Give Charles Hoffman credit: He's not afraid of a sinking ship. On June 5, struggling high-speed Internet access provider Covad Communications (COVD) announced that Hoffman will become chief executive on June 25. Hoffman succeeds interim CEO Frank Marshall, who will stay on as Covad's vice-chairman.
Hoffman, now CEO at Canada's Rogers Wireless Communications (RCN), will have his hands full at Covad. On June 1, the once high-flying Santa Clara (Calif.) company received notice that it could be delisted from Nasdaq because it does not meet asset requirements. Covad lost $1.35 billion on $158.7 million in revenues last year, and its shares are trading at $1.06.
That may sound bleak, but Hoffman "doesn't see it that way," says Covad Chairman Chuck McMinn. After dealing with the Nasdaq mess, he'll have to raise the $400 million to $700 million in financing that Covad needs to keep the lights on before its cash flow turns positive, hopefully, in the second quarter of 2002. With capital markets tight, finding that kind of money won't be easy. Signaling a new negotiating stance, General Electric (GE) is offering a major concession to European Commission antitrust regulators in an effort to save its $45 billion deal to buy Honeywell (HON). GE has offered to sell Honeywell's regional jet engines unit, according to a European source. Still, the Europeans want more. They may press for a GE sell-off of Honeywell's entire avionics division, the crown jewel in its portfolio. The Europeans also worry that GE's aircraft financing arm, GE Capital Aviation Services, will give the newly-merged company too much of a competitive advantage. GE Chairman Jack Welch will travel to Brussels to negotiate with chief European regulator Mario Monti on June 8. Welch dismissed news of the Honeywell engines unit sale, which was first reported in The Wall Street Journal, as "speculation." The online music-sharing service Napster, nearly crippled by its copyright lawsuit, signed a deal with MusicNet--a joint venture between RealNetworks (RNWK), AOL Time Warner (AOL), Bertelsmann, and EMI (EMIPY)--to be its exclusive supplier of major-label content. MusicNet had promised to license music to Napster when the venture was announced in April, but contracts weren't signed until June 5. "This is a big step forward for consumers," says Rob Glaser, MusicNet's interim CEO. Presuming they can get over one big catch, that is: The record companies will not allow Napster to sell their content until the upstart "tracks the identity of files" and is operating in a "legal non-infringing manner." So far, the music giants say that's not the case. Video rental giant Blockbuster (BBI) is offering to settle 23 class actions from customers who allege the Dallas-based retailer charged excessive late-return fees. If approved by a federal court, the settlement would compensate some 40 million customers who paid late fees over the past eight years. They would be given coupons for rentals or nonfood purchases at Blockbuster, a unit of Viacom (VIA). But the real winners in the settlement are the lawyers who sued the company on behalf of customers. As part of the deal, Blockbuster must pay--in cash, not coupons--$9.25 million in court costs and attorneys' fees. Amazon.com (AMZN), which boasts the "Earth's biggest selection" of goods ranging from books to housewares, is getting even bigger. On June 5, the online retailer announced it would add a personal computer store as well as a business bookstore by the end of the year. The company estimates that selling business books alone could bring in $100 million to $150 million in new revenue within two years. Amazon will need every penny of it to live up to its promise of operating profitability, excluding certain debt-related costs, in 2002. It's been a bad week for the tobacco industry. On June 6, a Los Angeles state court jury awarded an injured smoker more than $3 billion in compensatory and punitive damages from Philip Morris Cos. That came just two days after a Brooklyn jury forced Philip Morris (MO) and four other cigarette makers to fork over nearly $30 million to Empire Blue Cross and Blue Shield for increasing insurance costs in that state. The two courtroom losses put an end to a long winning streak for Big Tobacco. Philip Morris plans to appeal both the Los Angeles and Brooklyn verdicts. -- Newport News Shipbuilding (NNS) backed General Dynamics' (GD) takeover bid over Northrop Grumman's (NOC) rival offer.
-- Lucent (LU) will offer early-retirement packages to more than 10,000 managers.
-- Cadbury (CSG) plans to buy Orangina and other brands from Pernod (PDRDY) for about $590 million. Exelixis (EXEL) shares soared 14.2%, to $17.16, on June 6 after it announced the completion of a functional genome map of the zebrafish. It marks the first time that scientists have figured out all the genes in a vertebrate that control the structure and function of the heart and other organs. Humans and fish share about 95% of the same genes, so the discovery could have a big impact on drug development.