Ron Zarrella must love a challenge. After seven years, the head of General Motors' North American unit is returning to struggling Bausch & Lomb. Zarrella left as president and COO of the Rochester (N.Y.) eye-care company in November, 1994. A month later, BusinessWeek raised questions about B&L's accounting that eventually led to the resignation of its then-CEO and a restatement of 1993 and 1994 results. The SEC later found that the company had violated antifraud statutes and improperly overstated revenues. B&L has struggled ever since.
This time around, Zarrella will be chairman and CEO. Bausch & Lomb is counting on him to jumpstart revenues, still below their 1995 level of $1.93 billion. That won't be easy. The company faces a Goliath in Johnson & Johnson (JNJ), which has 55% of the U.S. contact lens market, vs. B&L's 10%. Worse, J&J's replaceable lenses are cutting demand for lens solution, which accounts for more than half of Bausch & Lomb's revenue. Zarrella's first job: devising a new strategic vision. Wall Street superstars beware: Credit Suisse First Boston's CEO John Mack, dubbed "Mack the Knife" for his aggressive cost-cutting, is tearing up guaranteed multiyear contracts for his investment bankers, including technology banking czar Frank Quattrone. On Nov. 13, Mack issued a memorandum to employees announcing that all investment bankers' pay packages will be tied more directly to the profits of the firm as a whole than to its divisions. With these changes, Mack wants to create a "one-firm" culture at CSFB. He also plans to save some $375 million over the next three years, on top of the $1 billion in costs he plans to wring out in 2002, partly by reducing the firm's global head count by 7%, or 2,000 jobs. Mack needs to move fast: CSFB is expected to report a $120 million operating loss for the third quarter on Nov. 20. AOL Time Warner (AOL) and Sony (SNE) have forged an alliance designed to enable consumers to conveniently connect all their Web-linked devices at home. The consumer-technology powerhouses are betting that more people will want to get broadband access when they can use multiple devices simultaneously and download music and other content from their PC to connected stereos, TVs, or other machines. Over the next few months, AOL and Sony will develop a "gateway" device that will link all the home machines, as well as an AOL microbrowser to navigate all of Sony's connected devices from handheld computers to camcorders. The dramatic reduction in air travel has forced ANC Rental, the parent company of Alamo Rent A Car (ANCX) and National Car Rental (ANCX), into bankruptcy. National, the No. 3 car rental company, has been struggling since September 11 because 90% of its business is linked to airline passengers. The company has cut its fleet by 35%, brought in a chief restructuring officer, and reached an agreement with lenders to defer $70 million in principal payments due Oct. 1--but it hasn't stopped the bleeding. VF (VFC) is getting out of the pool. The world's largest apparel maker plans to trim $115 million in annual costs by laying off 13,000 workers, or 18% of its workforce. The Greensboro (N.C.) maker of Lee and Wrangler jeans will take a one-time charge of $280 million to $320 million in the fourth quarter to cover the restructuring. "Our profitability remains at healthy levels," says company Chairman Mackey McDonald, "yet our return on capital has declined in recent years." To help improve performance, VF is putting its Jantzen swimwear line up for sale and consolidating its Bestform, Vanity Fair, and Vassarette intimate-wear businesses. It also plans to move more production overseas to lower-cost facilities. The past eight years have been miserable for Chiquita Brands (CQB), a $2.3 billion fruit marketer. In a last-ditch effort to stay alive, the 102-year-old company has worked out a deal to turn itself over to creditors in a debt-for-equity swap and file for bankruptcy. Banana baron Carl Lindner, who stepped down as CEO in August, blames the company's woes on "eight years of an illegal European import regime." Chiquita claims it has sustained $1.5 billion in damages since 1993 due to a long-running dispute over banana imports. Under a restructuring plan negotiated with bondholders, Lindner will have a seat on the new board of directors. -- Amgen (AMGN) won Food & Drug Administration approval for Kineret, an arthritis drug.
-- Tribune Co. (TRB) is freezing employee salaries and cutting the pay of 140 managers by 5%.
-- Newmont Mining (NEM) will become the world's largest gold producer via two acquisitions. Shares of Watson Pharmaceuticals (WPI) fell 39.5%, to $28.54, on Nov. 13 after it said it would shift its focus from generic to branded drugs. The move will cut 2002 earnings to $168.7 million-40% below analysts' expectations. To make the switch, Watson hired DuPont Pharmaceuticals (DD) veteran Joseph Papa as COO.