In Business This Week: Headliner
Jules Kroll: Dangerous Liaison
When security guru Jules Kroll decided to join forces with armored-car specialist Bill O'Gara in late 1997, the duo seemed set to dominate the world of danger. But the real danger, it seems, was in trying to work together. The synergies of Kroll O'Gara never happened: Top brass bickered, 1999 losses were heavy, and the stock price sits at less than one-fifth of its $41.38 high. After a buyer backed out, executives decided on Apr. 18 to break into three companies--Kroll, O'Gara, and an information-security firm called Securify.
Who's the villain in this caper? Analysts blame management for an acquisition binge and inability to agree on a strategy. Kroll, 58, admits merging cultures and head offices was hard. "I think we should have established one headquarters with one strategy at the outset," Chairman Kroll says. Until the breakup, he will be co-CEO with O'Gara, 42, who adds "there just wasn't enough clarity as to who led and who followed."
But Kroll says the duo could enjoy "a continuing relationship." Shareholders may not feel the same.By Diane Brady; Edited by Doug RoyaltyReturn to top
Cisco Helps SBC Go for Speed
SBC Communications is injecting Internet punch into its data offerings. The Bell company said on Apr. 19 that it will buy more than $1 billion worth of high-speed network gear from Cisco Systems over two years. The equipment will help SBC offer a host of services, including speedy Net access. In return, Cisco will direct its business customers to use SBC's network. That means SBC, with about 100,000 broadband business customers, could gain thousands more. Such scale makes SBC a more formidable supplier. Not only would it be capable of drawing customers by building fat pipelines to corporate buildings, it would also be able to link them with Cisco gear inside offices. The deal gives SBC "instant expertise and credibility in new areas," says telecom analyst Jeffrey Kagan.Edited by Doug RoyaltyReturn to top
More Groceries Move to the Net
Add another bricks-and-mortar chain to the e-grocery cart. On Apr. 17, Safeway agreed to spend $30 million for a 50% stake in GroceryWorks.com of Dallas. Safeway will supply merchandise to GroceryWorks, which will run distribution centers, a delivery fleet, and the Web site store. Privately held GroceryWorks now delivers only in its hometown, but with the backing of Safeway and its 1,663 stores, it plans service to other big cities. Safeway has to hope the deal does better than the one it had with Peapod, the online grocer that has run into financial troubles.Edited by Doug RoyaltyReturn to top
Avon Calls with Good News
It looks like 2000 is going to be an attractive year for Avon Products. The cosmetics maker was rocked last year by a weak fourth quarter, but under new CEO Andrea Jung, springtime has brought better news. On Apr. 19, Avon reported a strong first quarter, with earnings up 11% and sales up 9%. In a conference call with Wall Street analysts, Jung said sales and earnings for the year were likely to meet their estimates. Shares are up 19% over the past three weeks. "I think the company is turning the corner," says Bank of America analyst William Steele. Beyond 2000, Jung expects strong contributions from a relaunched Web site, increasing retail sales, and new products including a line of vitamins Avon ladies will begin hawking next year.Edited by Doug RoyaltyReturn to top