Garmentos

Liz Claiborne close to deal for apparel brands

Rumblings from inside Liz Claiborne (LIZ) suggest an announcement is imminent regarding the fate of several apparel brands it has put up for sale.

Liz Claiborne is expected to announce, perhaps as soon as Friday, the sale of Ellen Tracy to the private equity firm American Capital Strategies, a person close to the negotiations said. Speculation is also swirling about Sigrid Olsen. Two people familiar with the situation said that one of the brand’s original investors, a longtime apparel executive named Ed Jones, had been interested in buying the brand, but a deal is believed to have fallen through prior to Christmas, one of those people said.

A Liz Claiborne spokeswoman declined to comment.

Liz Claiborne has decided to keep several other brands it had put on the block, including Dana Buchman and possibly Enyce, after bids came in below expectations. The auction was complicated by potential suitors wanting to bid for brands individually, rather than as a package, as Liz Claiborne had initially hoped.

The divestitures are part of a plan announced by Liz Claiborne CEO William McComb in July that would see the $5 billion apparel maker shed laggard divisions to focus on its most promising brands: Juicy Couture, Lucky Brand Jeans, Kate Spade and Mexx.

As Fortune reported in late December, Liz Claiborne is also on the hunt for big name designers to revive its namesake Liz Claiborne sportswear brand. The company has had advanced negotiations with runway designer John Bartlett about a men’s line for Liz Claiborne and is also looking for a designer for the women’s label, sources said.

Building playgrounds is serious business

A nonprofit called KaBOOM galvanizes corporations and communities to build playgrounds in underprivileged neighborhoods. Here's a look inside the vital work behind the play.

PHILADELPHIA (Fortune) -- As the sun rose over the vacant lot in North Philadelphia, the light of day could do little to brighten the scene. Strewn with trash and leftover bricks from row houses that had been torn down, it was a depressing, unusable backyard for the neighborhood charter school, Alliance for Progress.

But this dawning day would not be like any other here. As if organized by some invisible, beneficent force, about 300 parents, teachers, and employees of IBM and software giant SAP descended upon the scene, an army equipped with hand tools. In just seven hours, the eyesore was transformed into a gleaming, state-of-the-art playground featuring a huge metal play dome, a multicolored slide, a rock-climbing wall, and three basketball hoops of various heights. The school's walls were emblazoned with freshly painted murals.

As students decorated a fence with colorful tiles they had made, a group of sweaty volunteers surveyed their handiwork with satisfaction. Said Jim Goldfinger, senior director, SAP's CRM Value Network, who shoveled mulch and helped build large outdoor easels: "This has been a great way to get out. My kids now have more respect for the company I work for because they can see something like this."

While local politicians stood about claiming credit for the wondrous transformation, a few people in purple T-shirts with the KaBOOM logo darted through the crowd, supervising the final touches. These were the agents of the hidden force: an 11-year-old nonprofit that has brought together volunteers to build 1,361 playgrounds, skate parks, and ice rinks in North America. While each project depends on the sweat equity of people in the community, these "BOOMers" - many of them just out of college - are highly organized project managers who supervise every aspect of a play space build, from choosing the sites to coordinating the volunteers to making Band-Aids available for scratches incurred in the line of duty. They are part of a remarkable organization whose mission comes from the heart - "a great place to play within walking distance of every child in America" - but whose tactics are highly systematic and insightful about human nature.

"The secret sauce with KaBOOM is not the playground," says Brad Shaw, senior vice president of corporate communications at Home Depot and a KaBOOM board member. "It's really the project management and the fun."

The organization is deeply serious about communicating the fun factor. At KaBOOM headquarters in Washington, D.C., the waiting room has a tire swing, a slide - and no chairs. The whole place is painted in bright purple and orange, with the company's logo - chosen because it evokes an explosion of energy - splashed everywhere and written as a comic-book sound effect. But little is left to chance at KaBOOM, from the branding to the dress code to the strict process by which play spaces are designed and built. "KaBOOM is one of the best-run nonprofits," says Robert Nardelli, CEO and Chairman of Chrysler, who has worked with KaBOOM for seven years, starting when he was CEO of Home Depot. KaBOOM has also tapped into a deep desire on the part of corporations to give back while also finding a way for its own employees to connect. "It's bringing people together in multifunctional teams, working on a project, seeing success and gratification," says Nardelli. "All the things you want to do in business you accomplish within eight hours in building this playground."

