The Harbus is pleased to offer this service in conjunction with Baker Library to brief you on the weekly business news highlights of the main HBS recruiters. The news is taken from The Wall Street Journal Interactive Edition and aims to provide a weekly summary of articles that can be followed up in greater depth. (Sources: WSJ- Wall Street Journal; DJ-Dow Jones News Wires)
Manufacturers
DaimlerChrysler AG (DCX) Monday said its troubled Chrysler unit will cut 26,000 jobs, or 20% of its workforce, over the next three years, and idle six plants through 2002. In a press statement, the German-American car giant confirmed the cuts, which were widely expected, as part of the company’s restructuring plan to turn around lossmaking U.S. arm Chrysler. DaimlerChrysler said it’s aiming to reduce its workforce mostly through retirement programs, in line with requirements from union contracts. After talks with key U.S. union United Auto Workers and the Canadian Auto Workers, “solutions were found that are in line with the framework of our current labor contracts,” said new Chrysler President Dieter Zetsche. DaimlerChrysler said about 75% of the planned job cuts will take place this year. (DJ 1/29/01)
DaimlerChrysler AG (DCX) Mexican unit confirmed Monday its transmission and engine plants in Toluca and its light-truck assembly plant in Mexico City would be closed as part of the company’s cutbacks in its Chrysler division. Mexico “will be affected because most of the vehicles produced in our country are for export,” DaimlerChrysler of Mexico said in a press release. The transmission plant, located to the west of Mexico City, will be closed Oct. 1 due to lower demand. (DJ 1/29/01)
Enron Corp. said it is seriously pursuing the development of a $300 million to $400 million terminal and facility for handling liquefied natural gas in the Bahamas that would supply gas to the fast-growing Florida market. The proposed LNG terminal would be the first such facility built to feed the U.S. gas market since 1978. (WSJ 1/29/01)
Enron Corp.’s (ENE) signed a definitive agreement to acquire Daishowa North America Corp.’s Forest Products Ltd. unit, a holding company for its Quebec City, Canada newsprint mill and related assets. Financial terms weren’t disclosed. In a press release Tuesday, Enron said the acquisition complements its existing production at Garden State Paper, a recycled newsprint mill in Garfield, N.J., which Enron acquired in July 2000. (DJ 1/30/01)
General Motors Corp. and Ford Motor Co. said Thursday they will idle a combined seven North American assembly plants -three in Ohio -in hopes of winnowing bloated inventories. GM said it will temporary close five plants for the week. Those sites and their products are: Oklahoma City, Chevrolet Malibu; Oshawa, Ontario, Buick Century and Buick Regal; Oakland County’s Orion Township, Buick LeSabre, Oldsmobile Aurora and Pontiac Bonneville; Lordstown, Ohio, Chevrolet Cavalier and Pontiac Sunfire; and Hamtramck, Mich., Cadillac Seville, LeSabre and Cadillac DeVille. All of those shutdowns, which GM said will affect about 14,400 workers, were previously announced, except for the Hamtramck plant. Ford said the two van plants it will idle for next week are in Avon Lake, Ohio, where the Mercury Villager and Nissan Quest are made, and in Lorain, Ohio, where the Ford Econoline is produced. (DJ 1/26/01)
Autoworkers staged Europe-wide protests against General Motors Corp. (GM) Thursday, denouncing the U.S. automaker’s plans to slash up to 5,000 jobs throughout the region in a sweeping restructuring project. Nearly 4,000 workers rallied outside a factory run by GM subsidiary Adam Opel AG (G.ADO) in Ruesselsheim outside Frankfurt, police said. Demonstrations were planned elsewhere throughout Britain, where the world’s biggest automaker cut jobs at its Vauxhall Motors subsidiary. (DJ 1/25/01)
Entertainment
Layoffs at Amazon.com Inc. (AMZN), announced Tuesday, were “painful” but necessary for the company to meet its goal of reaching pro-forma operating profitability in the fourth quarter of 2001, said Warren Jenson, the company’s chief financial officer. In a conference call with journalists following the release of Amazon’s fourth-quarter 2000 financial results, Jenson said the layoffs would affect about 850 employees in the Seattle area and 450 at a Georgia distribution center. The layoffs will total about 1,300, or about 15% of Amazon’s work force. (DJ 1/31/01)
Bertelsmann AG (G.BRT) named former U.S. antitrust chief Joel Klein chairman and chief executive of Bertelsmann Inc. In a press release Wednesday, Bertelsmann said Klein served with the Clinton administration since 1993, where he was head of the antitrust division at the Department of Justice. Klein waged a winning battle against Microsoft Corp. (MSFT), convincing a court last year that the company broke antitrust law by illegally seeking to preserve its Windows monopoly and extend that monopoly to the Internet. In his new position at Bertelsmann, Klein will oversee corporate functions in the U.S. and advise the company on legal and strategic government issues. He also will serve as key strategic adviser to Bertelsmann Chief Executive Thomas Middelhoff and advise Bertelsmann on venture-capital activities. (DJ 1/31/01)
Go.com has been stopped in its tracks. Walt Disney Co. said it will discontinue operation of the money-losing site as part of its plan to end Walt Disney Internet Group’s (DIG) life as a separate stock by converting the Internet Group outstanding shares into Disney stock. Go.com, formed after Disney acquired a 43% stake in Internet search company Infoseek, never achieved the Internet portal stature of AOL.com or Yahoo.com. The combination of search features and content on Go.com was supposed to turn visits by Web surfers into money and direct those Web denizens to Disney’s individual sites. “(Disney) was late to the portal game and I would imagine that they weren’t able to monetize those eyeballs with all the stiff competition,” said Prudential Securities Corp. analyst Katherine Styponias. It also seemed that users would rather make their way to ABC.com or Disney.com on their own, and bypass Go.com. (DJ 1/29/01)
