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Jack Welch: We Bring Good Things To Investors

In Business This Week: Headliner

Jack Welch: We Bring Good Things to Investors

John F. Welch & Co. had a rare surprise for General Electric investors on Mar. 21: a nice little bump up in the company's target for first-quarter earnings. Shareholders went nuts, driving the stock up 7.5% and giving GE the kind of one-day lift that usually only tech stocks get. Why the hoopla?

First, GE almost never rejiggers profit targets, so any uptick is significant--even if only from 75 cents to 77 cents a share. Moreover, after a powwow with top management on Mar. 21, analysts said Welch's year-old efforts to drive GE's business onto the Internet are paying off. "A major part of the story is the company's very rapid adaptation of the new economy tools to extend its already considerable advantages," said Goldman Sachs analyst Martin A. Sankey.

Another key: Welch says GE is getting a big lift from the strength of the global economy. With orders up 20% this year, Sankey said that GE appears well-positioned to keep up the growth--even well after Welch's expected retirement in 2001.By Pamela Moore in Greenwich, Conn.; Edited by Anne NewmanReturn to top

Things Get Bumpier at US Air

Labor tensions escalated at US Airways, where CEO Rakesh Gangwal threatened to close the carrier if flight attendants walk out. If the parties can't settle by Mar. 25, the 10,000-member union plans to strike key routes, which could cripple the airline's 2,000-flight system. But Gangwal would rather bear that cost than disrupt some 150,000 passengers daily. Attendants oppose US Airways' demand to peg salaries to average pay at other top airlines, plus 1%, and tinker with benefits. The formula has worked for Gangwal with most of the airline's unions as he tries to lower costs, among the industry's highest. But attendants say both pay and benefits would be cut. They have worked without a contract since '96.Edited by Anne NewmanReturn to top

A Match Made in Auto Heaven?

If DaimlerChrysler wants to expand its small-car lineup, it couldn't do better than Mitsubishi Motors, which has five minicar models with such names as the Minica and the Townbox. The carmakers are expected to agree that DaimlerChrysler will get a 33.4% stake in Mitsubishi--and a foothold in Asia, where it generates only 3% of sales.

Mitsubishi has a lot of debt, but it's one of the few Asian carmakers for sale. DaimlerChrysler Chairman Jurgen Schrempp passed on Nissan Motor last year, and Renault bought it. After seeing General Motors take a stake in Fiat, he's eager to strike.

Small cars have small profit margins. But sales should grow at a higher rate and they produce fewer emissions. That's a concern in North America and Europe, where Mitsubishi is barely present. So it may not be the last item on DaimlerChrysler's shopping list.Edited by Anne NewmanReturn to top

Andersen Sweetens the Pot

To keep dot-com mania from draining its talent, Andersen Consulting plans to double its partnership ranks by adding more than 1,000 new partners this year. It will also reduce the time it takes to make partner to 8 to 10 years, from 12 to 15. For nonpartners, Andersen intends to pour $200 million into an e-biz investment fund for top performers and those with more than three years' seniority. More than 30,000 of Andersen's 65,000 workers should benefit from the fund.Edited by Anne NewmanReturn to top

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