Kerry K. Killinger, who plays the trumpet at employee gatherings, is making plenty of noise these days. The CEO of Seattle-based Washington Mutual agreed on June 25 to buy New York's Dime Bancorp for $5.2 billion.
The 50-year-old Killinger, once an enthusiastic fixer-upper of old homes, now aims to remodel consumer banking in the Big Apple. WaMu, the nation's largest thrift, plans to lure middle-income New Yorkers with free checking accounts, no ATM fees, and friendly service. Killinger says his research shows that average New Yorkers are the most dissatisfied bank customers in the country.
Despite his success in other markets, Killinger may face his toughest challenge in New York. At the very least, the city's two bank giants--J.P. Morgan Chase (JPM) and Citigroup (C)--are formidable rivals with deep pockets. And New Jersey's Commerce Bancorp has vowed to use stellar customer service to woo the same customers he's targeting. The biggest question: Will hard-bitten New Yorkers embrace Killinger's warm-and-fuzzy service strategy? Flamboyant Texas investor Sam Wyly thinks he knows how to heat up revenue growth at software giant Computer Associates (CA): Fire the bosses. Wyly launched a proxy fight June 21 to take control of CA, which has struggled through flat revenues and accusations of questionable accounting practices. The company believes moving to subscriptions from upfront license fees is the answer. But Wyly, who owns about 1% of CA, says the problem is the "autocratic" management team of Chairman Charles Wang and CEO Sanjay Kumar, Wang's protege. Get rid of them, he says, and Islandia (N.Y.)-based CA can be fixed. Good luck. On June 25, Swiss billionaire Walter Haefner, who owns 21% of CA, backed Wang and Kumar in advance of the company's Aug. 29 annual meeting. Give Internet pioneer Marc Andreessen a little credit: The former Netscape co-founder puts his money where his mouth is. Even though Andreessen's Web-operations company Loudcloud (LDCL) fizzled in its March initial public offering--which went off at $6 a share--the 29-year-old chairman in June bought 1 million Loudcloud shares on the open market, the company disclosed on June 27. That bolsters Andreessen's stake to about 13%, with a value of roughly $20 million. Loudcloud's stock climbed 21% on June 27 to $2.45 on the news. In a slap to the publishing industry, the U.S. Supreme Court ruled on June 25 that newspapers and magazines must compensate freelance writers for articles that were sold to electronic databases without explicit permission. The decision, in Tasini v. The New York Times, was the first case in which the justices applied copyright principles to digital media. A lower court judge will now determine how much money the publishers owe the writers. The National Writers Union, one of the plaintiffs in the case, estimated that damages may be in the billions. Publishers say that number is greatly inflated. Toronto's Barrick Gold (ABX) snapped up one of America's oldest gold miners, Homestake Mining (HM), for about $2.2 billion in stock on June 25. The move turns the Canadian company into North America's biggest gold miner. Together, Barrick and Homestake produced 6 million ounces of gold last year. The merged outfit will rank behind only Britain's Anglo American (AAUK) in production. Barrick is known for its low production costs. Although Homestake's costs are higher, the companies together still turn out gold for just $156 an ounce, far lower than the recent $274 selling price. American Airlines (AMR) passengers are suddenly a first-class concern in Washington. On June 25, the White House confirmed that President Bush, as expected, will appoint a Presidential Emergency Board that would block a possible strike by flight attendants on July 1. If negotiations fail to produce a settlement by then, the union could face a 60-day wait before it can strike. Also going to bat for American passengers is the Justice Dept. On June 26, it said it will appeal a federal judge's decision to dismiss a predatory pricing suit against American. The federal government had charged American with slashing fares and adding flights to drive low-cost carriers out of its Dallas hub. American says it expects to win on appeal. -- The Nasdaq Stock Market will lay off 140 employees, or about 10% of its workforce.
-- Lucent (LU) and Nortel (NT) both won $1 billion contracts to supply wireless gear to Sprint PCS.
-- Pennzoil-Quaker State will restructure because of weak demand for auto products. Merrill Lynch's (MER) share price sank 11.3%, to $58.91, on June 26, after it warned that second-quarter earnings will be as much as 37% below consensus expectations of 82 cents per share. The drop reflected Wall Street's surprise that even America's No. 1 retail brokerage is having a tough time coping with weak markets. By June 27, its shares inched up to $57.86.