CEOs are taking a hit from the recession - less total compensation, smaller bonuses, nearly worthless stock options - but their companies are already making adjustments that could mean fatter paychecks in the future.

An Associated Press analysis shows the median pay package for CEOs of companies in the Standard & Poor's 500 index fell 7 percent to $7.6 million in 2008.

And the potential hit to their pocketbooks could be even larger if stock prices don't rebound. One clue: 90 percent of the $1.2 billion in CEO stock options granted last year are "under water," meaning the current stock price is too low to yield a profit, the AP analysis shows.

Boards already are trying to cushion the blow. The AP found that some have changed the rules to make it easier for executives to qualify for bonuses. Others are doling out more stock options, which give executives the right to buy shares in the future at prices locked in today.

Other findings in the AP's analysis:

_ Four of every five CEOs took home a cash bonus, despite the fact that the stock prices of the companies in the survey fell by an average 36 percent and profits fell 31 percent.

_ The median payout in cash for salary and bonuses fell 20 percent from a year earlier to $2.4 million. But that's still 48 times what the average U.S. worker makes, based on the most recent government figures.

_ Of the 10 CEOs who took the biggest pay cuts last year, four were heads of financial services companies. Overall, the heads of companies that develop and process raw materials - including supplies for construction, steel and glass, and paper products - took the biggest hit. That group's median compensation shriveled 26 percent to about $6.3 million.

Since the economic meltdown, pressure has grown from shareholders, Congress and President Barack Obama for boards of directors to rein in executive pay. But even with all that scrutiny, experts on CEO compensation say it's too soon to call the 2008 decline in pay the start of a trend.

"I wouldn't yet say this is a watershed moment for executive compensation. This is a watershed opportunity," said Jesse Brill of the Web site CompensationStandards.com and one of the nation's foremost experts on CEO pay. "I am fearful too many boards won't take a hard stance to enforce significant change."

There are already examples of corporate boards setting CEOs up for a potential windfall. Many made large stock grants in the first few months of 2009, when stock indexes dipped to levels not seen in more than a decade. The S&P 500 has rebounded more than 30 percent from its early March low, though it's off 44 percent from its October 2007 peak. Given the timing of the early 2009 stock awards, a sustained stock market recovery would supercharge the profits when these options are exercised.

SunTrust Banks illustrates how the rules of the game are changing. Its board voted in February to grant CEO James Wells options on 1.1 million shares, more than four times the number he received in 2008. That unusually big award became a target of shareholder groups, and in April the company said Wells had declined the full amount and would accept only half, 550,000 options. He will have to meet performance goals to earn slightly more than half of those options.

The exercise price on the 2009 grants is about $9 a share, reflecting the bank's stock price in February when it was close to an 18-year low. A year earlier his options had an exercise price close to $65, where the shares were then trading. SunTrust shares now are at $15, meaning that while Wells' 2008 options are deep under water, his 2009 options already are in the money to the tune of about $3 million.

The AP analysis is based on the compensation disclosures of 309 companies in the S&P 500 that filed proxy statements with federal regulators through April 20 and had the same CEO for the last two years. The overall AP database also includes 78 chief executives who headed their companies only in the second year. Company stock market and earnings performance figures were provided by Capital IQ, a unit of Standard & Poor's.

The AP formula shows how corporate boards value pay packages for their executives. It adds up salary, perks, bonuses, preferential interest on deferred pay, and the value a company puts on stock options and stock awards on the day they were granted last year.

When boards grant stock options to executives, they assign an exercise price that typically mirrors the share price on the day of the option grant. Most companies give CEOs several years to decide whether to exercise the options. If the stock does well, the payoffs can be enormous.

To put a value on a CEO's stock compensation, the company relies on formulas that make assumptions about how its stock will appreciate over the life of the options and what the resulting profit value will be for the CEO when the options are exercised.

If a company's stock has fallen sharply since options were granted early in 2008, the stock will have to rise sharply for a CEO to realize the original value the company put on the stock compensation.

The median compensation of $7.6 million means half of the CEOs in the AP sample made more than that and half less. That was down about $585,000 from 2007.

