In Business This Week
Edited by Monica Roman
Terry Semel: Can He Make Yahoo! a Star Again?
Terry Semel is a classic Hollywood insider. Alongside Bob Daly, Semel ran Warner Bros. studio for 20 years, before leaving as co-chairman and co-CEO in 1999. But is a guy who schmoozes with Clint Eastwood and Mel Gibson the right choice to fix an ailing Internet powerhouse?
Yahoo! thinks so. The 58-year-old Semel will take control of the portal, effective May 1, replacing boss Tim Koogle. He joins just as Internet advertising, which accounts for three-fourths of Yahoo's business, is melting fast, leading to a 21% decline in first-quarter revenues, to $180.2 million. Despite his Tinseltown contacts, Semel has little experience courting the big-name advertisers that Yahoo desperately needs.
But the former studio chief isn't fazed by the long odds. "I helped build one of the world's largest media companies," he says. "Yahoo is also a media company. I can help." He has put his money where his mouth is: On Apr. 16, Semel purchased 1 million Yahoo shares after they closed at $17.62.
By Ben Elgin and Ronald Grover
AT&T Will Conduct Concert Alone
AT&T will soon take control of Concert, its troubled global joint venture with British Telecommunications, BusinessWeek has learned. No agreement is assured, but sources inside and outside the companies say serious negotiations are under way and that an announcement could be made in May. AT&T CEO C. Michael Armstrong recently met with BT Chairman Sir Iain Vallance and BT CEO Sir Peter Bonfield. AT&T President David Dorman, a former Concert CEO, is expected to oversee the unit, which will include BT's Ignite continental local phone service.
Concert provides high-speed Internet and phone services to multinational companies. AT&T and BT want to simplify the sales structure to offer one seamless network to global accounts, says Mark Bruneau, an analyst with telecom consulting firm Adventis. About 400 of Concert's 6,400 jobs could be cut. "We have no comment on the speculation. But we are certainly talking to BT about strengthening the venture," says AT&T spokeswoman Adele Ambrose.
Refi Madness at Fannie Mae
Lower interest rates are proving to be a boon for Fannie Mae, the No. 1 U.S. home loan financing company. On Apr. 17, Fannie Mae, which buys loans from banks and other mortgage lenders and repackages them into securities for investors, posted a record 16.6% increase in quarterly earnings. Benefiting from a tidal wave of refinancing because of falling mortgage rates, the quasi-government agency reported net income of $1.24 billion in the first quarter.
Webvan's Driver Checks Out
When George Shaheen traded his $4 million-a-year job as CEO of Andersen Consulting for the top spot at Webvan in 1999, it was hailed as a major victory for the online grocer and for the Internet as a whole. But the dream ended abruptly on Apr. 13 when Shaheen unceremoniously handed in his resignation. Insiders say Shaheen was frustrated by mounting troubles at cash-starved Webvan, including a likely delisting from Nasdaq. The company says it needs a leader with more operational experience than Shaheen to turn itself around. Still, many wonder if anyone, including acting CEO Robert Swan, can keep Webvan afloat.
Splitsville for the Amex and Nasdaq?
The National Association of Securities Dealers, parent to both the Nasdaq and the American Stock Exchange, has been quietly shopping around the Amex, the NASD confirmed following a report in The Wall Street Journal. And the Amex has been meeting with electronic trading systems seeking partners. The likely split follows a failed 1998 merger between the two exchanges. The NASD recently spun off part of the Nasdaq, which has lost some companies to the New York Stock Exchange, and claims it simply wants to do the same with the Amex.
Power Traders Are All Charged Up
It was an electrifying quarter for power traders Enron, Dynegy, and Duke Energy. All three had strong first-quarter earnings, mostly due to California's energy crisis. At Houston-based Enron, the largest U.S. energy trader, revenue nearly quadrupled, to $50.1 billion, as earnings rose 26%, to $425 million. Fellow Houstonian Dynegy more than doubled first-quarter sales and profits, to $14.7 billion and $139.5 million. Revenues at Charlotte (N.C.)-based Duke also more than doubled, to $16.5 billion, as earnings surged 17%, to $458 million.
Et Cetera...
-- J&J settled a suit that accused it of urging consumers to throw away disposable contact lenses sooner than needed.
-- Gillette's first-quarter earnings dived nearly 30%, to $182 million, on a 7% sales decline.
-- Univision paid an undisclosed amount for 50% of Mexico's Disa Records.
Tyco K.O.
In what's shaping up as the worst quarter for corporate profits in a decade, Tyco International on Apr. 18 reported a hefty 30% jump in earnings per share, on a 26% sales gain. It was more of the magic that put the industrial conglomerate on top of this year's BusinessWeek 50. The latest results wowed Wall Street, which pushed Tyco's shares up 7.69%, to $49.70.
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