Central to KaBOOM's philosophy is giving everyone a stake in the outcome. Unlike many nonprofits, KaBOOM makes the local community a full participant in its projects by requiring it to raise part of the money for the play space - usually about 10% of the cost, which for a typical playground ranges from $70,000 to $125,000 in total - and also by providing much of the physical work. Corporations raise most of the rest of the money, but they can't just write a check either. Employees work side by side with the locals to assemble jungle gyms.

"It's a way of engaging the community to solve its own challenges," says Darell Hammond, 36, KaBOOM's co-founder and CEO. "This isn't a handout, this isn't pure philanthropy. This is an investment on everybody's part." Hammond, who resembles a big teddy bear, doesn't fit the usual profile of a philanthropist. His childhood was marked by poverty, not privilege. Born the seventh of eight children to a truck driver and nursing-home worker in Jerome, Idaho, Hammond quickly learned the value of a safe haven. His father abandoned the family when he was just two years old; his mother two years later became incapable of taking care of the family. All eight children were sent to live at Mooseheart Child City & School near Chicago, a home for poor children funded by the Moose fraternal organization.

"I didn't have a bad upbringing," he says. "I had what I considered to be a normal, happy upbringing. But I do what I do, no doubt, because of it." At Mooseheart, Hammond was called "the lawyer" because he was always standing up for kids in need. But law school never really interested him. He wanted to help kids - and after dropping out of college and discovering that he was dyslexic, he decided to do just that. In 1995, after he and KaBOOM co-founder Dawn Hutchison read an article about two Washington, D.C., boys who suffocated while playing in the trunk of a car, they decided to start a nonprofit that would use play to further social change. Hammond and Hutchison (who left KaBOOM in 1997) began fundraising the usual way, seeking money from large foundations.

But not everyone saw jungle gyms and slides as the best use of grant money. "They saw play as a luxury," Hammond says. So the BOOMers turned to the business community, which they figured had both the money and the manpower to help. Says Hammond: "It was not by great design or strategy, frankly, but where we lucked into it was that we executed well, and when we executed well, people wanted to take care of us."

While play spaces are built in a day, the actual process begins as much as six months earlier, when a funding partner is identified. From there, KaBOOM looks for an appropriate site, considering the economic needs of a neighborhood. About ten weeks before the build, KaBOOM's project managers host a Design Day, when kids help to choose the types and colors of equipment. The equipment manufacturer, Playworld Systems, comes up with three designs, and the community chooses one. In the remaining weeks, volunteers join such committees as "safety and maintenance" and "recruitment" and carry out tasks including getting food and water for the build and prepping the site. Every project is done the same way - and that's why, barring acts of God, they generally come off without a hitch. KaBOOM has created partnerships with the likes of Kimberly-Clark, Ben & Jerry's (which created a flavor to benefit the organization, KaBerry KaBOOM), Fannie Mae, Target (TGT, Fortune 500) stores, and many others.

But its deepest relationship is with Home Depot (HD, Fortune 500), whose head of community affairs met Hammond on a panel and contributed time and money for KaBOOM's first build, in Washington, D.C. The company has assisted in building some 600 play spaces over time, and the relationship has endured through several leadership changes, peaking in 2005 with a $25 million three-year grant to help KaBOOM build 1,000 play spaces. "We looked at it and said, This is exactly what our people love to do," says Shaw, "build things fast with a tangible outcome." Some of the companies that take part also view the projects as a way to help identify potential leaders. "Think how many consultants you'd have to hire to put blindfolds on and spin you around somewhere," says Bill McDermott, president and CEO of SAP Americas & Asia Pacific Japan. "We don't have to. We're out there with the real people."

