Up Front
Edited by Sheridan Prasso
Talk Show
"It's kind of embarrassing. The question we all ask ourselves is: `How could we all be so stupid?"'
-- Jerry Greenberg, co-CEO of online consulting outfit Sapient, during an address at the Internet World trade show
Handbags, Cognac--and Water
What's the latest trend item for your Louis Vuitton bag? Glaceau Vitamin Water or Fruit Water. The chic-set drinks, which sell for about $1.50, are made by tiny Energy Brands in Whitestone, N.Y. And they were the last of the up-and-coming "healthy" beverages available to be snapped up after others (Gatorade, SoBe, and Snapple) were bought by beverage giants such as PepsiCo.
But now France's LVMH Moet Hennessy Louis Vuitton is buying into Glaceau--its first drinks foray beyond champagne and cognac. Both sides are keen for cross-promotions linking the low-cal Waters to Givenchy fashions, TAG Heuer watches, and the group's other luxury brands. "We'll look at all opportunities," vows Energy's founder J. Darius Bikoff. Neither side would give details, but sources say LVMH put up $5 million for a minority stake and a board seat. The cash will fund Glaceau's expansion to the rest of the U.S.
It's a natural fit for Bikoff, 39, who has had the likes of Philippe Starck design his packaging and admits being a Prada addict. Good thing LVMH has a venture with Prada, too.
By Gerry Khermouch
McLatte and Croissant?
Just when it seemed McDonald's couldn't possibly cram another restaurant into the U.S., the burger giant has come up with a new way to expand: coffee bars. BusinessWeek has learned McDonald's will open its first, McCafe, in Chicago's Loop in April. It will sell pastries, perhaps prewrapped sandwiches, and premium coffee.
Sound familiar, Starbucks fans? But whether aficionados will give up their grande skim latte for a McCappuccino is a good question. McDonald's won't say how many McCafes it plans, but based on their success overseas, the rollout could be swift and wide. There are 300 McCafes in 17 countries, from Australia and Japan to Brazil and Greece. Each sits in or near a McDonald's, with its own staff and equipment. In the U.S., look for comfy couches, too.
Analysts pat Big Mac on the back for trying new things--including a 1950s-style diner that opened on Mar. 19 in Indiana. But they also note that Starbucks has sewn up the U.S. high-end coffee biz, with 3,300 outlets and 15 more opening every week. Yet with many imbibers resentful at having to line up to pay $3 or more, a quick-serve McLatte just might catch on.
By Michael Arndt
American's Ouch-Tickets
American Airlines is out to make some quick paper profits. On Apr. 9, it will start charging $10 to issue paper tickets, according to an internal memo obtained by BusinessWeek. The airline declined to comment, citing antitrust rules against price-signaling.
The fee is an attempt to push travelers harder into e-tickets, which save $4 to $5 per passenger in accounting and tracking costs, as well as boost American's bottom line. But it most certainly will be opposed by the National Business Travel Assn., which two years ago fought off an attempt by Delta Airlines to charge $2 for tickets not purchased through its Web site. "The market cannot bear one more surcharge on the price of air travel, especially among business travelers," says Marianne McInerney, NBTA's executive director.
And it comes at a bad time: American has three open labor contracts this year, says Glenn D. Engel, an airline analyst at Goldman, Sachs. "Paper tickets are easier for another airline to honor if a carrier cancels." At least one other carrier, Alaska Airlines, has a similar fee. But with fewer business travelers, the surcharge is sticking.
By Ann Therese Palmer
Dot-Com Talent on the Market
Many a successful tech exec has had one or two stumbles along the way. Consider Steve Jobs, ousted from Apple Computer in 1985, only to return in 1996. Below, some dot-com chieftains with (temporary?) setbacks who are on the job hunt:
CEO/ MONTHS RESUME
FORMER COMPANY AVAILABLE HIGHLIGHTS
JULIE WAINWRIGHT 4 Former CEO
pets.com of online videostore Reel.com
and Net entertainment pioneer
Berkeley Systems.
FRANK NEWMAN 3 Former CEO of Eckerd drugs;
more.com earned $500,000 salary as
head of the online retailer.
JOHN COSTELLO 1 Drew $65 million to the sports
mvp.com merchandise site; ex-marketing
whiz at Sears; named to the
Retailing Hall of Fame.
RICHARD NANULA 1 Former CFO for Disney Co.;
broadbandsports.com raised $20 million in the
sport site's last year.
Data: Christian & Timbers
Road Rage over Traffic
The movie Traffic is expected to win big at the Academy Awards on Mar. 25. Yet one of the "actors" isn't too happy with the acclaim. Orrin Hatch, the Republican Senator from Utah, has a cameo appearance at a Washington dinner party in which he and other politicians come across as stiff-looking and ineffective in the face of an ever-stronger drug trade.
But Hatch says that isn't the part that upsets him. He says Traffic may send an important message about America's drug culture, but that he's "shocked and dismayed at the gratuitous amount of violence and profanity" in the film, which earned it an R rating. Hatch has received dozens of letters from angry constituents in the Mormon community, which teaches followers to avoid R-rated movies. Hatch says the rating took him by surprise because he was told the movie would be rated PG-13.
A USA Films spokeswoman won't comment on Hatch, saying only: "This was Steven Soderbergh's film, and we're supporting him."
By Laura Cohn
If Jon Corzine Could Do It...
It looks like billionaire businessman Michael Bloomberg will run for New York City mayor. As a Republican, he would strive to continue the legacy of Rudy Giuliani: anticrime and pro-business development policies that have spurred the city's growth.
Bloomberg, 59, is no slouch himself when it comes to creating wealth. He has amassed a $4 billion fortune, first as a Salomon Brothers partner, then as founder of the Bloomberg financial information service. A no-nonsense CEO with a Harvard MBA, Bloomberg runs his company from a cubicle.
But in recent weeks he has stepped down as chairman of Bloomberg's board and quietly hired New York consultant David Garth, who has steered a number of successful mayoral campaigns. Garth adds to an already-assembled team of political advisers.
Bloomberg would face a slew of old-style Democrats, including the Rev. Al Sharpton. And, perhaps, a certain ex-President who's also rumored to be considering the job.
By Brian Murphy
A Grab for Control of Formula One
Mercedes and Ferrari, the carmakers with the leading auto racing teams, are threatening to quit Formula One and form an alternative racing group if they can't buy in. The brouhaha comes as control of the Formula One holding company is about to change hands, from F1 supremo Bernie Ecclestone to German media magnate Leo Kirch. (Kirch got involved by rescuing EM.TV, which bought 50% of the Formula One company from Ecclestone. Kirch is about to secure another 25%.)
But the Euro racers want a stake, too. The group, also including BMW, Jaguar, and Renault, had been talking to Ecclestone about getting into the biz themselves before Kirch came on the scene. They worry Kirch will try to boost his KirchPayTV network by restricting Formula One races, which are now on commercial channels, to the pay channel. The carmakers have invested billions in Formula One, and they insist the event be professionally run and freely broadcast to give them maximum public exposure. Mercedes chief Jürgen Hubbert expects negotiations with Kirch to begin soon: "We've sent a clear message."
If Kirch balks...well, there's always the 1978 precedent in the U.S., when team owners broke from the U.S. Auto Club to form Championship Auto Racing Teams (CART).
By Christine Tierney
Footnotes
Americans who support laws ensuring privacy on the Web: 59%; execs who say businesses can do it themselves: 60%
Data: Wirthlin Worldwide
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Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.
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