In Business This Week
Edited by Monica Roman
HEADLINER
Heidi Miller: Back from the Bubble
After forays into insurance and the dot-com world, Heidi Miller is back to banking. On Mar. 6, the former chief financial officer of Citigroup (C
) was named executive vice-president of strategy and development at Bank One Corp. (ONE
) While Chairman and Chief Executive James Dimon says he hired Miller, 48, to "take us to the next level" of growth, there's little doubt her financial prowess will come in handy now that the company is facing questions from Wall Street about its accounting practices.
Miller, most recently vice-chairman of Marsh Inc., gained attention in early 2000 when she left Citigroup for a short stint as chief financial officer of Priceline.com (PCLN
). "She made a mistake that a lot of smart people made during the Internet bubble," says analyst Sean Ryan of Fulcrum Global Partners. "She was very well regarded at Citigroup." So well regarded, in fact, that many wondered why she was never chosen to head up Travelers or another major unit. With Bank One, she'll likely play a larger role than her title suggests.
By Diane Brady
Leaving Amazon on a High Note
When Amazon.com (AMZN
) reported a surprise fourth-quarter profit, nobody realized it would be the swan song for the company's chief financial officer. On Mar. 5, Amazon said Warren Jenson, its CFO since September, 1999, would leave later this year, after helping to find a replacement. Jenson, 45, says he had planned a year ago to move on once Amazon reached profitability--although a full-year profit is not expected until at least 2003. Jenson, a veteran of Delta Air Lines and General Electric's NBC unit, was viewed as a steadying influence at the dot-com, whose big losses have raised persistent questions about its survival. Amazon CEO Jeffrey Bezos says Jenson's departure portends no looming financial problems. Analysts think he wanted to move up, and Bezos has no intention of leaving the CEO spot. On Mar. 6, Amazon's stock rose 2%, to $16.33.
ImClone's New Pact with Bristol
A truce has been reached. On Mar. 5, ImClone Systems (IMCL
) and Bristol-Myers Squibb (BMY
) announced they had come to an agreement on how to restructure their $2 billion co-development deal for the cancer drug Erbitux. The two had been at odds since December, when the Food & Drug Administration refused to accept the application for Erbitux' approval. Under the new deal, Bristol will have greater control over the regulatory process and will reduce some of the payments it makes to ImClone as the drug moves toward approval.
Tough Times, CEO Style
It's still good to be king--but not so good as it was. That's the conclusion of a new executive-compensation survey of 50 large companies by consultant Pearl Meyer & Partners. The upshot: Overall pay for the nation's top CEOs fell 4% in 2001, with the average corporate chieftain raking in $10.46 million. Still, shed no tears for the nation's corporate leaders. The boards that took away bonuses as performance flagged also showered CEOs with long-term incentives. If the pattern holds true this year, expect to see a dramatic decline in bonuses--but a less severe decline in option wealth.
Firing Arthur Andersen
When two big-name clients dumped embattled Arthur Andersen as their auditor, advocates of splitting the auditing and consulting businesses got a big boost. Merck (MRK
) on Mar. 1 and Freddie Mac (FRE
) on Mar. 6 both shed Andersen as auditor. But Freddie Mac said it would continue using the firm for some consulting, and Merck said it would consider Andersen for future nonaudit work. Barring auditors from providing consulting services is being pushed by some legislators and shareholder activists because they believe an auditor's independence is compromised when it pockets fees for other services.
The Airwaves Fight Just Got Longer
It was bad news for the wireless industry when the Supreme Court agreed on Mar. 4 to hear the government's appeal in the long-running saga over NextWave Telecom. Nextwave, a wireless startup, had bid $4.7 billion for airwaves in 1996 but was unable to pay up and went bankrupt. The Federal Communications Commission tried to reclaim the airwaves--to re-auction them to other carriers--but lower courts ruled that the FCC could not trump bankruptcy laws protecting assets from seizure by creditors. While the justices may not rule in favor of the government, the continuing legal battle scuttles chances of getting NextWave's spectrum into other hands until the high-court drama plays out.
Et Cetera...
-- United Airlines (UAL
) mechanics approved a contract providing their first raise since 1994.
-- On Mar. 5, Vivendi (V
) reported an $11.8 billion loss after a $14 billion write-down.
-- US Airways named David Siegel, formerly of Avis Rent A Car, as its new CEO.
CLOSING BELL
Clubbed Club
Costco (COST
) has promised Wall Street earnings growth of 15% for the year, but investors think the wholesale club's sales could be peaking. That's why they're punishing the stock. Since Feb. 22, Costco shares have fallen 14%, to $38.92, despite meeting sales and profits estimates for the second quarter.
CLOSING BELL
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Copyright 2002 , by The McGraw-Hill Companies Inc. All rights reserved.
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