For Ralph Hake, the third time really was the charm. After losing out to rivals for the No. 1 job at Whirlpool (WHR) and Fluor (FLR), Hake finally made it to the chief executive's suite on June 19, when he was named chairman and CEO of Maytag (MYG).
He has his work cut out for him. Only days earlier, Maytag warned that its second-quarter earnings will fall 25% below its first-quarter results because of slumping sales of household appliances and snags in its rollout of new Hoover vacuum cleaners.
But Hake, 52, may have what it takes. A University of Chicago MBA and a former CFO at Fluor and Whirlpool, he knows how to crunch numbers. He also knows the appliance biz from his 12 years at Whirlpool.
The tougher task might be keeping his post. Maytag, based in Newton, Iowa, has gone outside for a chief executive only once before. That CEO, Lloyd D. Ward, lasted 15 months before the previous chief, Leonard A. Hadley, came out of retirement to take the job back in November. Hadley remains on the board. Sounding a warning to the accounting profession, the Securities & Exchange Commission on June 19 hit Arthur Andersen with a $7 million penalty for failed audits at trash giant Waste Management. The bad audits, for 1992 through 1996, led to earnings that were overstated by more than $1 billion. Investors later lost more than $25 billion when the stock collapsed. In the fraud settlement, which also included four current or former partners, the SEC indicated Andersen lost its audit independence. The reasons? Significant nonaudit business with Waste Management and personal ties to company executives. The deal, which narrowly avoided court action, "allows the firm and its partners to close a very difficult chapter and move on," said Andersen managing partner Terry E. Hatchett. A group of female Wal-Mart Stores employees filed a federal lawsuit on June 19 charging the world's largest retailer with pervasive discrimination against women. Six former and current workers allege that Bentonville (Ark.)-based Wal-Mart regularly promoted men instead of women to senior positions and paid men higher salaries. Seeking class-action status, the suit, filed in U.S. District Court in California, could cover an estimated 700,000 current and former female employees. That would make it the largest suit ever filed against a private employer in the U.S. In response to the filing, a Wal-Mart spokesman said the company "does not condone discrimination of any kind." Walt Disney will defend its embattled animation franchise without its longtime architect. Peter Schneider, who headed the animation unit for 13 years before becoming studio chief, resigned from Disney on June 20. He succeeded former studio boss Joe Roth 17 months ago. With Disney's financial backing, Schneider intends to produce Broadway plays similar to Aida and The Lion King, which he oversaw at Disney. His departure comes as Disney's top two films, Pearl Harbor and Atlantis: The Lost Empire have performed below expectations. Moreover, Atlantis is being solidly outpaced by Shrek, produced by rival DreamWorks SKG. Disney did not immediately name a successor. The contrast could not have been greater: On June 19, Goldman Sachs reported a 24% decline in net income, to $577 million, in its second quarter from the year-earlier period, while Lehman Brothers' net income rose 14%, to $430 million. The disparity underscored an ongoing shift of power on Wall Street as more companies scramble to issue bonds, Lehman's specialty, than equity, Goldman's trademark. Lehman's revenues from underwriting fixed-income products such as bonds soared 45% from the previous quarter to a record $265 million. President Bush has never been a fan of the tobacco suit filed by the Clinton Administration charging that cigarette makers misled the Americans about the risks of smoking. But he hasn't wanted to drop it outright and risk accusations of being buddies with Joe Camel. On June 19, the Justice Dept. said it would seek a settlement, after the Administration's initial idea of omitting the necessary funding hit a snag when Democrats took over the Senate. The decision to seek a settlement was attacked by anti-smoking activists, who argued that the government was letting the public down. -- IBM Chairman and CEO Louis Gerstner has been made a knight of the British empire.
-- Boeing announced that Japan Airlines ordered three 777 jets for $525 million.
-- Insurance giant Phoenix Companies raised $854 million in its initial public offering. The Fed may not have bailed out the troubled tech sector, but preemptive rate cuts by mortgage lenders have been a boon to homebuilders. On June 19, Miami-based Lennar said second-quarter profits soared 166%, to $97 million, on a 44% jump in revenues, and boosted its forecast for the year. The homebuilder's stock, which has doubled in the past year, rose another 12.8% on the news, to close at $40.78 on June 20.