In Business This Week: Headliner
Jay Walker: Walking Away from Priceline
Jay Walker, the boyish, fast-talking founder of Priceline.com, couldn't make a winner out of any of his companies in 2000. Two closed in October, including WebHouse Club, his name-your-own-price outfit for groceries. Another delayed its initial public offering, while Priceline and sister company Walker Digital suffered painful layoffs. On Dec. 31, Walker decided it was time to quit. The controversial entrepreneur gave up his board seat at Priceline. He leaves behind a company whose shares now trade at $1 and change, far below their $162 post-IPO peak.
But that's not the end of his problems. Now, Walker will turn his attention to the identity crisis under way at Walker Digital. Known as the patent lab that spawned Priceline, the Stamford (Conn.) company retooled itself as an incubator and said it would spin off a dozen startups a year. No more. It's back to developing patents and trying to turn intellectual property into cash. Can Walker pull off a second act? The clock is ticking on those 15 minutes of fame.By Pamela L. Moore; Edited by Monica RomanReturn to top
Ford: A Better Idea on Warranties
There's nothing like a public-relations fiasco to motivate corporate change. Breaking a century-old tradition, Ford Motor said on Jan. 2 that it will cover tires under its vehicle warranty program. The decision, which will cost Ford tens of millions of dollars, comes after the recall of 6.5 million faulty Firestone tires, mostly on Ford Explorers. Ford says that the change will improve customer satisfaction and provide early warning of possible tire defects.
In a separate action, Bridgestone/Firestone recalled about 8,000 tires made in Mexico for GM vehicles, including the GMC Yukon and the Chevrolet Suburban. GM has covered tires under its vehicle warranties since 1996.Edited by Monica RomanReturn to top
Ringing in the New with a Rate Hike
AT&T welcomed the new year by raising cable rates. The largest U.S. cable-TV operator said on Jan. 2 it will raise rates an average of 4.8%. AT&T Broadband said programming costs, which account for 30% of its overall costs, rose 10% last year. Sports shows were the big culprit, says spokesman Steve Lang. The price increases will also cover upgrades that will improve the quality of TV signals. They will not be used, however, to pay for the cost of new digital services such as cable phone service or high-speed Internet access. The increases are about average for the industry, but that isn't likely to make AT&T's 16 million customers want to celebrate.Edited by Monica RomanReturn to top
Engine Trouble at GE?
Were those storm clouds gathering over General Electric or just shadows of doubt? GE shares plunged 8.7% Jan. 2 on fears that a slowing economy will harm the Fairfield (Conn.) conglomerate's earnings. Also sending shares south: renewed worries about GE's popular jet engine, the CF-6, which has suffered a series of problems. A GE spokesman says that stepped-up inspections of engines won't cost more than $30 million--an amount that won't affect profits. And CEO John F. Welch says that while GE's consumer businesses are slowing, industrial businesses are still strong. But that may not be enough to soothe investors, who have seen the company lose $126 billion in stock market value since August.Edited by Monica RomanReturn to top