Ford Motor CEO William C. Ford Jr. is kicking off another round of cost-cutting to offset the lower auto-industry sales expected in 2003. Anxiety about the pace of Ford's (F) turnaround and its ability to endure a tougher economy has roiled the carmaker's stock and bond prices recently. So the CEO is anxious to reassure investors. "I don't think we can count on a buoyant industry next year," he said. "We're re-attacking our nonproduct costs, because who knows what the next year will bring?"
Ford reported a $220 million operating profit for the third quarter, vs. a loss of $502 million a year earlier. Nearly all of the profits came from embattled Ford Credit, which is on the rebound. Still, the company's net loss was $326 million for the quarter, compared with a $692 million loss a year ago. The auto giant expects annual operating earnings of about $750 million, vs. last year's $782 million loss.
Despite Bill Ford's determination to cut costs, Standard & Poor's (MHP) put Ford's bonds on Credit Watch because of operating worries and underfunding in its pension plan. The reviled pop-up ad may be seeing its last days. America Online CEO Jonathan Miller announced the phase-out of one of AOL's (AOL) least favorite features at the Oct. 15 launch of AOL 8.0. The move is part of AOL's crusade to stem defections to rival ISPs. Meanwhile, archrival MSN has said it will moderate the use of pop-ups. While many Web sites accelerated their use of pop-ups as ad sales plummeted, they are discovering new promotional tools, such as longer banner ads. Hmmm. That may make some Net surfers wish for the return of the pop-ups. With two California teams, the Anaheim Angels and the San Francisco Giants, headed for the World Series, network TV executives don't expect this year to be a ratings blowout. Ratings for the autumn classic had their steepest fall in 2000, dropping 24%, to an average of 18 million viewers, in the series featuring two New York teams, the Yankees and the Mets. By comparison, last year's cliffhanger Yankees-Arizona Diamondbacks series drew an average of 24.5 million viewers, according to Nielsen Media Research.
Despite lower expectations, Fox (FOX) has sold out the first five games at an average of $325,000 for 30-second spots, up 8% from last year. Even if much of the country tunes out, viewing is expected to be huge in L.A. and San Francisco. Samuel Waksal, former chief executive and founder of ImClone Systems (IMCL), may have done the company a big favor by pleading guilty to 6 of 13 federal charges against him on Oct. 15. By taking responsibility for insider trading and bank fraud, Waksal has removed much of the onus from ImClone, now headed by brother Harlan. Although the New York company will still have to contend with shareholder lawsuits, ImClone will now be freer to focus on getting its experimental cancer drug Erbitux back on track.
ImClone is about to start enrolling several thousand patients in Phase 3 clinical trials for the drug and is awaiting the results of a Phase 2 trial conducted by its German partner, Merck (MRK), expected by yearend. There is still an outside chance, say analysts, that the Food & Drug Administration could act on Erbitux by the middle of next year if the results from the Merck tests are acceptable. Despite halting a six-quarter string of losses with third-quarter net income of 5 cents a share, Motorola (MOT) shares tumbled 22%, to $7.85, on Oct. 16. Investors were disappointed by the company's bleak forecast. Blaming slowing demand in the broadband, semiconductor, and wireless markets, Motorola expects to post a fourth-quarter profit of 10 cents a share, excluding special items, instead of the 14 cents previously projected. In what Chief Operating Officer Mike Zafirovski called a "tough environment," the company estimates 2003 sales of $27.5 billion, down from its earlier forecast of $29 billion. A onetime Enron (ENRNQ) wannabe, ailing Dynegy (DYN), announced Oct. 16 that it will dump its energy-trading business and decentralize. President Steve Bergstrom, one of the architects of the trading unit, is leaving. He had been viewed as a possible candidate to replace former CEO Chuck Watson, who left in May. Houston-based Dynegy, which expects to name a CEO in a few weeks, says the restructuring will reduce its collateral requirements. The move follows similar efforts to reduce or exit energy trading by Dynegy's rivals such as Aquila (ILA), Williams (WMB), and others. -- A federal judge ruled that Arthur Andersen must pay $500,000 for obstructing the government's Enron probe.
-- Credit-card issuer Capital One Financial (COF) sees fourth-quarter growth slowing.
-- Reuters (RTRSY) warned that it expects sales to decline 6%-7% in the second half of the year. Intel (INTC) sure knows how to rain on Wall Street's parade. The chipmaker took the sizzle out of a four-day stock rally with weaker-than-expected third-quarter profits and a warning that holiday PC sales will be slow. Shares promptly tumbled 18% on Oct. 16, to $13.54, as investors made sure to kill the messenger.