Chesapeake Energy CEO Aubrey McClendon topped the AP list with a total package of $112.5 million, even though his company's stock price fell nearly 60 percent last year. Motorola co-CEO Sanjay Jha was second with $104.4 million. It was the first time since AP started analyzing CEO pay three years ago that anyone topped $100 million.

McClendon's total was inflated by a $75 million bonus he received on Dec. 31 as part of a new employment contract. He owns a stake in some of the company's wells, and the company said his bonus payment will go toward his portion of the cost of developing and maintaining them.

The bonus came two months after McClendon was forced to sell more than 31 million shares of Chesapeake stock - valued at $550 million and down from a peak of $2.2 billion only three months earlier - to cover bank demands for repayment of loans. The huge sale helped further drive down the stock price last fall.

Chesapeake said in regulatory filings that McClendon's overall pay reflects his role "in shaping the vision for the company and growing it into the largest independent producer of U.S. natural gas."

There were similar examples of a mismatch between pay and stock performance throughout corporate America. At 104 companies in the AP sample, the chief executive's bonus got fatter even though the stock price declined.

Carol Bowie, head of the Governance Institute at RiskMetrics Group, a financial risk management firm, said that is part of a troubling trend. "Executives have been richly rewarded over the last decade because of market trends, not necessarily because of superior performance. Now, when the market trend goes the other way, they want to be bailed out," she said.

Motorola's Jha was an example of how many executives' total pay is heavily weighted in stock options and stock grants. Overall, such compensation accounted for 58 percent of total pay in the AP's larger sample of 387 companies.

Jha was a rising star at Qualcomm when Motorola wooed him last year with a package made up almost entirely of stock grants and options; the company valued them at $103.5 million on the day they were awarded in August, when the company's stock was around $10 a share.

Even though Motorola shares have since fallen to about $6, the 3.6 million stock grants he will receive over the next three years - effectively a signing bonus - still are worth more than $21 million.

But for Jha to wind up realizing the $104.4 million that Motorola valued his 2008 compensation at, he must engineer a turnaround of its struggling cell phone business and propel Motorola shares well above $10 a share. His 16.5 million options don't turn profitable until the stock reaches that level.

The 10 highest-paid CEOs on the AP list received packages totaling $538 million, $50 million less than the top 10 in 2007.

Four of the top earners in 2008 came from financial services companies - Goldman Sachs, American Express, Citigroup and JPMorgan Chase. All received money from the government's Troubled Asset Relief Program. But most of their pay was inflated by stock options and awards granted early in the year for their performance the year before. And most of the options are under water. None got bonuses for their work in 2008.

Even more stark was Morgan Stanley's John Mack, who received no raise, bonus or stock options. His salary and perks came to $1.2 million - 97 percent below the $41 million he made the year before. But it could have been worse. Morgan Stanley and Goldman Sachs were the only two of the big five Wall Street investment houses that survived the year.

In some cases, boards offered bonuses but CEOs turned them down.

Directors at General Electric wanted to give Jeffrey Immelt a bonus even though he missed every one of the six performance goals set for him, a list that includes revenue and earnings targets. The company explained in its proxy statement that Immelt "performed well in an extraordinarily tough business environment."

Immelt declined.

"Earnings came in well below where we expected. The broad equity markets, and GE's stock price, declined significantly in 2008," Immelt explained on the company's blog.

Robert Iger, head of Walt Disney Co., gave up a $2.4 million bonus. He was eligible for it partly because Disney stock, which fell 3 percent during its last fiscal year, was less than the S&P 500's 20 percent decline over the same period. (Iger still came in at No. 3 on the AP list for his total package - $51.1 million.)

Iger and others acted in the midst of populist anger over corporate riches at a time of growing economic pain for most of the country.

Already, the government is taking steps to limit bonuses and severance packages at companies that get bailout money. At the same time, those who set executive pay - board members, working with attorneys, corporate human resource officials and outside compensation consultants - are under increased pressure to clamp down, said Brill, the executive pay expert.

"Fear and self-preservation are great motivators," he said. "No one wants to be named in a lawsuit or in any way get negative publicity."

One of the nation's top pay advisers, Frederic Cook, is calling on companies to tie pay to long-term corporate performance, not short-term fluctuations in the stock price.

