"I wouldn't go on bended knee, and I wouldn't kiss anything."
---Former Massachusetts Governor William Weld, after Senator Jesse Helms (R-N.C.) blocked him as Ambassador to MexicoEDITED BY LARRY LIGHT AND PAT WECHSLERReturn to top
AT&T CREDIT-CHECKS ITSELF...
AT&T HAS HIRED OUTSIDE legal counsel to examine its policies toward bankrupt credit-card consumers. The new hired gun is a former bankruptcy judge: attorney Roger Whelan of Shaw Pittman Potts & Trowbridge in Washington. The move follows a BUSINESS WEEK article (Sept. 15) noting that the company may be a bit too quick to charge down-and-out holders of its Universal card with fraud.
Whelan will review all aspects of AT&T Universal's credit-card suits to make sure the company is "consistent with bankruptcy laws," says Whelan. He will make a recommendation based on his findings. While Whelan has been brought into other credit companies to review their fraud suits, he says there have been none "at this level."
Some doubt, however, whether Whelan is really the man for the job. Philadelphia-based attorney Henry Sommer, who frequently represents bankrupt clients, says Whelan in the past has backed credit industry proposals in Congress that "would have been very damaging to consumers." Whelan insists he's unbiased and will be fair when he reviews the AT&T situation. EDITED BY LARRY LIGHT AND PAT WECHSLER Debra SparksReturn to top
...AND POLISHES UP AN HEIR APPARENT
IT HAS BEEN A WHILE SINCE AT&T outperformed the market. However, in the week ended Sept. 12, the stock of the telecom giant surged nearly 3 points, to 42 13/16, while the Dow Jones Industrial Average managed to drop 79 points.
What's up? Analysts and portfolio managers say that AT&T has been signalling that earnings for the third quarter are likely to land higher than the average Wall Street consensus estimate of 64 cents a share--probably hitting 67 cents or 68 cents. "They're jawboning up the numbers," says Jonathan Kolle, portfolio manager at Wilmington Trust, a big shareholder. AT&T says that it's simply confirming what it has said in the past: The company plans to meet its tough cost-reduction targets.
Wall Street types say that the timing of all this optimistic talk is curious. AT&T's board meets over the weekend of Sept. 19 to discuss chief executive candidates, among other things. Vice-Chairman John Zeglis, the top internal candidate, will have an opportunity to present his team and game plan to the board. And a rising stock price, the reasoning goes, will bolster the chances of Zeglis against better-known outsiders, such as Hughes Electronics' C. Michael Armstrong. "It makes the case for Zeglis a little easier," says Michael Trotsky, senior vice-president at Independence Investment Associates, another big AT&T shareholder. EDITED BY LARRY LIGHT AND PAT WECHSLER Peter ElstromReturn to top
MOTOROLA CHARTS LIFE AFTER APPLE
IT HAS BEEN A PAINFUL TWO years for Motorola CEO Christopher Galvin. Fierce competition in cellular phones, slower growth in pagers, and a wrenching downturn in semiconductors have left the $28 billion electronics giant reeling. Galvin wasted no time exiting the Mac-compatible PC business Sept. 11, after Apple Computer decided to restrict Macintosh cloning.
So now what? Motorola is redirecting ambitions for its $7.9 billion chip business. Hector de J. Ruiz, new president of the Semiconductor Products Sector, is racing to land Motorola squarely in the systems-on-a-chip market.
His challenge: turn Motorola's thousands of specialty chips into puzzle pieces that customers who make everything from auto engines to laser printers can snap together to perform various functions. It's a tough market, says rival Rick Marz, executive vice-president at LSI Logic. "This isn't quite like cut, copy, and paste to create a system," he says. But with Motorola's chip operations sliding, Ruiz has strong incentives to succeed. Average prices for its bread-and-butter control chips, for instance, have fallen 14% this year, on top of a 12% 1996 dip. And other chips used in cell phones contracted 10% last year despite a 30% market jump.EDITED BY LARRY LIGHT AND PAT WECHSLER Gary McWilliamsReturn to top