In Business This Week: HEADLINER
STEVE JOBS: THE CHARMER AND THE DELL
In high-tech circles, Steve Jobs is famous for making believers of the most grizzled cynics. On Nov. 11, Apple Computer's acting CEO declared marketing war on Dell Computer. But making this a credible threat may take more charm than even Jobs can muster.
Yes, Jobs unveiled an online store to sell Macs via the Internet, a la Dell. And Apple has a long list of potential customers to reach via direct mail.
That's where the similarities end. Apple's Macs, including the new models Jobs trotted out on Nov. 10, are relatively pricey. And Apple can't undercut dealers as Dell does because it counts on retailers for almost all of its sales. Moreover, while Dell has long been perfecting the delivery of built-to-order PCs, Apple will face tough issues of quality control and just-in-time parts delivery. And Jobs' reputation for showmanship far outshines his record: After founding NeXT Computer in 1985, he built a factory too big for the company's needs. It was running at roughly 50% capacity when NeXT exited hardware in 1993.EDITED BY PAT WECHSLER & KELLEY HOLLAND By Peter BurrowsReturn to top
GM SPENDS ITS HUGHES WINDFALL
GENERAL MOTORS DID SOME HOUSECLEANING--and it will result in a $2 billion to $3 billion charge. GM said on Nov. 10 it would write down underperforming assets and close factories in the fourth quarter or in early 1998. Why the sudden activity? GM expects a gain of perhaps $4.5 billion this year from the spin-off of its Hughes defense unit--a handy offset to the write-offs. Analysts say the gain gives GM the chance to take a big charge at once instead of letting them drag down earnings over future quarters. The size of the charge has fostered speculation that GM might also close another North American car plant, perhaps Buick City in Flint, Mich., or St. Therese, Ont. That could end the rare spell of labor peace that GM has enjoyed in recent months.EDITED BY PAT WECHSLER & KELLEY HOLLANDReturn to top
A TRASH HAULER DUMPS SOME UNITS
CONTINUING A YEAR-LONG retrenchment, trash hauler Browning-Ferris Industries agreed on Nov. 11 to sell its European and Asian units for about $1 billion in cash and a 20% stake in the waste-collection unit of French industrial giant Suez Lyonnaise des Eaux. BFI CEO Bruce Ranck aims to hike profits by selling laggard units and improving returns. The biggest and latest sale would lop off about $1.4 billion, or 25% of BFI's annual revenues, and $165 million in operating income.EDITED BY PAT WECHSLER & KELLEY HOLLANDReturn to top
ITT BOOKS A BRIDAL SUITE
KICK BACK AND CALL ROOM SERVICE. Barry Sternlicht, who launched his hotel career in 1995 by buying a near-bankrupt REIT that owned a few inns, today rules the hotel world. After a bidding war against Hilton, ITT accepted Sternlicht's $10.6 billion offer. That gives his Starwood Lodging control of 650 hotels, including the Sheraton and Westin brands and the Caesars World casinos. Sternlicht's $85 a share bid beat Hilton's $80 hostile offer. Sternlicht's REIT may still face congressional and SEC scrutiny of the tax advantages that allowed it to outbid Hilton. Its mostly stock offer also puts pressure on Sternlicht to maintain Starwood's lofty share price.EDITED BY PAT WECHSLER & KELLEY HOLLANDReturn to top