"The American public and their elected representatives will no longer support companies who put their executives' self-interests and net worth ahead of the company and its stakeholders," Cook said in a March 18 letter to his clients, including McDonald's, Gap and Eastman Kodak.

Some companies are scaling back, with boards or CEOs driving such decisions. Dow Chemical, which shuttered 20 plants and laid off 11 percent of its work force in recent months, gave CEO Andrew Liveris stock awards worth $5 million in 2009, down from $11 million in 2008. Southwest Airlines CEO Gary Kelly voluntarily reduced his base salary by 10 percent, which would bring it down to about $400,000 for 2009, and he won't get a raise until the company's earnings improve.

But some companies are making it easier for executives to come out winners. Some are raising salaries. Others are tossing out old performance factors that tied pay to stock returns and profits and replacing them with measures some pay experts say are easier to achieve, such as revenue and cash flow targets.

Chip maker Altera said it will let the board weigh "significant individual contributions" to justify executive bonuses even when the company "fails to meet a challenging financial performance metric."

Altera also boosted the number of shares of restricted stock given to top executives because their current value is considered too low to retain them. CEO John Daane will be eligible for up to 250,000 shares this year, versus 100,000 in 2008. He stands to make about $2.4 million more from the larger grant, based on the current stock price of about $16.

Given these crosscurrents, it's too soon to say what happens next to executive pay.

Earlier this decade, public outrage followed corporate scandals at Enron and WorldCom, but attention shifted away as the stock market and economy rebounded.

"Every time we are in a crisis, you hear this is it for CEO pay," said RiskMetrics' Bowie. "The reality is, when the crisis passes, things tend to go back to business as usual."

Associated Press Writers Erin McClam, Nicoletta Ratti, Vinnee Tong, Erin Conroy, Tali Arbel and Chris Kahn contributed to this report.

Copyright 2009 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

Is America Going The Way Of Japan?

There are differences--but also worrying similarities.

William Pesek, a savvy Asia columnist for Bloomberg, reports, in his latest column, views about the structural crisis faced by Japan that I first outlined in a 1996 paper, "Japan's Economic Crisis." Thirteen years later, Japan is entering another severe slump, one that looks like even worse than that of other advanced economies. In the U.S., Europe and some other advanced economies, along with China, the second derivative of growth and of other economic indicators is approaching positive territory (i.e., growth is still negative, but GDP may be falling at a slowing rate). In Japan, it is still highly negative. There, the fall is accelerating, resembling a free fall--a severe case of stag-deflation.

The sad case of Japan's free fall is a cautionary tale of what happens when a high-flying economy has a real estate and equity bubble that goes bust, avoiding (for too long) doing the painful structural reforms and clean-up of the financial system that is necessary to avoid a lengthy, L-shaped near-depression. Japan had over a decade of stagnation and deflation, then a mild, sub-par growth recovery that lasted only three years, and is now spinning into another severe stag-deflation.

Keep alive zombie banks and zombie corporations with balance sheets and debts that haven't been restructured, as in Japan, and you end up in an L-shaped near-depression.

Let me explain why the U.S. and the global economy face the risk of an L-shaped near-depression if appropriate policy actions are not undertaken.

First, note that Japan made many policy mistakes that the U.S. should and could avoid. Japan cut policy rates two years after the bust of its asset bubble, while the U.S. eased monetary policy aggressively after August 2007. Japan went into quantitative easing and reversed its zero interest rate policy too slowly; it waited two years after the bursting of its bubbles to do a fiscal stimulus (and reversed it too early with a consumption tax). The U.S. did one--albeit a failed one--last year, and is doing another large one now. Japan created a convoy system of zombie banks and corporations that were restructured too late, while the U.S. may become more aggressive in cleaning up the financial system. Japan had structural rigidities, like lifetime employment, that slowed down the adjustment, while the U.S. has flexible labor markets, with workers who have lost jobs moving fast to new sectors and regions where jobs are abundant.

But by many measures, the U.S. started its financial and economic crisis in much worse shape than Japan. Indeed, Japan was in much better macro and financial shape than the U.S. before and during its stagnation. Japan had the benefit of high household and national savings rates and low leverage of the household sector, a large current account deficit and a net foreign asset position that allowed it to finance its large fiscal deficit during the stagnation. The U.S., by contrast, has had near-zero household savings and massive leverage for years. The U.S. carries large current account deficits and is the largest net foreign debtor in the world, relying on the kindness of strangers, or--more accurately--on the kindness of its strategic rivals (China, Russia) or unstable petro states to finance its twin fiscal and current account deficits.

