Jon Birger, page 77 What could the collapse in the subprime mortgage market possibly have to do with whether Dr. Jeffrey and Madeline Stier get full price for their four-bedroom house in the wealthy New York City suburb of Larchmont? Not much, you would think. After all, the people who live in Larchmont tend to be lawyers, doctors, and Wall Streeters. Generally speaking, they aren't the credit-challenged borrowers who must resort to subprime mortgages to finance their homes. And yet talk to the Stiers about the tepid demand for their home and it's clear that what's happening in the subprime market is reverberating all the way up the real estate food chain. Not only has the collapse driven up rates on many kinds of mortgages, but fear of a stock crash — one perhaps sparked by the bursting of the credit bubble — has for now prompted many high-end homebuyers to either trim their offers or stop shopping altogether. FORTUNE investigates this increasing trend and why your house may already have lost 10% to 15% of its value. MORTGAGE MAYHEM, page 82 The mortgage default mess is not easy to understand, but our FORTUNE graphic makes a complex situation clearer. Home-loan default rates across the country — especially for subprime—loans have nearly tripled since 2006. There's no end in sight: Adjustable-rate loans worth $850 billion are scheduled to reset by 2008. That will require borrowers to make larger payments, pushing defaults even higher. A BRIEF HISTORY OF FEAR, by Jerry Useem, page 84 A century before the crisis of '07, there was the Great Panic of '07. What does history tell us? Fear is fanned by uncertainty, dubious values, confounding innovations, and the lack of a towering leader. Sound familiar? CHINA'S MOBILE MAESTRO, by Clay Chandler, page 98 China Mobile's wireless network now stretches from Hong Kong to the Himalayas, offering mobile coverage to 97% of China's citizens. Its signal comes in strong on the Beijing subway, inside Shanghai elevators, in Guangxi rice paddies — even atop Mount Everest. China Mobile is the world's largest wireless company with 332 million subscribers as of July. So far, this breakneck growth hasn't come at the expense of profit. Far from it: In the first half of 2007 the company reported net income of $5 billion, up 25% from the previous year, on sales of $21.1 billion. China, a country where only two decades ago fixed-line phones were a privilege of the Communist elite, now claims the most valuable mobile-phone company in the world. But running this behemoth is no cinch. CEO Wang Jianzhou may have one of the trickiest jobs of any FORTUNE Global 500 CEO. It's hard to imagine another chief who answers to as many masters. Improbably, Wang has hatched a growth strategy that, for now at least, is keeping everyone happy. The secret to his balancing act can be found in places like Wuzhubi, a village of about 250 families nestled deep in the mountains of Yunnan province near the Tibet border. FORTUNE reveals how Wang transformed life in these isolated villages. FLIGHT OF THE HONEYBEES, by David Stipp, page 108 It's a sweet time for honeybees in the rolling hills of eastern Pennsylvania: honeycomb stocked with yellow pollen, neat rows of was hexagons housing larval bees, and a fertile queen churning out eggs. But something has gone terribly wrong in this little utopia in a box. Worker bees are playing Amelia Earhart and that pattern has become dismayingly familiar to the nation's beekeepers over the past year, as well as to growers whose crops are pollinated by honeybees. A third of our food, from apples to zucchinis, begins with floral sex acts abetted by honeybees trucked around the country on 18-wheelers. We wouldn't starve if the mysterious disappearance of bees, dubbed colony collapse disorder, or CCD, decimated hives worldwide. But in a honeybee-less world, almonds, blueberries, melons, cranberries, peaches, pumpkins, onions, squash, cucumbers, and scores of other fruits and vegetables would become as pricey as sumptuous old wine. Even more, in late June, U.S. Agriculture Secretary Mike Johanns starkly warned that "if left unchecked, CCD has the potential to cause a $15 billion direct loss of crop production and $75 billion in indirect losses." FORTUNE investigates the disappearance of millions of bees and why it has touched off a scientific detective mission to avert a pollination crisis. DEPARTMENTS FIRST: The Bear Truth Entrepreneurial but plodding: That was the reputation of Bear Stearns. But then it strayed into high-risk hedge funds. The Online Numbers Game Measuring web-page views is far from an exact science, and that's a big problem for online advertisers. Samsung Moves Up the Ranks Low-key Samsung is now the No. 2 seller of cellphones. Sumner's Superjuice Sumner Redstone plans to live 50 years more, drinking MonaVie. DISPATCH: A Glove Story Rawlings has made the fanciest baseball glove ever. COLUMNS: Value Driven U.S. workers can't compete globally unless they work harder. Technology Apple Macintosh computers are becoming the hottest line.
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CONTACT: Katy Reitz
Erin Clinton
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