) CEO Millard S. "Mickey" Drexler is calling it quits. On May 21, Drexler, who has faced two years of sharp sales declines, sliding profits, and rapid management turnover, said he will retire once the retailer finds a successor.
Long known as a savvy merchandiser, the 57-year-old Drexler pulled Gap out of a slump in the mid-1990s. But this time around, he hasn't had much luck as the company has stumbled on everything from fashion trends to marketing and distribution. He also expanded far too aggressively at the chain, which includes Banana Republic and Old Navy in addition to the flagship Gap stores.
"This company is so large today that it needs a different style of management than the company is getting, and Mickey recognized that," says Gap Chairman Donald G. Fisher. Wall Street sent Gap shares down 15%, to $13.55, on May 22 in response. Gap is seeking a successor with plenty of operational expertise--though retail experience isn't necessarily required. Still, he or she had better like hawking T-shirts and khaki pants. Samuel Waksal finally threw in the towel. The flamboyant 54-year-old CEO and founder of ImClone Systems (IMCL
) resigned on May 22. The move was an acknowledgment that Waksal's presence at the helm is overshadowing any progress that the New York biotech company's stalled cancer drug, Erbitux, is making. He was replaced by his brother, Dr. Harlan Waksal, 49, ImClone's COO and a co-founder. Sam Waksal has taken much of the blame since the Food & Drug Administration rejected the approval application for Erbitux in December because of incomplete data. Mixed results from a number of Erbitux trials reported on May 21 indicate the drug still has a long way to go before it might win approval. ImClone partner Bristol-Myers Squibb is now planning three large clinical trials of Erbitux in an attempt to save the drug. With business slowing at America Online (AOL
), Microsoft's MSN Internet Access launched a new offensive to spirit customers away. On May 21, MSN began offering AOL subscribers free tools to shift their AOL mailbox, address book, and calendar to a new MSN account. Switchers can also forward their AOL e-mail for a month. Additionally, MSN extended a $50 rebate to AOL subscribers who switch through June 30. MSN plans to spend $10 million on a marketing campaign. But AOL isn't worried. Says spokesman Andrew Weinstein: "This is nothing new. We've seen similar campaigns before." Citigroup (C
) said on May 21 it would buy San Francisco's Golden State Bancorp in a stock and cash deal worth $5.8 billion. The move cements Citigroup's presence in California, adding more than 350 branches there and $54 billion in assets. Golden State is the parent company of California Federal Bank, First Nationwide Mortgage, Cal Fed Investments, and Auto One Acceptance. Citigroup President Robert Willumstad hinted that the deal would be followed by others in selected markets. Citigroup has a small presence in Florida and Washington, D.C., and plans to expand its franchise in those markets. These days, back to basics in the auto industry sometimes means the return of retired executives. The latest is Allan Gilmour, 67, reprising his role as Ford Motor vice-chairman and chief financial officer--the carmaker's third CFO in a year. Wall Street analysts, who have voiced concern about Ford's financial controls, applauded the seasoned addition to CEO Bill Ford Jr.'s management team. Ford (F
) shares rose 9% in the three days following his arrival. Still, Gilmour, who spent the years since his 1995 retirement as a car dealer, director on several corporate boards, and a gay-rights spokesman, will have his hands full reining in Ford's runaway costs. Competition in the market for stents--metal devices used to prop arteries open after angioplasty--is heating up. On May 22, Johnson & Johnson (JNJ
) presented data in Paris on the company's drug-coated stent. J&J is leading rivals like Guidant in developing a new stent, with a drug coating aimed at preventing the arteries from reclogging. While J&J's drug-coated stent had a lower reclogging rate than a bare metal stent, it didn't completely eliminate the problem. That could give competitors an opening in what analysts say may become an $8 billion market. "It's a good product, but it's not perfect," says Larry Feinberg, managing partner at health-care hedge fund Oracle Partners. -- Intel released three chip sets that could shave the price of PCs by as much as $50.
-- Ex-Arthur Andersen partners and staffers formed Huron Consulting Group.
-- Chicago-based online travel company Orbitz has filed with the SEC to go public. Redback Networks' (RBAK
) stock shot up 19% on May 22, to $2.69, after mobile-phone powerhouse Nokia (NOK
) spent $36 million for a 10% stake in the telecom-equipment maker. Redback has been struggling in the wake of the telecom slowdown, and investors hope Nokia will help Redback sell more in Europe and Asia.