In Business This Week: HEADLINER
ROBERT HAAS: JEAN THERAPY
Faded denim? Levi Strauss, the San Francisco company that put the world into blue jeans, is feeling the pinch of competition. On Nov. 3, CEO Robert Haas announced that Levi's will shutter 11 of its 37 plants in the U.S. and Canada and lay off a third of the workforce. Demand for Levi's jeans is down, while competition from designer labels and store brands is up. "After a decade of unprecedented growth, we probably overextended the boundaries of our business," says Haas.
Haas is working to cultivate a hipper image. One change will be in ads. Besides hunting for a new agency, Levi's says it will double its $200 million-plus marketing budget--already one of the largest among jeans makers--over the next several years.
Also, Levi's will launch a new line next fall called Red Line that attempts to blend traditional style with contemporary tastes. "All good marketers have to continue to reinvent themselves," says Gordon Shank, president of Levi Strauss, The Americas. Too bad some 6,395 Levi's workers won't be part of that process.EDITED BY KELLEY HOLLAND & PAT WECHSLER By Linda HimelsteinReturn to top
MICROSOFT'S NEXT CABLE BUY IS...
WHEN MICROSOFT INVESTED $1 billion in Comcast last summer, the software giant spun its deal almost as a public service: By offering its money to help build Comcast's high-speed cable network, Microsoft hoped to get other investors to fund cable upgrades, too. So who's following Microsoft's lead? Microsoft. For weeks, rumors circulated that Microsoft would soon make another huge investment, probably in Tele-Communications. But TCI Chief John Malone has spoken publicly about cable not handing Bill Gates too much power. Now, industry sources say Gates may be weighing a $1 billion stake in US West Media Group instead. US West is aligned with Time Warner, the largest cable operator. On the other hand, some of its most seasoned executives bolted earlier this year, so Gates might not be picking the best horse to ride. TCI, US West, and Microsoft all decline comment.EDITED BY KELLEY HOLLAND & PAT WECHSLERReturn to top
BARCLAYS AND CSFB ARE CLOSE TO A DEAL
WILL CREDIT SUISSE FIRST BOSTON pick up where Barclays is leaving off? Barclays confirmed on Nov. 4 that it is close to selling portions of its investment bank--the equities and mergers businesses--to CSFB. When Barclays first put its investment banking units up for sale, industry sources thought they would fetch $600 million to $800 million. But many suitors have backed away because they wanted to cherry-pick the businesses, as CSFB apparently is. Barclays' difficult sale bodes ill for National Westminster Bank, which is considering selling its struggling investment banking subsidiary.EDITED BY KELLEY HOLLAND & PAT WECHSLERReturn to top
BELL ATLANTIC GOES THE DISTANCE
BELL ATLANTIC IS TRYING TO beat the odds and become the first Baby Bell to offer long-distance phone service in its territory. On Nov. 6, it is to file a petition with the New York Public Service Commission asking to sell long distance in the state. If the state O.K.'s the proposal, the Federal Communications Commission will rule on the matter. Bell Atlantic has its work cut out for it. The FCC has rejected other applications. It's likely to turn down a pending application by BellSouth, too, since the Justice Dept. has recommended against letting BellSouth into long distance.EDITED BY KELLEY HOLLAND & PAT WECHSLERReturn to top