In Business This Week: Headliner
Ken Chenault: Well, That Was Fast
WHEN BUSINESS WEEK PROFILED KENNETH CHENAULT last December, he had not yet completed two years as president and COO of American Express. Even so, Chenault's law school classmate Franklin Raines, then CEO-designate of Fannie Mae, had some advice for AmEx: "The real issue is not whether Ken is going to be a CEO, but is someone else going to steal him away before he is moved up." At that time, AmEx Chairman and CEO Harvey Golub was hinting that he might stay on until he turned 65 in 2004.
But the future has arrived early. On Apr. 26, Golub announced he would cede the CEO title to Chenault, 47, in 2001 and pass along the chairman's post a year later.
What prompted Golub to step up his plans is unclear. "In a sense, there is no ideal time," he says. But the impetus probably came from Golub. In his six years at the helm, Golub has succeeded handily in reviving a troubled company. Chenault's big challenge will be to wrest back market share from Visa and fatten AmEx' top line.EDITED BY KELLEY HOLLANDReturn to top
A Sudden Chill at McKesson
BITTER MEDICINE: McKESSON HBOC LOST NEARLY HALF ITS MARKET value on Apr. 28, after the nation's largest drug wholesaler abruptly restated earnings for the most recent quarter and the previous fiscal year. The company would say only that a yearend audit revealed contingencies on software revenues that were never resolved. After a conference call during which no questions were allowed, analysts were left scrambling for more information, particularly about why the company would cut estimates for the current fiscal year far more than it sliced earnings from the previous year. McKesson paid $14 billion for HBO & Co. last year, hoping to see strong sales of that company's health-care software. One month ago, McKesson was telling investors the deal had boosted sales.EDITED BY KELLEY HOLLANDReturn to top
Gulping Down Some Very Rich Coffee
CHOCK FULL O' NUTS GAVE THE MARKET A JOLT on Apr. 22, when it confirmed it had received unsolicited bids from food giant Sara Lee. Why the interest? Norman Alexander, chairman of the coffee company, had purchased 530,000 shares at $5 apiece in February, even though he knew Sara Lee had informally offered up to $11 a share four months earlier. The company says he had legal clearance from outside counsel to buy because the offer was assumed to be dead. But in a letter filed with the SEC and addressed to Alexander, fund manager Mario Gabelli, who owns almost 16% of Chock's common stock, urged him to resign at once. The stock jumped $3 a share on news of the Sara Lee bid, putting Alexander's paper profit at $2.4 million as of Apr. 27.EDITED BY KELLEY HOLLANDReturn to top
Motorola Gets in Step with Sprint
IT'S NOT A DROP-DEAD CONTRACT, but it's a strong sign that Motorola is reviving its wireless-equipment business. Motorola, say sources close to the company, has landed a $220 million deal to install cellular gear at 1,200 locations that Sprint PCS is establishing in the third phase of its national network build-out. Motorola's contract pales in comparison with the $780 million deal that Sprint gave Lucent Technologies. But Motorola's new technology, to be tested by Sprint, will allow Motorola to sell equipment in markets currently controlled by Lucent and Northern Telecom.EDITED BY KELLEY HOLLANDReturn to top