The U.S. may make some of the same mistakes as Japan and suffer similar macro policy constraints that could limit its ability to more rapidly resolve the financial crisis. First, monetary policy, however aggressive, is like pushing on a string when you have a glut of capacity, credit and insolvency, rather than just illiquidity problems.

Second, fiscal policy has its limits for a nation that is already the biggest net debtor and net borrower, one which needs to borrow $2 trillion net ($2.5 trillion gross) to finance its fiscal deficit. Every other country (including the U.S.' traditional lenders and creditors) is now running large fiscal deficits with the risk of a sharp back-up in long-term interest rates once the tidal wave of new U.S. Treasuries hits the market.

Third, the U.S. is taking an approach to bank recapitalization and cleanup that looks more like Japan--a convoy system and a delayed true cleanup, as the necessary pain to shareholders and unsecured creditors of banks is avoided or delayed--than like the successful outright takeover and nationalization process Sweden has chosen.

Fourth, the market-friendly, case-by-case approach to the necessary debt reduction of insolvent private non-financial agents--corporate for Japan, households for the U.S.--will be too slow. A systemic debt overhang requires across- the-board debt reduction that is not politically feasible, at this point, in the U.S.

Thus, even if the U.S. were to do everything quickly and correctly (in terms of monetary, fiscal, bank cleanup and household debt reduction) we would still have a severe two-year U-shaped recession, lasting until early 2010. The weak recovery of growth, 1% or so, continues to feels like a recession even after you're technically out of it, until 2010-2011. But if the U.S. does it wrong, this severe U-shaped U.S. and global recession may turn into a nasty, multi-year, L-shaped near-depression like that experienced by Japan.

We don't have to go back to the Great Depression (when output fell over 20% and unemployment peaked over 25%); even a stag-deflation and near-depression like that in Japan would be most severe for the U.S. and the global economy. And while six months ago I was putting the odds of this L-shaped near-depression at 10% or so, they have now risen to one-third.

Time is of the essence, and the clock is working against U.S. and global policymakers. The time to stop dithering has long passed; the time to implement a program of forceful, coherent, credible, globally coordinated monetary, fiscal, financial clean-up and debt-resolution policies is now.

The U.S. and global economy are truly risking a near-depression if the policy reaction is not bold, aggressive, sustainable and credible.

Some people say recessions are inevitable; others say they are healthy, necessary to clean out the system and clear the way for the next expansion. Finally, while many blame greedy capitalists for pushing things too far, there are some who believe that the current recession is something we deserved (or earned) because so many lived beyond their means.

No matter what you believe, recessions are never fun. Beneath all the statistics and data are real people facing real challenges. The unemployment rate, now 6.7%, is headed to about 8% by late 2009. In the fourth quarter, real gross domestic product will drop the most since the brutal recession of 1981-1982, when, over the course of only two years, Paul Volcker reversed 20 years of inflationary monetary policy.

But it is not just the speed of the collapse that is so scary; it is that our current generation has little experience with economic pain. Between 1965 and 1982, the U.S. economy was in recession one out of every three years, inflation hit double digits and the unemployment rate peaked at 10.8%.

Since 1982, the U.S. has been in recession just one out of 16 years, the unemployment rate bottomed at 3.8% in early 2000 and then at 4.4% in early 2007. In other words, a wobbly economy today feels much worse to the average American and politician than it did 30 years ago.

So we have a real schizophrenia today. People are going to the mall for holiday shopping, parking hundreds of yards away and waiting in long lines to check out. But then these same people go to parties and argue about whether the Obama economic stimulus plan should be $500 billion or $1 trillion. It feels so bad that President Bush is justifying his economic intervention by saying that "I've abandoned free-market principles to save the free-market system."

What's important to recognize is that even at the bottom of the current recession, sometime in mid-2009, the living standards of the typical American will still be amazingly high. In fact, even an aggressive contraction in real GDP will leave per-capita real GDP above 2005 levels.