Hammond spends some 75% of his work life attending builds, wooing donors, speaking at conferences, and trying to persuade lawmakers of the social value of play. "Darell is undaunted," says Michelle Nunn, CEO of Points of Light & Hands On Network, a group that helps match volunteers with projects. "He has a personal magnetism and a drive, and he understands the marketing value of that too." While KaBOOM has won kudos from nonprofit watchers, Hammond still seems dissatisfied when he discusses his accomplishments, noting that while KaBOOM will build 229 play spaces this year, it has received more than 6,000 requests. So Hammond decided several years ago to make KaBOOM's project handbooks, best practices, and guidelines available on the web, free, to anyone with the passion to build a playground. "We are giving away our intellectual property," Hammond says. "We deliberately decided that we could go further, faster, in a dissemination model than we could by starting more chapters and affiliates."

Now KaBOOM is amping up its strategy, thanks in part to people like Pierre Omidyar, founder of eBay and founding partner of the Omidyar Network. Omidyar contributed $5 million to build out the nonprofit's website and also to support KaBOOM's RALLY effort, which aims to bring the importance of play - as both a health and a community benefit - to the attention of lawmakers and policy experts. Says he: "KaBOOM's platform allows anyone to go online, access resources and a walk-through of the KaBOOM process, connect with other communities, and share ratings of playground equipment."

Beyond this, KaBOOM is trying to raise $106 million over the next three years to facilitate the building of 6,000 play spaces by 2010. Only 1,500 of them will be built through corporate partners; the rest will be built by self-starters who adopt the KaBOOM method and do it themselves. Back in Philadelphia, the playground is complete. "The kids never had any place to play," said Tyhesha Williams, a volunteer at the build whose daughter is in fourth grade at the Alliance for Progress. "And you know what? At the end of the day, we will say, 'We built this' - and we did. I've never been a part of anything like this."

Now a group of about 30 students stops dancing the "Cha-Cha Slide," the unofficial anthem of a KaBOOM build, and gathers eagerly in front of the playground for the official ribbon-cutting ceremony. They stare at the "triple racer" slide as if it's a giant, tempting ice-cream cone. "Pleeeeease," they beg Stacey Hill, CEO of the school. "Can we play?" Not tonight, Hill says, because the concrete has to dry. But thanks to KaBOOM, they can tomorrow morning - and every morning after that.

The Chrysler rumor mill

The whispering about Detroit's only private automaker is getting louder, and almost none of it is positive.

(Fortune) -- It was only five months ago that Cerberus Capital Management bought 80% of Chrysler from Germany's Daimler but already the vultures are circling. Stock market pundit Jim Cramer has become the latest to forecast disaster for the struggling automaker. In the January 7 issue of New York magazine, Cramer riffed on Chrysler's weakened condition and the skills of its CEO, Bob Nardelli of Home Depot, declaring: "Call the Chrysler failure [in 2008] a lock."

Of course, Cramer makes pronouncements with the same frequency - and credibility - as politicians who promise higher services and lower taxes. But he was only the latest to forecast impending disaster for private equity's first foray into the auto business. The clamor grew so loud before Christmas that Cerberus, which usually maintains a stony public silence, felt compelled to put out a statement declaring that its board of directors was "highly complimentary" about Chrysler's progress and that the automaker is "not only meeting, but, in many cases, exceeding its financial targets."

Cerberus' statement did nothing to dampen the Detroit rumor mill, where the activities of private-equity guys from New York are the subject of intense speculation. Take fleet sales. So weak is Chrysler's current product lineup - and so out of sync with the market - that competitors figure that an unusually large chunk of its car and truck production is being dumped into fleets.

Others are even pondering the possibility of a merger between Chrysler and Detroit's other weak sister - Ford (F, Fortune 500). One scenario has it that Ford would keep Chrysler's Jeep brand and its Dodge and Chrysler minivans - and discard everything else.

One major reason for all the gossip is that, as a private company, Chrysler now operates with a far lower public profile than it used to. Outsiders eagerly pounce on every piece of news that dribbles out. Detroiters were fascinated to hear talk, for example, that Chrysler keeps track of its cash flow on practically an hour-by-hour basis and that Cerberus's office in New York gets a daily accounting of how much money is in the till.

