In Business This Week
Edited by Monica Roman
HEADLINER
Philip Odeen: From Retirement to a Takeover Fight
Philip Odeen kept in fighting shape during his month-long retirement from TRW (TRW
). And on Mar. 13, the interim CEO sprang back into action. Making clear that TRW will fight Northrop Grumman's (NOC
) unsolicited $5.9 billion takeover offer, Odeen unveiled a program of asset sales, debt reduction, and a spin-off of the automotive unit by yearend.
Odeen says the moves would leave TRW with a strong lineup of missile-defense and homeland-security apparatus, positioning the Cleveland-based company right in the "sweet spot" of future defense outlays. Under an Ohio law that makes hostile deals more difficult, TRW shareholders will vote on whether to let Northrop continue its bid on Apr. 22.
Odeen, 66, took over his present job in February after the surprise resignation of TRW Chairman David M. Cote, who left to become CEO of Honeywell International. Odeen previously ran TRW's Washington office. He also spent 13 years at Wilson Sporting Goods. Apparently, Odeen's competitive juices are flowing again.
By Chris Palmeri
Cisco Lets the Sun Shine In
In a bid to satisfy skeptics about its accounting, Cisco Systems (CSCO
) has changed the data it provides in regulatory filings to the Securities & Exchange Commission. In its quarterly report filed on Mar. 11, Cisco revealed for the first time its plans to purchase four private companies in which it has already invested money. The biggest, storage networking company Andiamo Systems, is partially owned by Cisco and is housed at its headquarters. Acquiring the rest of Andiamo would cost up to $2.5 billion, depending on Andiamo's results. The maximum cost of buying the other three unnamed companies would be $500 million, says the filing. Cisco omitted pro forma data from its SEC filings, though it will still offer pro forma results in press releases. Investor reaction has been tepid, with Cisco's stock dropping 6% to $16.36 in the two days since the filing.
Two More Flavors under One Roof
Tricon Global Restaurants (YUM
) is acquiring Long John Silver's and A&W All American Food Restaurants for $320 million in cash. The acquisition, pending regulatory approval, will help the Louisville owner of Taco Bell, KFC, and Pizza Hut accelerate its strategy of offering customers several brands under one roof. Prior to the deal, Tricon had a licensing deal with Yorkshire Global Restaurants, owner of Long John Silver's and A&W. Tricon CEO David Novak says sales and profits have increased by 25% to 40% at units where multiple brands are offered. Tricon will also change its name to Yum! Brands--after its ticker, YUM.
E.T.: Not Headed for the Stratosphere?
In the hopes that Steven Spielberg's E.T. The Extra-Terrestrial will dial up some added revenues, Vivendi Universal is rereleasing the 1982 blockbuster on Mar. 22 with the usual Hollywood send-off. The studio is throwing a star-studded premiere with a 100-piece orchestra for the classic, which grossed a then-record $349 million at the box office. Few expect the film, to be released on more than 2,500 screens, to do otherworldly business, however. The real goal is more likely to provide liftoff for the film's first-time release on DVD, which is likely to be out for Christmas.
OPEC Cuts Could Cause Some Pain
Oil prices appear to be headed higher in coming months, which could strike a blow to the struggling global economy. Blame OPEC, which is expected to leave its output unchanged when ministers meet on Mar. 15 in Vienna. In December, OPEC agreed to cut oil production by 1.5 million barrels per day for six months beginning Jan. 1. That, along with rising Mideast tensions, the prospect of increased U.S. demand, and falling crude oil inventories, has led to a price spurt in recent weeks. Crude recently hit $24 a barrel, and analysts say it could rise to $27 a barrel by midyear.
Battle of Two TV "Stars"
Satellite mogul Charlie Ergen and Gemstar-TV Guide (GMST
) Chairman Henry Yuen are squaring off in an obscure case before the International Trade Commission. At issue is whether Ergen's EchoStar (DISH
) satellite service violated Gemstar patents for on-screen program guides that go into set-top boxes made in Mexico for EchoStar's Dish Network. Gemstar, which contends that its patents give it control of guides for cable- and satellite-TV subscribers, says its patents were violated when the boxes entered the U.S. A decision by an ITC judge is expected on Mar. 21, with the full ITC expected to rule by June. EchoStar has filed suit in U.S. District Court alleging that Gemstar uses its patents to "coerce" companies into signing "anticompetitive" agreements.
Et Cetera...
-- The FDA rejected Corixa's (CRXA
) application for its cancer drug, Bexxar.
-- U.S. airlines received a 60-day extension of war-risk insurance coverage.
-- Grocery chain Safeway (SWY
) is launching a Web-based home delivery service.
CLOSING BELL
Maybe Next Year
Lucent (LU
) backed off its forecast for profitability this year, saying it won't make money until fiscal year 2003. Investors, also troubled by the telecom equipment maker's news that revenue growth would miss its target for the current quarter, punished the stock. Shares fell 21%, to $4.92, in the two days ended Mar. 13.
CLOSING BELL
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Copyright 2002 , by The McGraw-Hill Companies Inc. All rights reserved.
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