The pressure is building on Bristol-Myers Squibb CEO Peter Dolan. A June 13 congressional hearing on ImClone Systems raised questions about whether Dolan rushed into signing a $2 billion pact that awarded Bristol co-promotion rights to the biotech upstart's cancer drug Erbitux. The hearing revealed that some Bristol executives had doubts about the drug's regulatory prospects before the deal--concerns that proved valid after the Food & Drug Administration refused to accept the Erbitux application.
The ImClone investment isn't Dolan's only headache. Bristol's earnings are down due to generic competition and bloated wholesale inventories. And Bristol faces mounting lawsuits over its efforts to delay generic rivals. Now, some investors are expressing frustration that Bristol's board hasn't moved to replace the 46-year-old Dolan. "He hasn't done anything right since he has been in charge," contends Jon Fisher, head of equity research at Fifth Third Bank. Dolan could not be reached for comment. Fear of terrorists finally overcame worries about trial lawyers as the Senate voted on June 18 to give insurers a federal backstop in the event of any future terror attacks. Under the Senate plan, approved 84-14, the Treasury would pay almost 80% of the first $10 billion of damages, with the government's share rising to 90% in bigger catastrophes. That aid must be reconciled with a less-generous House-passed plan, which would give insurers low-cost loans to cover losses from terror attacks. The House and Senate may have an even harder time agreeing on lawsuit limits: The House bill shields businesses from terror liability, but Senate Democrats and Republicans deadlocked for weeks before approving much milder limits on suits. The White House favors tough limits but was eager to get any bill from the Senate. There's no shortage of ideas on how to reform corporate governance, but now the Conference Board is getting into the act. The business research group has corralled a blue-ribbon panel to examine ethical practices and governance issues. Peter Peterson, chairman of the Blackstone Group, and John Snow, CSX's chairman, will spearhead the effort. The group includes such big names as Intel Chairman Andrew Grove, former SEC Chairman Arthur Levitt, and Vanguard Group founder John Bogle. The committee expects to complete best-practice guidelines by September. Who'll have the biggest freezer in the ice-cream world? Swiss food giant Nestl? has proposed a $2.6 billion deal to merge its ice- cream business with Dreyer's Grand Ice Cream, grouping Nestl?'s H?agen-Dazs, Drumstick, and Nestl? Crunch brands with Dreyer's Edy's, Godiva, and Dreyer's ice-cream brands. The deal could increase Nestl? ice-cream sales to nearly $2 billion, just ahead of its Dutch rival Unilever, which two years ago outbid Nestl? to acquire Ben & Jerry's. There's at least one sticky issue in the proposed deal, though: Dreyer's carries Ben & Jerry's ice cream on its delivery trucks. If the combination is approved by regulators, Nestl? would become a distributor of Unilever's product. Still, Nestl? executives say they don't plan to kick Ben & Jerry's off the truck. Advanced micro devices confirmed on June 18 that it's nail-biting time for the chip industry. The semiconductor company joined rival Intel (INTC) in trimming forecasts for the second quarter, with both citing weakening consumer demand for PCs. AMD predicted sales may fall as much as 31% over the first quarter as seasonal PC purchases in May and June failed to materialize. With business spending on computers expected to remain stagnant in the second half of the year, the PC and semiconductor industry could have a hard time meeting expectations for a solid rebound. After long debate, Reston (Va.)-based XO Communications filed for Chapter 11 on June 17. The broadband communications provider submitted two alternatives. In one, XO's bank creditors would convert $1 billion in loans into equity, secured debt, and new funding. In the other, Forstmann Little and Tel?fonos de M?xico would provide XO with $800 million to pay off bondholders and continue operations. But Forst- mann and Telmex want out because they say XO has not met certain conditions. Until now, Forstmann and Carl Icahn had been fighting over control of XO. -- TRW (TRW) has struck a deal to sell its aeronautical unit to Goodrich for $1.5 billion.
-- Southwest Airlines (LUV) reaffirmed a 1980 policy requiring large fliers to buy two seats.
-- Marc Andreessen sold Loudcloud's Web-hosting business to EDS for $63 million. Apple Computer (AAPL) shares plunged 15%, to $17.12, on June 19. Why? The computer maker warned third-quarter earnings would be as much as 10% below earlier forecasts as red-hot demand for its flat-panel iMac computer cooled. Investors pushed the company's stock to its lowest level since October.