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MAY 10, 2004
Edited by Monica Roman William Owens: Welcome To The Hot Seat  Amid an accounting probe, telecom equipment maker Nortel Networks (NT
) axed CEO Frank Dunn on Apr. 28. His replacement: William Owens, a retired U.S. Navy officer and a board member since 2002. There's no sign that Owens is only an interim CEO, although he is "untested in telecom," notes TD Securities analyst Mark Lucey. Nortel shares fell 29% on the news.Nortel Chairman Lynton "Red" Wilson told investors Dunn's termination was about "accountability." Besides Dunn, Nortel fired its chief financial officer and controller. None of the departing execs could be reached for comment. Dunn was at the helm in early 2003, when surprise profits brought bonuses. But the good times were brief: Forced to restate profits for the second time on Apr. 28, it now may wipe out half of its 2003 profits of $732 million. Nortel has been winning business from telcos like Verizon Communications (VZ ), but its woes scare off customers. Says Standard & Poor's analyst Ken Leon: "This is going to be a big challenge." By Roger O. Crockett Better News At Boeing An expanded criminal probe into Boeing's (BA ) rocket launch contract with NASA overshadowed some good news from the Chicago aerospace giant. Japanese carrier All Nippon Airways (ALNPY ) on Apr. 26 was the first to order the super-efficient 7E7 jetliner, allowing Boeing to launch its first all-new airplane program in a decade. ANA ordered 50 jets, worth about $6 billion at list price. And on Apr. 28, strong military sales and a tax refund helped Boeing post better-than-expected first-quarter profits. But the news was offset by new questions over whether Boeing used Lockheed-Martin data to win the NASA contract. The U.S. Air Force has already stripped Boeing of $1 billion worth of business for possessing stolen Lockheed-Martin (LMT ) documents. Boeing says it is cooperating with the Air Force.   If You Believe In Mike, Clap  The tide could be turning for Walt Disney (DIS
) CEO Michael Eisner. First, the Disney board expressed "complete confidence" in Eisner and Disney President Robert Iger at a two-day meeting to review strategy that ended on Apr. 27. The board's support came in spite of a 45.4% vote against Eisner by investors at Disney's recent annual meeting. Then, on Apr. 28, cable giant Comcast (CMCSK
) dropped its unsolicited $48.4 billion bid for Disney, launched two months ago. Eisner's newfound momentum also seems to have stalled efforts to unseat him by dissident former directors Roy Disney and Stanley Gold. The two had pondered a midyear "consent solicitation" of new board members, but have since rejected the idea as too expensive. Their next move may have to wait until next year's annual meeting, when they can run their own slate of directors. Oxford's New Shingle UnitedHealth Group (UNH ) got a juicy piece of the Big Apple on Apr. 26 with its $4.9 billion acquisition of Oxford Health Plans (OHP ). The stock-and-cash deal will add 1.4 million members, mostly from the New York City area, to the Minnetonka (Minn.) health insurer's 20.2 million customers. Analysts argue United's lack of a strong New York presence had been a barrier to building up some national accounts. At the same time, Oxford's lack of heft in the fast-consolidating insurance sector led it to discuss a merger with rival WellChoice (WC ) prior to getting its new parent. The High Cost Of Cotton A World Trade Organization panel ruled against the U.S. on Apr. 26 in a case that could have huge implications for farmers in the U.S., Europe, and Japan as well as the stalled global trade talks known as the Doha Round. A panel of three WTO judges found that $3 billion in yearly subsidies paid to 25,000 U.S. cotton farmers violates international trade rules. That opens the door to poorer nations to challenge more than $200 billion in annual payments to farmers in wealthy nations, leading to dumping of agricultural products. The issue has stymied global trade talks. Et Cetera... -- Wyeth (WYE ) will appeal a $1 billion judgment from a Texas jury over a diet drug. -- Hilton Hotels (HLT ) said its first-quarter earnings quadrupled. -- Computer Associates International (CA ) appointed Kenneth Cron interim CEO. Closing Bell: Flextronics International  Flextronics International (FLEX
) shares fell 7%, to $17.19, on Apr. 28, after the contract manu-facturer posted a 23% quarterly sales gain. Part of the problem: Investors fretted that Nortel Networks' (NT
) decision to fire its CEO (see Headliner) would scuttle a possible $2 billion deal.
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