White House Budget Director Mitch Daniels' May 6 decision to explore a bid for governor of Indiana opens the door for President Bush to name Clay Johnson, a longtime ally, to the job.
Johnson, 56, previously served Bush as White House personnel director and chief of staff in the Texas governor's office. His r?sum? includes stints with PepsiCo (PEP) Wilson Sporting Goods, and Horchow Collection, a mail-order retailer.
The Fort Worth native's personal connections may be his biggest asset. Bush spokesman Ari Fleischer describes Johnson as "the President's best friend from his high school days and forward." Still, Johnson faces resistance on Capitol Hill and inside the Administration from people who want someone with more budgetary experience.
If he's given the top job at the Office of Management & Budget, Johnson will replace an outspoken conservative who blasted lawmakers of both parties for their pork-barrel spending. Would this loyal Friend of George do better? Johnson may need some help: He acknowledges that his political instincts aren't always good. Dell Computer (DELL) has long opposed the drive to count stock options as an expense on its income statement. But with the Financial Accounting Standards Board moving toward requiring just that, the company seems to have given in. According to its proxy filed with the Securities & Exchange Commission on May 5, Round Rock (Tex.)-based Dell plans to move long-term executive compensation away from options and toward performance-based cash awards. Diane Posnak, a partner at compensation consultants Pearl Meyer & Partners, sees Dell's move as "a leading-edge trend." Although many technology companies have resisted the change, other industries have embraced alternatives to stock options, most commonly with restricted stock grants that become valuable only if an executive stays with the company for a certain period of time. Investors desperate for good news about severe acute respiratory syndrome have gone ape over tiny SciClone Pharmaceuticals (SCLN). On May 6, the San Mateo (Calif.)-based biotech announced that unexpected demand from China for its antiviral drug Zadaxin will push second-quarter sales to $15 million -- more than triple its revenues in the year-ago quarter. Zadaxin is approved to treat hepatitis in some countries and is in late-stage trials in the U.S. Still, SciClone urged caution, stating that there is not yet any clinical data proving Zadaxin's efficacy in treating SARS. Still, the company's shares jumped 30%, to $8.23, before settling back to $7.15 in the two days following the forecast. On May 6, Kmart (KMRTQ) emerged from bankruptcy protection after just 15 months. But is the Troy (Mich.)-based discounter ready for the tough battles ahead with rivals Wal-Mart Stores (WMT) and Target (TGT) Julian Day, who was appointed chief executive by the troubled retailer in January, 2002, sees no reason why Kmart won't succeed. His plan calls for Kmart to generate $955 million in earnings before interest and taxes in 2006, up from $75 million forecast for this year. It looks like a bit of a stretch, though. For the year ended on Jan. 29, Kmart racked up $3.2 billion in losses. Even excluding hefty charges for hundreds of store closings, the discounter lost $846 million. Kmart may have broken out of Chapter 11, but it still faces a long, hard road. The Food & Drug Administration may be taking a more flexible stance toward novel drugs. Although the agency raised questions about AstraZeneca (AZN) lung-cancer drug Iressa last fall, it approved the drug on May 7 for patients who have not been cured by other treatments. Iressa is the first of a class of closely watched biotech drugs that shut down growth factors in cancer cells, but clinical trials indicate it works in only 10% of patients. It has also been associated with some 250 deaths from pneumonia in Japan, where it was approved last year. European Union trade commissioner Pascal Lamy is giving Congress until Oct. 1 to get serious about replacing a tax subsidy for U.S. exporters that the World Trade Organization has ruled violates trade laws. If the U.S. has not made progress by then, Lamy warned on May 7 that on Jan. 1, 2004, he'll kick off a byzantine EU process to levy up to $4 billion in penalty tariffs against U.S. exports. It would be the largest trade retaliation ever under WTO rules. The WTO has already approved a list of retaliatory targets among U.S. exports, including many agricultural commodities. -- J.D. Power & Associates finds Detroit's auto quality rising, but it still lags Japan.
-- The U.S. Treasury lifted sanctions against doing business with Iraq.
-- Gillette (G) said terrorism fears drove up first-quarter sales of its Duracell batteries by 16%. Coca-Cola (KO) shares rose 5%, to $43.27, on May 7 after Morgan Stanley (MWD) analyst William Pecoriello raised his rating. He reckons Coke will benefit from a weaker dollar, a successful move into noncarbonated drinks, and the improving finances of its bottlers, which should be able to absorb any syrup price hikes.