The bad news keeps coming for Bristol-Myers Squibb (BMY) Chairman and Chief Executive Officer Peter Dolan. On Mar. 20, Bristol presented disappointing results on the company's hypertension drug, Vanlev.
The data showed Vanlev is no more effective than an older generic drug in treating congestive heart failure. And a second study revealed the drug has a higher incidence of a potentially dangerous side effect than that older alternative. The company's shares fell 16%, to $41.
The news is a major blow. Analysts had been betting on Vanlev to generate annual sales of $2 billion by 2005. Now, some are wondering if the drug will even get approved. Their prognosis: Bristol could become a takeover target or be forced to seek a merger. "They have troubles all around," says Samuel Isaly, managing partner at pharmaceutical fund manager OrbiMed Advisors. "It might be time that somebody else solved those problems."
The company wasn't talking and Dolan could not be reached for comment. Next on the block in the never-ending Enron scandal: credit-rating agencies? On Mar. 20, Senator Joseph Lieberman (D-Conn.) urged the Securities & Exchange Commission to look at the power that Standard & Poor's, Moody's Investors Service, and Fitch exercise over bond issuers. He said the agencies did a poor job uncovering trouble at the scandal-ridden energy trader. Each agency lowered its rating but still maintained an investment-grade rating on Enron's paper until a few days before the company declared bankruptcy on Dec. 2, 2001. The agencies' reply to the charge: Enron lied to conceal some $4 billion in debt. Raters were misled by Enron's "direct and deliberate misrepresentations," says Ronald Barone, Enron analyst for S&P, which, like BusinessWeek, is owned by The McGraw-Hill Companies. SEC Commissioner Isaac Hunt Jr. says the agency will examine whether new rules for the raters are necessary. Despite a falloff in its core air express business, FedEx (FDX) reported on Mar. 20 that earnings for the quarter ended February soared to $120 million, an 11% increase over a year earlier. While domestic air express revenues dropped 5%, the Memphis shipper saw its quarterly ground shipments jump 21% over 2001. The reason: Recession-induced cost-cutting has led many FedEx customers to shift to ground delivery, which is three to five times less expensive than air delivery. The Mar. 18 resignation of Gemstar-TV Guide International (GMST) Co-President Peter Boylan III caught Wall Street by surprise: Shares plummeted 26%, to $16. Boylan was pivotal in signing many of the 140 licensing deals with cable operators to carry the company's online programming guide. Last year, Boylan signed large deals with cable operators Comcast and Charter. But he was increasingly at odds with cable executives who accused him of using hardball tactics: Gemstar sued companies that offered programming guides without paying its license fees. Boylan, who is expected to do consulting work for Gemstar, said he was leaving "to spend more time with my family and to embark on new challenges in my career." With Boylan's departure, Gemstar Co-President and CFO Elsie Ma Leung becomes president and COO. Strapped for cash, Conseco (CNC) is asking bondholders for extra time to repay $2.54 billion in debt. The beleaguered Indianapolis financial-services firm said investors can exchange existing bonds by Apr. 12 for others that have identical principal amounts and interest rates, but mature 2 1/2 years later. Conseco CEO Gary C. Wendt has found raising money from operations in the face of rising defaults in its mobile-homes business a daunting task. Putnam Investments is cleaning house after two years of poor performance and slowing sales. On Mar. 18, the nation's fourth-largest mutual-fund company said it will close or merge 11 of its 66 retail mutual funds, cutting its fund offerings by 17%. In addition, two of its senior fund managers will leave the firm. Putnam says the moves aren't designed to wipe out poor performance records. But two funds being merged out of existence, the Putnam Technology Fund and Putnam New Century Growth Fund, are aggressive tech funds with poor records. Most of the other targeted funds have small asset bases and strategies redundant with other Putnam funds. -- Verizon (VZ) withdrew its application to sell long-distance service in New Jersey.
-- Halliburton (HAL) plans to reorganize into separate energy and engineering units.
-- Donald Trump agreed to sell the Empire State Building to its leaseholder for $57.5 million. Dollar General's (DG) stock rose 11% on Mar. 18, to $16.99. The discount chain announced that last year's profits increased by 33%, even as it was in the midst of restating earnings. Fourth-quarter sales jumped by 10% to $1.6 billion, thanks to thrifty Christmas shoppers and 55 new stores.