A former Wal-Mart Stores (WMT) exec is taking the helm of Starbucks, (PTMK) and helped develop Wal-Mart's supercenter concept.
Smith presided over Starbucks throughout a time of bountiful growth. During his tenure, the number of Starbucks stores rose to more than 8,500, from 2,498.
Donald's job won't be so easy to pull off. He will take over at a moment when coffee prices are rising. So are health-care costs for Starbucks employees, who enjoy an attractive benefits package. To avoid a crimp on profits, Donald will have to come up with new ways to increase revenue beyond coffee and keep costs in check. For now, though, the cup looks more full than empty.
Corporate America is getting a breather. After months of debate, the Financial Accounting Standards Board on Oct. 13 agreed to delay the mandatory expensing of stock options for six months, until mid-2005. The reason: to give companies inundated with legal and regulatory shifts a chance to catch their breath. But the delay may give opponents of the measure more time to lobby for a change that would reduce the impact on profits or even an elimination of the expensing rule altogether. Despite growing political pressure, FASB remains adamantly opposed to both options. On Oct. 13, it rejected an alternative method for valuing options that would cut the cost by 80%; it approved the final rule by a 5-2 vote.
With a new hit on its hands, the computer-generated Shark Tale, DreamWorks is pushing ahead with an initial public offering that could raise up to $725 million. The animated studio, which had lost $183 million over the prior two years, had profits of $66.5 million for the first six months of this year, thanks to its summer hit Shrek 2. The big winner: billionaire Paul Allen, who will sell 6% of his 64% stake in DreamWorks Animation's A shares for an estimated $58 million. The company will be controlled by co-founders Jeffrey Katzenberg and David Geffen through super-voting B shares. Steven Spielberg, the third co-founder, chose not to be on the board to avoid making public his pay as a film director. He put a stake worth up to $170 million into a trust for his children.
Unlike the chief executives of many PC makers, Steve Jobs isn't singing the blues. Riding high on sales of its popular iPod music player, Jobs' Apple Computer (AAPL) on Oct. 13 said its fiscal fourth-quarter profits more than doubled, to $106 million, on a 37% jump in sales, to $1.72 billion. While sales of its Macintosh PCs rose just 6% from a year ago, Apple sold more than 2 million iPods, up 500% from a year ago. Apple also boosted earnings estimates for the current quarter, sending its stock up in after-hours trading.
The pitched battle between Intel (INTC) and archrival Advanced Micro Device (AMD) shows no signs of letting up. Intel on Oct. 12 reported a 15% gain in third-quarter earnings, lower than normal for the period, and predicted fourth-quarter results would be no different. The chipmaker blamed excess inventories at PC makers. But analysts point to AMD's growing strength in the microprocessor business (BW -- Sept. 30). A week earlier, it reported its third-quarter profit of $43.8 billion came largely on the strength in microprocessor shipments and a spike in prices. AMD plans to increase the pressure: On Oct. 13, Hewlett-Packard (HPQ) said it was adding AMD chips to its Media Center PC lineup, and BusinessWeek has learned that Gateway (GTW) also is considering adopting the AMD chips for some PCs and notebooks.
-- The SEC proposed new rules to curb IPO abuses.
-- Dutch grocer Royal Ahold (AHO) has agreed to settle U.S. securities fraud charges related to inflating profits.
-- Johnson & Johnson (JNJ) reported a 13% gain in third-quarter net income.
Big Mac is back. McDonald's (MCD) worldwide same-store sales rose 5.8% in the third quarter, even faster than last year's 3.9%. As a result, quarterly earnings will be 25% higher than expected. Wall Street ate up the news, sending shares up 5%, to $28.86, on Oct. 13.