Now, we did not have 8% unemployment back in 2005, but that kind of jobless rate is not unusual for recessions. The unemployment rate peaked at only 6.3% in the recession early this decade but peaked at 7.8%, 10.8%, 7.8%, and 9% in each of the previous four recessions, respectively, dating all the way back to the 1973-1975 recession.

The cash-strapped masses may be spending less on restaurants and entertainment, but not necessarily on the quality of their sex lives--and manufacturers of sexual aids are broadening their lines to meet the demand.

To wit: Trojan now offers a condom that comes with a disposable vibrating ring. Durex, another condom maker, sells a vibrator and a line of lubricants. Even Philips Electronics (nyse: PHG - news - people ) has joined competitor Hitachi (nyse: HIT - news - people ) in the vibrator business. "We're much more open now to experimenting sexually," says Louis Friedman, chief executive of Liberator, a maker of sex toys in Atlanta. "We’re seeing countless new products being sold to a much larger audience than people realized. Even the more conservative retailers have begun to come around."

Indeed, Wal-Mart (nyse: WMT - news - people ), Walgreen (nyse: WAG - news - people ) and Target (nyse: TGT - news - people ) now peddle sexual aids, including condoms, lubricants and personal massagers. Walgreen's Web site features a "sexual wellness" tab, behind which are listed not only contraceptives and fertility tests, but also pleasure-enhancing dietary supplements, romance-themed costumes and games, massage oils and lotions, and the "Emotional Bliss Femblossom" vibrator. (Representatives from Walgreen's and Target were unavailable for comment; a Wal-Mart communications manager would say only that the chain "has a diverse mix of shoppers who visit our stores each day, and we are committed to providing customers with the selection of products they expect to find in our stores.")

In Pictures: The Mainstreaming of the Sex Industry

Poor as we all may feel lately, it seems there's at least one bright spot in having to hunker down at home. "This industry is shielded in a way," says Katy Zvolerin, director of public relations with Adam & Eve, another sex toy maker. "It does seem people use us even more heavily in bad times." (Not that there's much of a correlation between recessions and birth rates--if people have more sex during a recession, they are being careful about it.)

Chad Braverman, director of product development and licensing at Doc Johnson, takes a more sober approach to the coming months. "I don't know if I'd say our industry was 'recession-proof,'" he says. "We need to be proactive in creating a quality product that's going to sell. And there's a lot more competition than there was 20 years ago."

The sex industry traces back to 500 B.C., when traders from the Greek port of Miletus sold olisbos, an early version of the dildo. Today, the business of sex (including pornography) now runs into the tens of billions of dollars. (No official estimates are available; Wall Street analysts don't tend to track this stuff.) And while print and video sales are ebbing, as more free adult content has become available online, sales of un-reproducible sexual aids are still healthy.

Many observers are pessimistic about the economy because they believe a vicious downward cycle has taken hold, where less spending leads to fewer jobs, which reduces purchasing power, leading to even more job losses. Many just can't see how this vicious cycle will stop.

We are frequently asked, what is the "catalyst" for a recovery? What force (external or internal) will break the downward cycle of job losses? How does it ever end?

Taking this thought process to its conclusion clearly shows that something is missing. If job losses beget less spending and more job losses, then recessions would never end. On the other hand, if job gains beget more spending and more job gains, then expansions would never end.

A cursory look at history shows that this can't be true. Since 1854, the U.S. economy has gone through 32 business cycles (recessions and recoveries). In other words, the direction of economic activity eventually changed. Many times in these past cycles, the economy started to recover well before employment turned up. Take the last time consumption fell during a recession, in the early 1990s. In the four quarters after the end of the official recession, "real" (inflation-adjusted) consumption increased 2.9% even as payrolls continued to decline.

There are a number of reasons why this is true. The first reason is that the combined decisions we make as independent members of a free society tend to generate economic growth. When people lose their jobs, it does not mean they lose their ability to be productive. It may take time for them to find a new position that matches their skill set, but as long as they have worthwhile abilities, they will eventually get another chance to produce.