Consumer electronics giant Sony Corp. (SNE or 6758) said Wednesday it has filed with the Financial Services Agency an application for government preliminary screening to set up a planned online bank. Sony announced its plan for setting up the Internet-based bank in March 2000. The high-tech company will take an 80% stake in Sony Bank Corp., which is to be capitalized at Y37.5 billion, while the remaining 20% will be held by business partners Sakura Bank Ltd. (J.MUB or 8314) and U.S.-based J.P. Morgan Chase & Co. (JPM). Once approved by the government, Sony Bank Corp. will open for business in June, Sony said. (DJ 1/31/01)
Banks
The world of stock trading just got a little smaller. Earlier Monday, Goldman Sachs Group Inc. (GS) unveiled a definitive agreement to acquire Benjamin Jacobson & Sons LLC. The firm is one of the “specialists” operating on the New York Stock Exchange floor. Specialists manage the NYSE’s auction market for an assigned batch of stocks. In exchange for the trading franchise in their stocks, a specialist must maintain a fair and orderly market in those securities. Goldman’s deal for Jacobson, valued at $250 million in stock and cash, comes on the heels of Goldman’s acquisition last year of Spear Leeds & Kellogg, a securities firm that runs a large NYSE specialist business. (DJ 1/30/01)
J.P. Morgan Chase & Co.’s (JPM) proposed acquisition of Advanta Corp.’s (ADVNA, ADVNB) mortgage operations has received antitrust clearance from the U.S. Federal Trade Commission. The agency announced Tuesday the companies have been granted early termination of the waiting period required under the Hart-Scott-Rodino Antitrust Improvements Act. Under the terms of the deal, announced Jan. 8, J.P. Morgan’
s Chase Manhattan Mortgage Corp. unit agreed to acquire Advanta’s mortgage business, which includes a $15.8 billion mortgage loan servicing and subservicing portfolio, as well as other assets. The transaction is expected to close in the first quarter. (DJ 1/30/01)
A suit seeking class action status has been filed against Merrill Lynch & Co. (MER) for allegedly failing to make timely payments to individuals who settled personal injury cases. The plaintiffs agreed to accept periodic payments from Merrill’s Settlement Services unit – which Merrill Lynch sold in 1991 – using structured payments, or a series of payments over time. In a press release Friday, Foley & Bezek, the law firm representing the plaintiffs, said Merrill Lynch Settlement Services bought U.S. Treasury Bonds, placed them in trust and agreed to use the income from the bonds to pay the plaintiffs. According to the plaintiffs’ law firm, the securities firm later sold its ownership in its settlement services’ subsidiary to an unnamed third party, which pledged the Treasury bonds to Morgan Stanley Dean Witter & Co. (MWD) as collateral for a loan to itself. When the third party defaulted on the loans, Morgan Stanley foreclosed on the Treasury bonds to repay the defaulted loan, according to the suit. A Merrill Lynch spokesman said, “The problems that have arisen occured almost a decade after Merrill Lynch sold this business. We have had absolutely no involvement in the actions that have caused these problems.” (DJ 1/26/01)
It looks like another famous Wall Street name is headed off into history. Morgan Stanley Dean Witter & Co. said Monday that it is lopping off the Dean Witter name in favor of using just the Morgan Stanley moniker. “The change, which has been under review for several months, will be addressed by the firm’s board at its March meeting,” the securities firm said. The news comes just a week after John Mack, who helped ensure the melding of the old Morgan Stanley Group Inc. with Dean Witter, Discover & Co. in 1997, said he was resigning. (WSJ 1/30/01)
Morgan Stanley Dean Witter & Co. (MWD) named Howard I. Hoffen chairman and chief executive of its Private Equity business. In a press release Thursday, the company said Hoffen will replace Alan E. Goldberg, who announced his resignation earlier in January to form his own investment firm. Morgan Stanley had said it would work closely with his firm. Hoffen was most recently a managing director reporting to Goldberg. (DJ 1/25/01)
Retail
Coca-Cola Co., after settling one race-discrimination lawsuit and still facing another, said it hired a new general counsel who spearheaded efforts to improve diversity at Texaco Inc. and served as a point man in the Clinton administration on civil rights. Deval L. Patrick, 44 years old, will succeed Joseph R. Gladden Jr., 58, who is retiring, the company said. The appointment brings a lawyer with a distinguished record in employment law and civil rights to a company that has been challenged to improve its record on diversity. (WSJ 1/25/01)
High Tech
Advancing again in the race to manufacture chips for the mobile computer market, Intel Corp. has built two new energy-saving versions of its Pentium III and Celeron microprocessors. The two new low-voltage chips, to be introduced on Tuesday, are designed for lightweight notebooks weighing less than three pounds. One of them, the Pentium III, is the industry’s first to operate at 300-megahertz speed under 1 volt while consuming less than a half watt of power, Intel officials said. The less power drained by the chip, the longer the battery lasts. (DJ 1/30/01)
Microsoft Corp., trying to generate new, Web-based business in Silicon Valley, announced it has hired longtime computer-industry executive Dan’l Lewin as a vice president based at the company’s new Mountain View, Calif., campus. Mr. Lewin, 46 years old, has worked at a raft of established Silicon Valley companies and start-ups, most notably Apple Computer Inc. and Steve Jobs’s other famous, but failed, project, NeXT Inc., of which Mr. Lewin was a co-founder. Mr. Lewin also worked at GO Corp., the company that tried to pioneer “pen computing,” through which computers could recognize handwriting. Microsoft is trying to revive that technology now in new products such as a slim “tablet” computer. (WSJ 1/31/01)