Another morsel of news was the announcement that Chrysler has already approved more than 260 line item improvements for its products - some of which will appear as soon as February. In an industry that usually requires a year or more to identify needed changes, engineer and source them, and then introduce them into the manufacturing process, that announcement either constitutes an operational revolution -- or an off-the-cuff impulse that could cause more problems than it solves.

Chrysler's current travails beg the question about how the experienced automotive minds at Daimler, after nearly a decade of ownership, could have left Chrysler in such miserable shape. All the talk about clashing cultures and the mismatch between American mass-marketing techniques with the cost-is-no-object Germans luxury car makers doesn't explain the failure of products like the unloved Chrysler Sebring, the ungainly Dodge Nitro, and the unnecessary Jeep Commander.

Chrysler used to be known as the sharpest design house in Detroit. But its one recent success, the much heralded Chrysler 300 sedan, looks increasingly like a shot-in-the-dark. For instance, the 300's platform-mate, the Dodge Magnum sport wagon, in many ways a more successful execution but one that failed to reach sales targets, is now headed for extinction.

In fact, most of the new models that were pushed through during CEO Dieter Zetsche's tenure look cheap and flashy - like the kind of costume jewelry you'd find in a discount store. "Exterior styling, a Chrysler forte, seems to have lost its way," says consultant George Peterson of AutoPacific. "And they have been doing the most downscale interiors in the industry."

One theory is that Chrysler's German owners panicked when they saw the demographics of Chrysler and Dodge buyers - older, less well-educated, and poorer than the owners of other American brands, much less the imports. Instead of trying to moving up market to attract better-heeled buyers with smarter, better-executed vehicles, Daimler decided to reach down instead.

Another thought is that in an effort to squeeze more products out of its capital budget, the money spent on interiors and other items was cut to stay within limits, with unfortunate results. In 2007, Chrysler kept itself afloat with some of the highest percentage of fleet sales in the industry, north of 30%. For 2008, vice-chairman and president Jim Press says, "We want to get into the 20's range we haven't been there."

With the overall industry expected to be under strong pressure this year, a sharp decline in market share brought on by lower fleet sales could crank up the Chrysler rumor mill to an even higher volume.

Antitrust: Apple accused of bullying Microsoft

In a case rich in irony, an antitrust suit has been filed against Apple (AAPL) accusing the company of illegally maintaining a monopoly in the digital music market by failing to support Microsoft’s (MSFT) Windows Media Audio format.

The suit was filed Dec. 31 in San Jose and brought to light Thursday afternoon by InformationWeek. The plaintiff is Stacie Somers, a San Diego-based attorney represented in this case by a gaggle of class-action specialists: Craig Briskin and Steven Skalet of Mehri & Skalet, Alreen Haeggquist of Haeggquist Law Group, and Helen Zeldes. See filing here (subscription required).

Microsoft, of course, is the company usually associated with charges of antitrust behavior, most famously for tying Windows to Internet Explorer in United States v. Microsoft. Apple was named in that case, along with Netscape and Java, as one of the threats to its monopoly that Microsoft tried to crush.

But now the New Balance 991s are on the other foot, according to Somers’ lawsuit, which quotes Steve Jobs as bragging that Apple’s iTunes store is now “the Microsoft of music stores.”

According to the complaint, Apple controls 75 percent of the online video market, 83 percent of the online music market, more than 90 percent of the hard-drive based music player market, and 70 percent of the Flash-based music player market.

Yet among the major digital music vendors, Apple is alone in not supporting Windows Media Audio. The suit estimates that Apple could license WMA from Microsoft for less than $1 million — or about 3 cents for each iPod sold in 2005.

According to InformationWeek:

… the complaint goes beyond software licensing politics and charges Apple with deliberately designing its iPod hardware to be incompatible with WMA. One of the third-party components in iPods, the Portal Player System-On-A-Chip, supports WMA, according to the complaint. “Apple, however, deliberately designed the iPod’s software so that it would only play a single protected digital format, Apple’s FairPlay-modified AAC format,” the complaint states. “Deliberately disabling a desirable feature of a computer product is known as ‘crippling’ a product, and software that does this is known as ‘crippleware.’ ”.

