In Business This Week: Headliner
Herbert Allison Jr.: Warmer and Fuzzier, Please
Wanted: executive to fill the No. 2 slot at Merrill Lynch. On July 11, in a move that surprised Wall Street, Herbert Allison Jr., Merrill's president and chief operating officer, quit after 28 years. Allison, 55, had been heir apparent to CEO David Komansky since 1997, when he became top lieutenant, but was told recently that he would not take over the reins when his 66-year-old boss retires.
Some inside Merrill, known for its chummy ambience, expressed relief that the not-warm-and-fuzzy Allison would not be the boss. "Allison is not a person who gives praise easily or who builds up people around him," says a former senior exec, who asked not to be named. Allison did not return calls.
Next? A new heir apparent won't be named soon, Merrill insiders say. Komansky, a former broker, is expected to tap several top guns from Merrill's executive management committee and see who prevails. Among the contenders: Jeffrey Peek, head of Merrill's Asset Management Group, and CFO E. Stanley O'Neal. Whoever wins had better practice their back-slapping.By Debra Sparks; Edited by Mark FrankelReturn to top
Intel: Not Just a Bag of Chips
So what if price wars in PC chips limited Intel's Second-quarter profit growth to a mere 49%? The chip giant is looking to the future, assuring Wall Street that it will do better in the second half and moving further into non-PC lines. On July 15, the company planned to unveil a new unit that will sell high-speed consumer modems. Intel will license digital subscriber line (DSL) technology from Cisco Systems and sell co-branded DSL modems, mostly through Internet service providers. That's good news for investors concerned about Intel's near-total dependence on PC processors--cited as one reason its profits came in below expectations, even though they looked healthy compared to last year's depressed June quarter.Edited by Mark FrankelReturn to top
Lockheed Martin's Endangered Species
Will Washington clip the wings of Lockheed Martin's newest bird? On July 12, a House appropriations subcommittee voted to kill production money for the company's F-22 Raptor, an Air Force fighter program expected to cost $63 billion. But the F-22 could fly yet. The Senate has backed funding for the plane, and a furious lobbying effort may save it. But the vote signals growing Capitol Hill dissatisfaction with Pentagon plans for three new tactical aircraft at a cost of $350 billion. At least one of these programs may be quashed.Edited by Mark FrankelReturn to top
Housecleaning at Waste Management
On July 13, Waste Management launched an investigation into insider selling by top executives during the second quarter--when the No. 1 trash hauler was developing a serious earnings shortfall. The probe will be handled by a new executive board committee chaired by outside director Ralph Whitworth, who was also named acting chairman while CEO John Drury recovers from surgery. In early July, Waste Management said second-quarter revenue would be $250 million lower than anticipated. It now says the shortfall was the result of "aggressive" projections.Edited by Mark FrankelReturn to top