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Closing Bell: Anheuser-Busch


Pfizer (PFE) chief Henry McKinnell Jr. is performing radical surgery. On Apr. 5 the drug giant announced a restructuring aimed at cutting $4 billion in costs by 2008, twice what many on Wall Street expected. "We do not underestimate the challenges we face," McKinnell told analysts in New York.

Pfizer's moves will crimp earnings in 2005. The company will take charges for its restructuring as well as a $2.2 billion charge related to the repatriation of $28 billion in foreign cash. Yet even without those one-time items, Pfizer expects 2005 net income to decline nearly 8%, to $14.9 billion. But McKinnell vowed the cost-cutting will boost earnings by double digits in 2006.

Still, some on Wall Street aren't so sure. Sanford Bernstein analyst Richard Evans warns that Pfizer is counting on renewed strength in its $4.6 billion Cox-2 painkiller franchise for next year's rebound, which he believes is unlikely. This is one patient that will resist a quick cure.

The Securities & Exchange Commission, in a 3-2 vote, approved on Apr. 6 a controversial overhaul of trading rules for all U.S. stock exchanges. The new rules require investors to get the best price when trades are executed electronically. The current rules bar "trading through" -- ignoring the best price -- only for issues listed on the New York Stock Exchange. The SEC vote was a blow to the NASDAQ Stock Market, which opposed extending best-price protection to its stocks. Fidelity Investments, some other institutions, and electronic-trading networks had pressed the SEC to scrap the "trade-through" rule altogether, arguing that investors should be able to trade where they like. The new rule, which was championed by SEC Chairman William Donaldson, will be phased in between Apr. 10 and June 12, 2006.

The nation's second-largest insurance broker, Aon (AOC), finally has a new CEO. On Apr. 4 -- nearly six months after company founder Patrick Ryan said he was stepping down -- the board named Gregory Case, the former head of the North American financial-services practice at McKinsey, to the top spot. Ryan will continue to serve as chairman. One reason it took so long to fill the corner office is Aon's regulatory run-ins. In March the company settled with several states over allegations that it took payment for directing clients to preferred insurers, charges it neither admitted nor denied. Case, 42, is relatively unknown in the insurance industry. But his consulting background may be a boon for the company, which needs to trim fat and improve the bottom line.

With his company in a crisis, General Motors Chairman and CEO Richard Wagoner Jr. is shaking up management. Wagoner has taken control of GM's North American business from Vice-Chairman Robert Lutz and manufacturing boss Gary Cowger, who was demoted to group vice-president for labor relations. Cowger will try to wrest concessions from the United Auto Workers to cut GM's $5.6 billion annual health-care tab. Lutz, who keeps his title, will focus on developing new models worldwide. Analysts say Wagoner's reshuffling is likely to have little effect. He still has the same team trying to read the U.S. market.

Is trouble brewing in the software industry? That was the fear after Siebel Systems (SEBL) announced that it will post a first-quarter loss of up to $9 million. That missed estimates by a mile, knocking its stock down 10%, to $8.26, on Apr. 6. License revenue for its customer management software came in the lowest in more than six years, which will mean a 9% drop in sales. CEO J. Michael Lawrie cited problems closing deals and said tech spending remains soft. Analysts don't expect similar shortfalls from other software companies.

-- MCI (MCIP) on Apr. 6 rejected Qwest Communications Internationals' (Q) third offer to buy the company.

-- ChevronTexaco (CVX) will acquire Unocal (UCL) for $18.4 billion.

-- Restructuring and high energy costs pushed down Alcoa's (AA) first-quarter profits.

Shares of Anheuser-Busch (BUD) fizzled 4%, to $45.65, on Apr. 6 after the St. Louis brewer lowered its earnings estimate for 2005. The King of Beers, which faces increased competition, also said first-quarter domestic sales to wholesalers fell nearly 3%.


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