Apple has faced other antitrust charges over its dominant position in digital music. See for example here. Most of these cases, however, complain that Apple maintains its grip by tying the iPod to the iTunes store. This is the first time Apple has been charged with trying to muscle Microsoft out of the market.

Apple, as usual, is declining to comment on pending litigation.

State Street’s subprime mess

Subprime problems are smacking State Street (STT). The asset manager warned Thursday morning that it will have to set aside $618 million to cover legal costs tied to the company’s foray into subprime investments via its State Street Global Advisors unit. State Street said the legal worries stem from “customer concerns as to whether the execution of these strategies was consistent with the customers’ investment intent.” Their suitability aside, the strategies have already been costly for State Street and its clients: Assets in 12 fixed-income strategies plunged 67 percent over the course of three months to $2.6 billion at the end of the third quarter, Financial Week reported, amid hefty losses and customer defections.

Customers aren’t the only ones leaving State Street, though. William Hunt is stepping down as CEO of State Street Global Advisors, to be replaced on an interim basis by State Street exec James Phalen. In November, the firm bid adieu to three top fixed-income execs who were involved in making the bad subprime bets. Last month, a group of international stock managers departed, the Boston Globe notes. Next, look for investors to flee the shares, which, unlike most financial stocks, remain within striking distance of their 52-week high. “SSGA has an exceptional team of professionals,” Phalen said, “and I look forward to helping them continue to build on their track record of growth and industry innovation.” Customers will be hoping Phalen can prevail on State Street to be a little less innovative, frankly.

Apple daytrading: How to cash in on the Macworld keynote effect

The buzz among Apple (AAPL) traders today is a thought experiment that Matt Haughey worked up at A Whole Lotta Nothing. He writes

A few months ago I was thinking about Apple’s rise in value after the iPhone and how Steve Jobs does a great keynote every year, and naturally I thought “I wonder if there’s a way to make money off quick investments around the keynotes?” Then I thought “What if you did this every year, for just a day or two of investment?”

Haughey worked the numbers and the result is the chart above, which he calls the Keynote Index Fund (click chart to view full size). His conclusion: if you had invested in his hypothetical fund for the past two years, you would have realized a healthy 7.3% profit over 24 hours and 11.9% over 48 hours. The longer term results are not quite so impressive. Over the past decade, the fund gained 1.2% over 24 hours and 2.2% over 48.

Of course, long-term Apple investors have done considerably better. Haughey points out that if you had bought $10,000 worth of Apple stock in 1997 and held it the whole time, it would be worth $525,187 today.

Haughey’s methodology has been raked over the coals rather thoroughly at MetaTalk, where it has been pointed out in several ways that hindsight is enormously seductive but not much help in picking stocks.

Curiously, Piper Jaffray’s Gene Munster performed a thought experiment similar to Haughey’s last month and arrived at the opposite conclusion. Reviewing Apple share prices in the month before and the month after Macworld over the past three years, he noted that the stock tends to rise in advance of the keynote and to fall afterward — or at least it did two years out of three (see chart at right). His analysis suggests the old Wall Street adage: buy on the buzz, sell on the news.

UPDATE: Speaking for the bulls at The Mac Observer’s Apple Finance Board, reader Tommo_UK looks beyond the Macworld effect to offer this sensible advice:

The “clever” trade for early 2008 was to buy sub-$200 and sell in the run-up to Macworld, and then buy the “sell the news reaction” afterwards for a run-up into earnings, but this strategy has now become so well-discussed and widespread that its pretty much a given and is probably itself going to be the subject of predatory manipulation by larger players. Perhaps the alternative trade is simply to recognise that the earnings growth machine is only just revving up, courtesy of the Mac market share increase and iPhone deferred revenue/subscriber revenue sharing and step aside from being whipsawed by these crooks, and simply hold as large a position as you can comfortably achieve which won’t result in you being whipsawed/liquidated by wild 10-20% swings.

