2006: The Year in Business

The business world saw a variety of dramas play out during the last 12 months -- from a venerable tech company spying on its employees to one of the world's richest men pledging billions to charity.

Indeed, there was no shortage of story lines in 2006.

American automakers struggled to handle the rise of foreign competition, and the real estate market finally saw a downturn after years of prosperity.

Despite a calendar littered with bad news and scandal at several prominent American companies, the year ended with stock markets completing the rebound from the post-Sept. 11 crash -- setting new record highs in the Dow Jones industrial average and giving investors hope for an even better 2007.

Here's a quick refresher of the most compelling news stories from the world of business in 2006:

Hewlett Packard and Pretexting

Pssst. Wanna buy some phone records? Hewlett Packard, one of the world's largest tech companies, did just that during 2006 and got embroiled in a controversy that landed on Capitol Hill and led to the ouster of several top executives.

HP was trying to figure out how secret board discussions were ending up on the front page. The company hired private investigators to pose as company officials and journalists to obtain cell phone records hoping to find the leak.

HP ended up agreeing to pay a fine of $14.5 million to settle civil claims with the state of California.

Some of the investigators and chairwoman Patricia Dunn ended up facing criminal indictments. HP can take credit for introducing the nation to the ominous-sounding word "pretext."

Real Estate Prices Take a Hit

The 2006 calendar year will be remembered as the return of the buyers market in residential real estate. At the start of the year, analysts had been consistently predicting a downturn in the housing market, but it hadn't come to be.

Prices for new and pre-owned homes were on the plus side for 2005 -- high single-digit growth -- and people were still buying.

Midway through 2006, though, buyer interest dried up, forcing builders to start tacking on exorbitant incentives to buy and pre-owned home sellers to drop their prices.

By the end of the year, median home prices were actually lower than the same time a year ago in some areas.

That "negative home price appreciation" has many people feeling a bit less wealthy at the end of 2006, and it has become a drag on consumer spending, according to the Federal Reserve.

American Autos in Trouble

At the dawn of the new year, Ford announced its "Way Forward" plan to get back on financial track, mirroring an effort by GM to cut costs and return to profitability.

Both auto giants hoped to make their businesses work by making massive cuts to production capacity -- both plants and workers.

GM and Ford were facing the prospect of unsustainable financial losses as American car buyers decided to buy from their Asian competitors.

By the end of this year, GM's late 2005 efforts began to pay off: Minor quarterly profits emerged and billions in future retirement and health-care benefit costs were moved off their books.

But Ford's efforts seemed to be coming up short, forcing the icon of American ingenuity to "accelerate" its plan at the midyear point.

The end of this industrial drama won't be known for years, but one measure of success was not looking good.

Both Ford and GM have market share to foreign competitors during the first 11 months of 2006.

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