In Business This Week
Edited by Monica Roman
HEADLINER
Antonio Perez: The Man to Focus Kodak?
Some executives are big thinkers, others shine by getting things done. But few do both well. So it was a coup for Eastman Kodak (EK
) to snare one of these rare birds. On Apr. 2, Kodak Chairman and CEO Daniel Carp named retired Hewlett-Packard exec Antonio Perez president and COO.
His marching orders: Get shutterbugs to print many more digital photos, and make sure they use Kodak gear and paper to do it. The Rochester (N.Y.) company, whose film sales fell 3% in 2002, needs to grab a big chunk of the digital market, estimated to grow to nearly $7 billion worldwide by 2005, to remain a consumer imaging icon. Now, though, it lags behind rivals Fuji and HP in the key areas of retail minilabs and home printers.
Perez, who was president of consumer business and digital media solutions at HP, may be just the person to turn the tables at Kodak. Under his watch at HP, its installed base of inkjet printers grew from 17 million in 1995 to 100 million in 1999 and printers became a $10 billion business. Kodak is hoping for similar results from the 25-year HP veteran.
By Faith Keenan
Altria: Calling the Bondsman
After a $12 billion decision against Altria's Philip Morris USA (MO
) in Illinois on Mar. 21, the company is struggling to figure out how to post bond and avoid bankruptcy for its U.S. tobacco unit. For now, Illinois wants a bond posted for the full $12 billion, but Altria is lobbying state officials to reduce the figure. Execs also hope that other states that are counting on cash payments from a previous tobacco litigation settlement will lean on Illinois to compromise. Still, credit-rating agencies have started to downgrade Altria and its Kraft Foods subsidiary. Standard & Poor's is threatening to cut Altria's A rating to junk status if the company doesn't come up with a solution by Apr. 21. Says S&P analyst Nicole Delz Lynch: "In the event that the amount of the bond cannot be raised or reduced to a manageable amount, PM USA might have to consider bankruptcy as an option."
AMD and Fujitsu Make Memories
Faced with heavy pricing pressure and increasing manufacturing costs, semiconductor maker Advanced Micro Devices (AMD
) will combine its flash memory chip operations with rival Fujitsu (FJTSY
). The two companies will share costs on research and development, marketing, and other expenses. AMD and Fujitsu have been operating under a joint manufacturing venture to produce the chips, which store data in cell phones and handhelds even when the devices are turned off. Their new company, called FASL, will have operations around the world, with 7,000 employees in all. FASL's headquarters will be in Sunnyvale, Calif.
Taking Stock of a Bank Merger
Did Wachovia (WB
) and First Union engineer the trading in their stocks to ensure that their merger went through two years ago? On Mar. 31, the combined Wachovia disclosed that the Securities & Exchange Commission has launched an investigation into whether cross-trading by the two banks during their 2001 merger talks constituted market manipulation. When the old Wachovia agreed to sell itself to First Union in a $14 billion stock swap, rival bidder SunTrust Banks (STI
) accused Wachovia of unfairly helping First Union purchase its stock to inflate the value of First Union's stock-based deal -- and to make Atlanta-based SunTrust's own offer appear inferior. Wachovia execs acknowledge that it and First Union engaged in stock purchases -- but claim that new accounting rules made the trading permissible.
The Oh-So-Popular Sears Card
Looks like the $31 billion Sears (S
) credit-card portfolio will draw bids from all the industry leaders, including Bank One (ONE
), Citigroup (C
), General Electric (GE
), Morgan Stanley (MWD
), and Household International (HI
), bank analysts say. Odds are that the private-label Sears card -- which carries about $18 billion in receivables -- will be split from the Sears gold MasterCard unit, says Second Curve Capital analyst Salil Mehta. But any buyer will have to weed out defaulting customers; Mehta says the portfolio is likely to report a loss rate topping 7% in the second half of this year.
It's Car-Incentive Season Again
Whenever the economy slumps and auto sales are weak, General Motors (GM
) starts laying out 0% financing deals to spark sales. Sure enough, after sales for both the industry and GM fell 3% in March, the auto maker announced 0% financing for 60 months on all its models except Hummer sport-utility vehicles. Not to be outdone, DaimlerChrysler's Chrysler Group (DCX
) and Ford Motor (F
) will offer similar deals. All three companies are trying to lower inventories. GM's lots swelled to carrying 1.2 million vehicles in March, about 100,000 more than the company likes to hold.
Et Cetera...
-- First Data (FDC
) agreed to buy Concord EFS to become the largest owner of ATM networks.
-- Tyco International (TYC
) has sued former CFO Mark Swartz for at least $400 million.
-- Lewisville (Tex.) wholesaler Fleming Cos. (FLM
) filed for bankruptcy protection.
CLOSING BELL
Sour Note
Shares of Overture Services (OVER
), the largest provider of paid search listings on the Web, skidded 11.42%, to $13.49, on Apr. 2. The trigger? An analyst report suggesting that Microsoft (MSFT
) and Yahoo! (YHOO
), whose partnerships with Overture account for an estimated two-thirds of its sales, might be developing rival services.
CLOSING BELL
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Copyright 2003, by The McGraw-Hill Companies Inc. All rights reserved.
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