Now or never for Citi's new CEO

If he wants investors to overlook his flimsy resume, Citi's Vikram Pandit needs to take some radical steps, right now.

NEW YORK (Fortune) -- Judging by his resume, Vikram Pandit doesn't have the depth of experience to run Citigroup, but with some quick and decisive moves the bank's new CEO could win back many of the investors who've dumped Citi's stock as it fell victim to the credit crunch this year.

What might those moves be? Pandit's agenda will initially be influenced by the immediate severity of bad loan losses and other pressing problems at Citigroup, but within his first month investors will also want a clear indication of where he stands on important longer-term questions, like whether large parts of the bank should be sold off.

Pandit, 50, has been at Citigroup only since May, when the bank bought his hedge fund, Old Lane Partners. Before that, Pandit was at Morgan Stanley, where he won a reputation for his markets savvy. Charles Prince, Citigroup's previous permanent CEO, left the bank last month when the bank said it would take up to $11 billion of losses on mortgage-related securities.

Like all new CEOs, Pandit will have a short grace period during which he can take tough measures that would normally be considered defeat if carried out by a longer-serving CEO. For instance, don't be totally surprised if Pandit quickly raises a substantial amount of new capital, adding to the $7.5 billion of stock the bank sold to the Abu Dhabi Investment Authority late last month. Eager to see financial soundness at banks, investors are tolerant of capital raises right now - and the Abu Dhabi investment may turn out to be insufficient if fourth quarter earnings are worse than expected.

As a result, it may make sense for Pandit to issue at least another $10 billion now rather than in, say, six months, because a later capital raise would open Pandit up to the criticism that he didn't have a handle on Citigroup's financial condition. Indeed, having extra capital now would allow Pandit to bring Citigroup's huge distressed leveraged bond funds - called structured investment vehicles (SIVs) - onto its balance sheet like rival HSBC did earlier this month.

That move was a smart one by HSBC because it removed uncertainty about its SIVs and showed the bank was strong enough to consolidate them. And having extra capital may reassure investors if Citigroup's mortgage losses remain high in 2008, as some analysts expect.

For example, CIBC analyst Meredith Whitney thinks Citigroup could take large losses on many mortgages - prime and subprime - where the loan value is equivalent to 90 percent or more of the value of the house. Whitney calculates that Citigroup has $50 billion of these high loan-to-value loans, on which the bank could book up to $6.5 billion of losses next year.

The second big question Pandit has to settle is his lack of qualifications for running consumer banking operations, which account for over half of Citigroup's revenue. One solution may be to appoint a well-known and capable overall head of consumer operations. Right now, Citigroup doesn't have one such position, but effectively splits leadership between the international head, Ajay Banga, and the North America head, Steven Freiberg.

Happily, Pandit is thought to have exceptional expertise in capital markets, which should help him repair Citigroup's investment banking and brokerage division, where losses have been horrendous. Improving risk management and trading technology is central to rebuilding the capital markets business, says Richard Bove, banks analyst at Punk, Ziegel. That will be expensive, so if Pandit spends large amounts on risk management repairs and the like, he needs to communicate exactly what he is doing and why, since investors are likely to complain if expense levels are higher than expected in the investment bank. After all, a seeming inability to control expenses was a big part of what caused disaffection with Prince.

Last, and certainly not least, Pandit has to quickly give some indication of whether he wants to break off large parts of Citigroup and sell them. Some people believe this would make the bank more focused and streamlined. Today's Citigroup is a combination of many large institutions acquired chiefly under the reign of Sandy Weill. The pro-break-up camp says that the bank is too big to achieve meaningful synergies. Unlike any other bank, it has large consumer and capital markets businesses in the United States, as well as other parts of the world.

But since that hasn't led to superior earnings growth after several years of trying, Citigroup may as well split up, according to the breakup case. The counter case says that Citigroup has never actually had a management team that was up to achieving those synergies. Weill had faults, as did Prince.

So, imagine if Pandit were up to the job -- and picked some capable lieutenants. Investors might start to believe Citigroup could capitalize on the breadth of its businesses and geographical reach. Talking in such terms may seem very, very premature, as the credit crunch gets nastier. Eevn so, if Pandit wants investors and employees to bear the pain today, he has to hold up a vision worth pursuing.