In the meantime, companies can use layoffs to increase efficiency, laying the groundwork for future increases in profits and wages for their remaining workers. What that means is that a 1% loss in jobs results in a smaller than 1% loss of production. And using assets more productively frees up resources to do "new" things. We have lost millions of farming jobs over the decades and centuries, but the nation as a whole is more prosperous as a result, not less.

In addition, if a recession is partly caused by over-investment in a particular sector, two forces drive down jobs in that sector, but one is temporary. For example, home building exceeded demand, and those extra jobs were unnecessary. Reducing inventories of homes will cause employment to fall even further. But once excess inventories are worked off, the industry will add jobs, even if it does not ramp up to the previous peak in production.

LONDON, England (CNN) -- What recession? Christie's, the famed auction house, this week sold a nearly 36-carat diamond for $24.3 million, which it said was the highest price for a diamond sold at auction.

The 35.56-carat diamond dates back to the 17th century.

The previous record was a mere $16.5 million for a 100-carat diamond in 1995, Christie's said.

"In the midst of these challenging times, we were thrilled to achieve an historic price for an historic diamond," said Francois Curiel, chairman of Christie's Europe and auctioneer for Wednesday's sale.

The 35.56-carat Wittelsbach blue diamond, dating to the 17th century, was purchased by international jeweler Laurence Graff, the auction house said in a release. Graff was bidding against Aleks Paul of Essex Global Trading, a professional of Russian origin based in New York, Christie's said.

"Known as 'Der Blaue Wittelsbacher' since 1722, it is one of very few diamonds which can claim 17th century heritage, incredible rarity and exceptional beauty."

The diamond, mined in India nearly 400 years ago, has been privately owned since 1964. Until 1723, Christie's said, all diamonds worn by European royalty came from India.

The diamond has a royal lineage. Christie's traces it thus: King Philip IV of Spain (1605-1665) selected the diamond in 1664 as part of a dowry for his daughter, the Infanta Margarita Teresa (1651-1673). She had become engaged to Leopold I of Austria (1640-1705), who later became Holy Roman Emperor. When she died in 1673, her husband retained the diamond, which was passed on to his heirs.

In 1722, the diamond entered the Wittelsbach family when the Archduchess Maria Amalia of Austria (1701-1756) married the Bavarian Crown Prince, Charles Albert (1697-1745). It was worn by successive rulers until the abdication of King Ludwig III (1845-1921) in 1918.

The world's largest deep blue diamond is the "Hope Diamond," a 45.52-carat stone housed at the Smithsonian Institution in Washington, DC.

Diamonds apparently are recession-proof. Christie's reported jewelry sales of $226 million for the first half of 2008, calling it "the best jewelry season ever seen at auction." Sales for the first six months of this year marked a 32 percent increase over the same period in 2007, Christie's said.

According to Christie's, key diamonds the company sold in the first half of 2008 included a 13.39-carat fancy intense blue diamond that fetched $8.9 million in Geneva on May 14 and the pear-shaped potentially flawless 38-carat Onassis diamond, which sold for $7.1 million on June 11 in London.

Sharply lower consumer spending in the United States and other high-income countries is stalling global trade, causing a surprise downturn in exports from China that is dramatically slowing its economy and rippling through other countries that rely on international commerce.

In this downturn, the strong are getting stronger and the ones with cash are getting richer.

There are several factors at work here, and all of them play prominently across the tech world.

Factor No. 1: Those with the deepest pockets can afford to really ratchet up the pressure on competitors in a downturn. Case in point: Hewlett-Packard's (nyse: HP - news - people ) recent haul at Best Buy (nyse: BBY - news - people ) on Black Friday outpaced Dell's (nasdaq: DELL - news - people ) by five to one. Given the brand recognition of both companies and the fact that they're competing with commodities, the only differentiator is price and features. HP can afford to pack more into a box for the same price if it means gaining market share.

Ditto for Advanced Micro Devices (nyse: AMD - news - people ) vs. Intel (nasdaq: INTC - news - people ). AMD has been trying to keep up with Intel for decades. Its low-power chips were a major leap forward until Intel caught on, zipping by AMD like it was a tractor on a superhighway. Intel has deeper pockets for research. Its sales are expected to be 10% to 20% below expectations this quarter, but AMD's sales will be 25% lower. Even more to the point, AMD posted a loss last quarter of $67 million, while Intel posted a profit of $2 billion. The only thing that's really keeping Intel from wiping AMD off the map is the U.S. Department of Justice. Competition is the best way to keep the antitrust wolves at bay.

