Pfizer's (PFE) chairman and CEO may be readying the ax. On Feb. 8, Henry McKinnell confirmed he is studying how best to "streamline the organization." While McKinnell, 62, declined to say whether his review will lead to job cuts, Friedman, Billings, Ramsey Group (FBR) analyst David Moskowitz says Pfizer may slash $3 billion in costs over the next several years.
A lot is riding on a Food & Drug Administration meeting on the safety of Cox-2 painkillers that begins on Feb. 16. If Pfizer's $3.3 billion drug Celebrex is pulled from the market or restricted, McKinnell may have to cut jobs quickly.
The Celebrex headache is only one of several problems. Some big drugs will soon face generic rivals, and Pfizer faces a court fight over two patents on its $10 billion cholesterol drug, Lipitor. McKinnell believes Pfizer will prevail. "We have challenges," he concedes. "But we clearly have the best operating capability in the industry." Still, that doesn't mean there isn't room for improvement.
Boeing (BA) Commercial Airplanes is gaining momentum. Its latest customer: SpiceJet, a new discount airline from India, which agreed on Feb. 9 to purchase 10 of its 737-800 airliners at a list price of $630 million. The SpiceJet order follows a $1.8 billion deal with Japan Airlines for 30 737s and six of the short-haul jets for Air Libya. What's more, orders for Boeing's new fuel-sipping 787 airliner are starting to arrive. Five Chinese carriers ordered 60 of the lightweight 787s, while Ethiopian Airlines said it would buy 10 of the planes. On Feb. 2, Boeing raised its forecast of expected deliveries. Driven by Asian and Middle Eastern demand for the long-range 777 and the smaller 737 models, Boeing now expects 2006 deliveries to grow more than 17% over 2005. The first delivery of the 787 is expected in 2008.
New CEO Stephen Cooper is starting to cut the fat out of beleaguered Krispy Kreme Doughnuts (KKD). On Feb. 8, the restructuring specialist said he is cutting 125 jobs, or 25% of the workers at Krispy Kreme's Winston-Salem (N.C.) headquarters and its manufacturing and distribution facilities. At the same time, Krispy Kreme said it recently unloaded a corporate jet. The moves should generate $10 million in annual pretax savings. Still, even that may not be enough to stave off a looming cash crunch. The company warned that unless its lenders agree to the reopening of a key credit line in the next two months, it may not be able to fund its ongoing operations.
Hurricanes and regulatory scandals failed to dent American International Group. (AIG) On Feb. 9, the New York-based insurance and financial giant reported its annual profits jumped 19.1%, to $11.05 billion. Revenue rose 21.3%, to $98.6 billion. That's despite $683 million of aftertax losses due to natural disasters like the hurricanes and tsunami, as well as $53 million to settle charges stemming from regulatory probes. AIG's strength amid such turmoil is due to diversification, says Chairman Maurice Greenberg. Its insurance operations in foreign countries such as China continue to thrive.
Five Bank of America (BAC) units settled charges of improper mutual-fund trading with the Securities & Exchange Commission on Feb. 9 by agreeing to pay a total of $515 million. In one case, Banc of America Capital Management, BACAP Distributors, and Banc of America Securities agreed to pay $375 million to settle charges that they let large investors make rapid and illegal late mutual-fund trades. In a second case, BofA's mutual-fund unit Columbia Management Group and its distributor agreed to pay $140 million to settle charges related to undisclosed market-timing. As is customary, BofA settled all charges with the SEC without admitting or denying guilt.
-- Coke (KO) is rolling out a version of Diet Coke made with Splenda.
-- Better medical cost management helped CIGNA (CI) double its quarterly profit.
-- Insurer MetLife's (MET) fourth-quarter earnings fell, in part because of investment losses.
Three weeks after slamming eBay for barely missing its fourth-quarter profit estimate, investors saw a buying opportunity. After analysts commented on the potential for eBay's PayPal finance arm and its Chinese unit, shares rose 4.5%, to $78.99, on Feb. 8 and 9.