Don't expect a bigger raise this year

According to our crystal ball, your salary increase will be just so-so this year. You're also more likely to catch a cold in the office. Here's what to expect at work in 2008.

(Fortune) -- It's a presidential election year, of course. It's also the first year in which the leading edge of the humongous Baby Boom generation (those born in 1946) will be eligible to start collecting partial Social Security benefits, at age 62. But 2008 will differ from 2007 in some other ways as well, not all of them good.

Consider, for instance, a poll last month by ComPsych (www.compsych.com), a major provider of employee assistance programs and other outsourced human-resources services. The firm surveyed 1,000 employees of its client companies nationwide and found that 83% plan to come to work even if they are sick, up from 77% the last time ComPsych asked this question two years ago.

More than one in three (37%, up from 34% in the earlier poll)) said their workload is just too heavy to allow for time off, and 21% (up from 17% in 2005) said they plan to save up their own sick time for when their children are ill.

"Employees are pushing the limits of their health and showing up to work at all costs," notes Dr. Richard Chaifetz, ComPsych's CEO. He says the trend is driven in large part by "economic uncertainty and the significant debt loads taken on by consumers in the past two years."

That means you're more likely to be working alongside a contagious colleague (ah-choo!) - just one more reason to telecommute, if you can.

Don't expect a big raise to make up for the extra germs. Sibson Consulting's (www.sibson.com) annual study of salary-increase budgets across 11 U.S. industries reveals that pay hikes for salaried employees and managers this year will be exactly the same as in 2007, averaging a ho-hum 3.9%. Hourly workers will make out a tiny bit worse, with increases of 3.7%.

You could probably boost your pay by changing jobs, but it may not be quite as easy as last year. In 2007, the economy produced 1.3 million new jobs. At this time last year, according to an annual survey by Harris Interactive and CareerBuilders (www.careerbuilders.com), 40% of American employers expected to add full-time, permanent jobs in the 12 months ahead. Now, that has dropped to 32%.

"There will be continued job creation, but plans for hiring are tracking below last year's projections," says Matt Ferguson, CEO of CareerBuilder. "Hiring will be steady, but slower."

It matters what industry you're in. For example, 45% of companies in professional services and information-technology plan to step up hiring, as do 37% of employers in transportation and utilities, 34% in financial services, and 28% in health care and retailing. It might help to live in the South or the West, where hiring is expected to increase by 36% and 34% respectively, versus 31% in the Northeast and 28% in Midwestern states.

One bright spot in the Harris/CareerBuilders survey: Lots of employers are planning to offer more flexible work arrangements in 2008. Almost 80% said they'll introduce or expand alternative work schedules, for instance, allowing employees to come in early and leave early or come in late and work late; 38% plan to allow compressed workweeks, in which people work the same hours but in fewer days; and 33% expect to encourage an increase in telecommuting.

If one of your New Year's resolutions is to find a new job, now is the time to buff up your online image. A new poll of hiring managers and recruiters, by executive career network ExecuNet (www.execunet.com), says that job seekers' "online image management will make or break more job searches" in 2008 than ever.

Right now, 83% of hiring managers and headhunters say they use search engines to check out a candidate before contacting him or her. Here's the ominous part: 43% have eliminated a job prospect based on something that popped up online - up from just 26% who had done so in 2005.

"Digital dirt will derail an even greater number of job searches in 2008," ExecuNet predicts.

How can you make sure your online reputation is everything you want it to be? The ExecuNet study offers three tips. First, be alert: Enter your name into several search engines each month to keep track of exactly what's out there.

Then, be proactive. The survey recommends "purchasing a domain name to display your resume, any press mentions, and professional accomplishments," including trade-journal articles, speeches, and information about volunteer work or other noteworthy deeds.

And third, be prepared. If an online search turns up anything that might be problematic - a lawsuit against a former employer, for instance - the study suggests that you "expect it will be uncovered before the interview process begins" and come up with a succinct, positive way to tell your side of the story.