After being passed over for the top job at Coca-Cola (KO), Steven Heyer is checking into Starwood Hotels & Resorts (HOT). Heyer, 52, will take over from founder Barry Sternlicht as chief executive on Oct. 1. He is likely to push for further extensions of the hotel brands into retailing, spas, golf courses, residences, and other businesses. But first, he will have to learn to work with Sternlicht, who is sticking around as executive chairman and chief design officer -- in a bow to his passion for ideas ranging from the Westin's Heavenly Bed to the Sheraton's shampoo bottles. Among other things, Sternlicht says he was attracted to Heyer's reputation as a marketer and an innovator. Prior to joining Coke, Heyer was president of Turner Broadcasting System (TWX), where he helped to launch 14 new TV networks and 19 Web sites. With business on the upswing at Starwood, he will have the wind at his back for a while. But nurturing the house that Barry built while the former boss is still around could prove to be one of Heyer's biggest challenges yet.
Computer Associates International (CA) seems to be putting its accounting problems behind it, but for former CEO Sanjay Kumar the hard part is just starting. On Sept. 22, the Justice Dept. announced a settlement with CA, while the Securities & Exchange Commission charged Kumar with securities fraud. The Justice agreement ends a two-year probe into allegations that the company improperly recognized revenues. Under the agreement, CA will pay $225 million into a fund for shareholders. Justice agreed to defer prosecution of CA on criminal charges, instead putting the company on probation for 18 months. Kumar could not be reached for comment, but in the past he has denied any wrongdoing.
Eastman Kodak's (EK) painful transition to digital photography is bearing fruit. On Sept. 22, Kodak told investors it expects digital sales to grow at a compound annual growth rate of 36% between 2003 and 2007, substantially faster than its earlier forecast of 26% growth. To be sure, the traditional film business is fading fast. But by next year, Kodak expects that over half its sales will come from digital. As a result, it now expects total sales to grow at a 7% to 8% clip over the four-year period.
First Freddie Mac (FRE), now Fannie Mae (FNM). Federal regulators on Sept. 22 released a report that casts a dark cloud over Fannie Mae, the larger of the housing finance giants with $1 trillion in assets. The Office of Federal Housing Enterprise Oversight says Fannie massaged accounts to meet earnings estimates and in 1998 may have deferred $200 million in expenses so its execs, including Chairman Franklin Raines, could get bonuses totaling $4.8 million. OFHEO cast doubt on Fannie's 2001-03 earnings, which may have been overstated. If so, Fannie's capital levels may have been understated -- raising safety questions. The SEC has begun an inquiry to see if a restatement is needed, and Fannie's board hired former Senator Warren Rudman to advise a panel of outside directors overseeing the matter. A Fannie spokeswoman said the company declined to comment.
For Sony (SNE) and Nintendo, there's no letup in the console wars. Nintendo's new dual-screen Game Boy Advance handheld will hit U.S. stores on Nov. 21 at an aggressively priced $149. Not to be outdone, Sony will sell a redesigned PlayStation 2 console that is half the current size, with the price remaining at $149. Sony's move is aimed at tempering a decision to launch its new PlayStation Portable, or PSP, handheld only in Japan this holiday season. Nintendo hopes to sell 4 million units by March, before PSP, hits the U.S.
-- AIG (AIG) said the SEC may bring civil action against it for allegedly helping PNC Financial (PNC) hide bad loans.
-- The FCC fined Viacom's CBS (VIA) $550,000 for Janet Jackson's breast-baring Super Bowl halftime show.
-- General Motors (GM) plans a late-month sales blitz with six-year, 0% loans.
Charley, Frances, and Ivan have been beating up Wendy. On Sept. 22, burger chain Wendy's International (WEN) warned that the hurricanes, along with higher beef prices, have hurt third-quarter profits. The news sent shares skidding 6%, to $33.34.