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Closing Bell: Coach


For the second time, Dow Chemical (DOW) Chairman William Stavropoulos is handing over his chief executive duties. Andrew Liveris, Dow's president and chief operating officer since last November and a 28-year company veteran, will take over as CEO of the nation's biggest chemical company on Nov. 1.

Liveris, 50, should have it easier than Stavropoulos' earlier pick. Michael Parker, named chief in 2000, lasted only two years before Stavropoulos reclaimed the job after the recession led Dow into back-to-back annual losses. Today, with demand for chemicals and plastics rebounding, the Midland (Mich.) giant is again in the black. Cost-cutting helped: After dumping 3,500 jobs in 2003, Dow plans to axe another 3,000 this year, leaving a total of 43,000.

Still, Liveris faces challenges. Natural gas and oil cost Dow $3.5 billion in the second quarter, up 20%. The weaker dollar, which has helped earnings, is also leveling out. Liveris knows, too, that the chairman will be watching.

Bristol-Myers Squibb (BMY) is breaking out its checkbook to resolve its accounting scandal. On Aug. 4, the company reached a settlement with the Securities & Exchange Commission under which Bristol will pay a $150 million fine. The SEC alleged that the company used a variety of tactics, including selling excessive amounts of its products to wholesalers, to meet Wall Street earnings expectations. The SEC said it is continuing to investigate certain executives. Bristol, which did not admit or deny any liability, says a probe into the matter by the Justice Dept. is continuing. On July 30, Bristol struck a $300 million settlement of a class action involving, among other things, the alleged improper accounting.

With the prospect of jail time already dampening Martha Stewart's birthday party, her company served up another blow with a bigger-than- expected loss for the second quarter. On Aug. 3, the same day that its founder turned 63, Martha Stewart Living Omnimedia (MSO) reported a loss of $19.29 million, or 39 cents a share, compared with a paltry profit of $931,000 the year before. Sales dropped by a third, to $44 million, during the same period. One culprit was a defection of advertisers and readers from the flagship Martha Stewart Living magazine, which has run few references to its founder since her federal criminal conviction. But poor results in the TV segment and merchandising, a former bright spot, also dragged down results. Her recipe for renewed vigor: more layoffs, expanding the Everyday Food magazine into television, and a vow to clear her name in court.

Little TiVo (TIVO) won a nasty battle over the Hollywood studios. On Aug. 4, the Federal Communications Commission approved the first set of new technologies to distribute and record digital TV shows under the so-called broadcast flag rule that it passed last November. The Motion Picture Association of America and the NFL objected vehemently to TiVo's proposal to allow up to 10 registered TiVo devices to send copies of digital TV shows to each other. The FCC determined that TiVo's scheme wouldn't violate the broadcast flag rule, because it wouldn't lead to mass, indiscriminate distribution of copyrighted content.

Steve Jobs plans to return to work as CEO of Apple Computer (AAPL) and Pixar Animation Studios (PIXR) in September. Until then, he'll be recuperating from surgery to remove an islet cell neuroendocrine tumor, a rare form of pancreatic cancer that is usually curable if caught early. In an e-mail to Apple employees from his hospital bed on Aug. 1, Jobs said the surgery was a success, and that he was not expected to require chemotherapy or radiation treatments. "The prognosis is excellent, and that's a quote from his doctor," says Apple board member Bill Campbell.

-- GM (GM) is offering $6,000 on some models, including a bonus of up to $1,500 for financing through GMAC.

-- Ronald Drapeau resigned as CEO of Callaway Golf (ELY).

-- Eli Lilly (LLY) got approval for Cymbalta, a new anti-depressant intended to succeed Prozac.

Shares of Coach (COH) fell 11%, to $38.12, in the two days ended Aug. 4 after the handbag maker reported fourth-quarter profits up 120%. Investors are worried about slowing sales in Japan; many also appear to be taking profits after a 63% runup in the stock in the past 12 months.


American Apparel's Future
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