In Business This Week: HEADLINER
ALEX TROTMAN: IN THE PASSING LANE
Alex Trotman is sitting pretty. Ford's second-quarter profit of $2.5 billion was an industry record and well ahead of rival General Motors' $2.1 billion. Now, the Ford chairman says his company, the world's No.2 car- maker since 1932, could even pull ahead of GM. "Our goal is to be the best automotive company in the world, and that may result in us being the biggest," he told BUSINESS WEEK on July 16.
In June, Ford came within a few car lengths of overtaking GM. GM's U.S. market share tumbled four points, to 28.4% in the quarter, while Ford's surged more than two points, to 26.9%. GM CFO J. Michael Losh blames its share loss on lengthy strikes and pledges his company's market share will top 31% by yearend.
Ford has stalled before. It set a profit record in second-quarter '96, then tumbled in the fall, leaving it with Detroit's worst profits in '96. Analysts expect a second-half squeeze this year, too. But Trotman vows to cut incentives to buoy margins. "We have a green flag flying, and we're going around the track in fine fashion," he boasts.EDITED BY KELLEY HOLLAND By Keith NaughtonReturn to top
ITT SHOWS HILTON THE DOOR
ITT CHAIRMAN RAND ARASKOG appears to have successfully fended off Hilton Hotels' $10.5 billion bid for his conglomerate by moving on July 16 to split ITT into three public companies. Hilton President and CEO Stephen Bollenbach blasted the plan. But ITT's share price jumped 6.9% on the news, and many analysts think Hilton's only option now is to raise its bid from $55 a share to more than $70. Under the plan, ITT would become three separate entities--ITT Destinations, including Sheraton Hotels and Caesars World casinos; ITT Educational Services, which operates technical schools; and ITT Corp., holding the telephone-directory publishing business. The new companies will be structured to make hostile bids next to impossible.EDITED BY KELLEY HOLLANDReturn to top
WILL CAMPBELL CLEAR ITS PANTRY?
DALE MORRISON IS MOVING mm-mm fast at Campbell Soup. Morrison was just picked to succeed David Johnson as CEO on June 30. Two weeks later, Campbell said it might divest businesses with sales totaling $1.4 billion. While the company wouldn't say which assets it might shed, Prudential Securities analyst John McMillin figures the frozen-food business and Vlasic pickle line could be on the block. Morrison also needs to boost revenue growth. He did manage to turn around Campbell's Pepperidge Farm unit before being named CEO.EDITED BY KELLEY HOLLANDReturn to top
REYNOLDS MAY CAN ITS CAN BUSINESS
NO CAN DO: REYNOLDS metals is considering a sale of its $1 billion can division. The sale would remove the company from a brutal market. While Reynolds and archrival Alcoa stole the beverage-can business from steel in the 1970s, they're now running into a tough new rival. Plastic bottles, especially the new 20-ounce models, are a big hit with consumers. Although more costly for beverage makers than aluminum, the plastic battles have encouraged consumers to buy larger containers--and more sodas, according to Coke. And that puts a big dent in the prospects for aluminum cans.EDITED BY KELLEY HOLLANDReturn to top