Posted by: Harry Maurer on December 06
Coca-Cola announced that CEO E. Neville Isdell will step down on July 1, though he will remain chairman. He’ll be succeeded by an insider, Muhtar Kent, now president and COO.
The move comes as no surprise, since observers have expected Kent, 55, to take over from Isdell. Kent, a native of Turkey, joined Coke in 1978 and has enormous international experience. He says he’ll continue to pursue the strategy now in place: working to make existing brands stronger, buying new ones when they seem a good fit, and expanding overseas. He was a key player in the successful acquisition of vitamin water brand Glaceau last spring.
Source: New York Times
The European Central Bank left its benchmark rate at 4%, but in comments at a press conference, ECB President Jean-Claude Trichet sounded more hawkish. Saying that there is “strong upward pressure on inflation,” mainly from oil prices, he said that some policymakers wanted to raise rates now, and that the bank will hike rates if the pressure continues. That puts the ECB on a different tack from the Fed, which is expected to cut rates at its Dec. 11 meeting, and the Bank of England, which cut rates today.
Well, maybe the problem is the cup. Starbucks announced that it’s recalling 167,000 coffee mugs sold in its shops because of a faulty handle that can break off and result in minor burns. The cups were imported from China. In a more heavy-duty recall, Ford is calling back 1.2 million diesel trucks because of a software problem that can cause the engine to stall.
Source: TheStreet.com, CNNMoney.com
Delta Financial, based in Woodbury, N.Y., is filing for bankruptcy, becoming the latest mortgage outfit to be brought low by the subprime crisis. It announced it has been unable to find new financing and so will explore a sale of the firm’s assets.
President George W. Bush announced an agreement Thursday afternoon with major mortgage firms to freeze interest rates for five years to help prevent homeowners from defaulting on the homes they bought at the height of the real estate bubble. The plan will apply to homeowners who obtained an adjustable-rate subprime mortgage between Jan. 1, 2005 and July 31 of this year and are facing a sharp increase in their monthly payments before July 31, 2010. The plan will also allow homeowners to be put on a fast track to refinance their mortgage.
Generic competition is expected to wipe $67 billion, or half of this year’s sales, from top pharmaceutical companies’ annual U.S. sales between 2007 to 2012 as more than three dozen drugs lose patent protection. Drugs are granted 20 years’ protection and once they expire, generic drugmakers offer the drugs at a lower price. That could pose a big problem for Pfizer, Merck, and other pharmaceutical companies. These companies’ research labs are creating fewer new blockbuster drugs to replace old ones.
Source: Wall Street Journal
A panel of cancer drug experts advising the Food & Drug Administration voted not to approve Genentech’s colon and lung cancer drug Avastin to also treat breast cancer, saying that the side effects outweigh the drug’s benefits in slowing tumor growth. Genentech’s share price plunged 10% before trading was halted
Chrysler CEO Robert Nardelli told a group of designers and engineers at a town hall meeting Wednesday that the automaker will lose $1.6 billion this year. The Detroit carmaker’s costs will exceed $64 billion, while revenues will fall short of $63 billion.
Source: Detroit News
The world’s largest airline, Air France-KLM, submitted a bid for struggling Italian airline Alitalia in an effort to win back the Italian market. Germany’s Deutsche Lufthansa and Italy’s Air One are expected to submit their bids before today’s deadline. Alitalia will choose a partner for exclusive talks by the end of December.
Britain’s second-largest bank, Royal Bank of Scotland, is writing down a smaller-than-expected $3 billion due to the global credit crunch. At the same time, the bank said 2007 profits are on track exceed $20.4 billion, beating forecasts, after a lower-than-expected fall in the value of assets. RBS shares rose more than 8% on the news.
Citigroup, Bank of America, and JP Morgan Chase are scaling back the $100 billion fund to provide liquidity for structured investment vehicles due to lack of interest from the financial firms that are supposed to benefit from it. The fund may now be half the size originally planned.
Source: Wall Street Journal
Facebook CEO Mark Zuckerberg publicly apologized for the social-networking site’s controversial Beacon advertising system. “We’ve made a lot of mistakes building this feature, but we’ve made even more with how we’ve handled them. We simply did a bad job with this release, and I apologize for it,” he wrote on The Facebook Blog. He said Facebook users will have the option of turning off the advertising system.
Source: Facebook blog
Keep up with the latest business headlines from around the world via daily updates from our reporters around the world. BusinessWeek staff reporters in Asia, Europe, and New York filter and analyze the top news stories of the day, giving readers a quick way to stay on top of current events with intelligent commentary and context.