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FEBRUARY 14, 2005
Edited by Monica Gagnier HEADLINER Ken Chenault: Dealing Out The Cards  American Express (AXP
) CEO Kenneth Chenault has one word for investors: Plastic. By spinning off the less-profitable brokerage and money management unit to shareholders later this year, Chenault is returning AmEx to its core card and payments business -- credit cards, corporate travel and entertainment cards, and reloadable traveler's checks. "If you don't have focus, you're at a competitive disadvantage," Chenault said. That's an about-face for an outfit that helped kick off the era of financial supermarkets by buying the predecessor of American Express Financial Advisors back in 1984. Investors like the new strategy, though. They pushed shares up 6.5%, to 56.75, on Feb. 1.Chenault's plastic focus got a boost on Oct. 4, when courts struck down Visa USA and MasterCard International rules banning U.S. banks from issuing rival cards. AmEx' new partners, credit-card issuers MBNA (KRB ) and Citigroup (C ), are expected to put thousands of new cards in the market this year. Charge! By Mara der Hovanesian Google's Boodle Google continues to raise investor expectations about the potential of the Internet search business. On Feb. 1, the Mountain View (Calif.) search giant blew past its fourth-quarter expectations, thanks to accelerating revenue and profit growth. The company tallied $204 million in net profits for the quarter, on $654 million in net sales. More marketers have piled into the booming business of search ads, fueling a rise in the price that online advertisers pay for certain search terms. The earnings results made for a frenzy in Google's stock, despite Microsoft's launch of its competing search engine, which was also unveiled on Feb. 1. Google shares rose 7%, to $205.96, on Feb. 2.   Marsh Mac Settles Up  Marsh & McLennan, the world's largest insurance broker, agreed to settle civil fraud charges on Jan. 31 for a record $850 million, though it did not admit or deny guilt. The charges were brought on Oct. 14 by New York Attorney General Eliot Spitzer, who is still targeting insurers Aon, Ace, and American International Group, among others. As part of the deal, Marsh is banning "contingency fees" -- money received for steering business to certain insurers -- and other practices such as "tying," when insurers obtain business by promising to pay for services of other Marsh divisions. Spitzer isn't gunning for changes at just Marsh. He has said that his goal is to reform the entire culture of insurance brokering.Adelphia Tug-Of-War New Jersey financier William Huff could hold the key to who ultimately wins control of bankrupt Adelphia Communications. Through bond holdings, Huff, 54, owns about 17% of the nation's fifth-largest cable operator. Cable giants Comcast and Time Warner jointly offered $17 billion for Adelphia's 5 million subscribers in a Feb. 1 auction. Private equity firms Kohlberg Kravis Roberts and Providence Equity Partners jointly bid $16 billion. Huff has said he wants $17.5 billion or more for the cable operator or will block any sale. Huff, who leads a group of Adelphia bondholders, could force bidders to raise their offers or persuade them to accept bonds as equity in a new company, sources say. Adelphia, which lost nearly 250,000 subscribers in 2004, has said it wants to sell the company whole or in parts within the next few weeks. Ford Falls Behind January was icy indeed for Ford Motor, as sales dropped 5%. Meanwhile Chrysler Group posted a 9% gain, and General Motors eked out a 1% increase; overall, industry sales rose 2%. Ford's Explorer and Expedition sport-utility vehicles took big hits, and sales fell 33% at its Jaguar unit. Even sales of popular F-series pickup trucks dropped 13%. Analysts also fretted that sales for the trio of new family cars Ford launched last fall -- the Ford Five Hundred and Freestyle, and the Mercury Montego -- haven't been picking up momentum. Et Cetera... -- NewsCorp reported an 80% gain in quarterly earnings on strong film sales. -- Computer Associates named former Dell exec Robert Davis as its new CFO. -- Martha Stewart will star in a version of The Apprentice. Closing Bell: TiVo  TiVo investors hit rewind when the president quit on Feb. 1, a week after the CEO stepped down. The digital-video-recorder pioneer is under fire, as cable and satellite operators offer cheaper DVR service. TiVo shares fell 10.7%, to $3.58, in the two days ended Feb. 2.
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