Factor No. 2: Those with the strongest positions get stronger because they're considered a safe haven. In the electronic design automation world--the software used to design semiconductors--Synopsys (nasdaq: SNPS - news - people ) and Mentor Graphics (nasdaq: MENT - news - people ) have been showing much better than expected numbers because they're picking up market share from their troubled competitor Cadence Design Systems (nasdaq: CDNS - news - people ).

This is like the old adage to information technology managers that you can't get fired for buying IBM (nyse: IBM - news - people ). Well, you can get fired for investing precious resources in a company that won't have the resources to refresh its product line on a regular basis.

Factor No. 3: Those with the most cash can buy companies, market share or longevity--or all of the above. With the stock market getting pummeled, the only thing that has held back massive acquisitions is the availability of capital. That makes those with cash all the more powerful.

When the Super Bowl festivities roll into Tampa late next month, the party blitz and corporate spending that surround the big day may take a hit because of the economic crisis.

Sponsors have been slower to commit. Companies are scaling back plans, carefully watching expenses, bringing fewer guests and pushing back travel bookings. The private party circuit will be missing a few staple destinations, including the annual Sports Illustrated fete.

"The decision making process is just a little slower," Reid Sigmon, executive director of the host committee, said of the efforts to attract sponsors. The committee has reached about 80 percent of its sponsorship goal - a level it has been stuck at since October.

"A lot of companies are kicking the tire, so to speak," he said.

Even so, the Feb. 1 game will sell out. And, to be sure, there will still be plenty of star-studded events: Maxim, ESPN The Magazine, and Penthouse all said they have parties in the works. The Lingerie Bowl, a televised alternative halftime event featuring semi-dressed models, will hold three games and a red-carpet affair. Beer giant Anheuser-Busch (nyse: BUD - news - people ) is sponsoring concerts and other events.

And there will be a bevy of official NFL activities, including the weeklong NFL Experience, which features interactive games and autograph sessions.

The host committee is hoping for 100,000 visitors, the same as in 2001 when Tampa last had the game, but NFL spokesman Brian McCarthy said the number may drop.

An analyst expects the downturn to lead consumers to drop the music player, even as sales of iPhones soar.

Note to Apple Chief Steve Jobs: Don't worry. Piper Jaffray analyst Gene Munster still loves you. As for your little friend the iPod, well, let's just say Munster doesn't think it's so cute any more.

A longtime Apple (nasdaq: AAPL - news - people ) fan, Munster slashed his estimate for the company's 2009 sales by 5% Thursday, citing weak consumer spending and economic uncertainty. Mac and iPhone fans have nothing to panic about, however: Munster thinks Apple's computers will continue to gobble up market share, and sales of the iPhone will boom. 

Then again, Munster might be Apple's biggest cheerleader. Hey, the man has a price target on Apple's stock of $235. This on a company whose shares were selling for $91.41 at the end of Thursday trading.

So pay attention when Munster says the iPod faces a bleak future. Rising unemployment and credit problems will just make it tougher for shoppers to justify spending money on little luxuries next year. Munster predicts Apple will sell 20% fewer iPods next year, after clocking unit sales growth of 6% this year. "We are modeling for the sky to fall on iPod demand," Munster wrote.

Those same factors caused Munster to cut his target for Mac sales, too. While PC sales will cool, however, Munster still predicts Apple will gobble up market share next year. As a result, Munster figures Mac sales will jump 10% over this year's levels in 2009.

The iPhone, however, could be the new iPod: a hit product that powers Apple through a downturn in stronger shape than ever. Munster stuck to his prediction that Apple will sell 45 million iPhones next year, despite bearish guidance in recent weeks from Research In Motion (nasdaq: RIMM - news - people ) and Palm (nasdaq: PALM - news - people ). Munster sees smart phone sales booming next year, and Apple romping through the fast-growing category.

So does Musnster have it, right? Maybe--although the iPod Touch may have a future, in part because it can tap into iPhone applications, including Truphone, which turns the second-generation iPod Touch into an Internet phone.