Companies in Brief
Apple: Lala Is Killed off, but May Rise Again
On May 31, Apple (AAPL) will shut down Lala, the online music service it purchased five months ago for $193.3 million, according to a notice posted on its Web site. Apple did not give a reason for the move. Analysts speculate that the company wants to integrate Lala's Internet cloud-based distribution technology into a future version of its iTunes store. Steve Jobs has stepped up the pace of acquisitions, with two deals inked in April, in an apparent attempt to fend off competition from Google (GOOG), which is also on a buying spree.
InterMune: U.S. Regulators Nix Lung Treatment
The FDA on May 4 rejected InterMune's (ITMN) application for a potential $1 billion-a-year lung treatment called Esbriet. The decision caused InterMune's stock to plunge close to 75 percent by the end of trading the next day. Regulators have asked the Brisbane (Calif.) drugmaker to carry out a new trial of the medicine to prove it delays progression of idiopathic pulmonary fibrosis, a condition that affects some 100,000 Americans.
Washington Post Co.: Turning the Page on Magazines
Washington Post Co. (WPO) announced on May 5 that it is exploring a sale of Newsweek magazine and has hired Allen & Co. as an adviser. The weekly posted losses from 2007 to 2009 and will continue to be unprofitable this year. Washington Post has been paring jobs at the magazine after cutting its guaranteed circulation to 1.5 million from 2.6 million last year.
Citic Securities: A Sino-Franco Alliance in Finance
Citic Securities, China's largest brokerage by market value, and France's Crédit Agricole are in exclusive talks to combine their global equity brokerage units and investment-banking operations in Asia. As a first step, CLSA Asia-Pacific Markets, which is 65 percent owned by Credit Agricole, would form a joint venture in investment banking and institutional brokerage with Citic. The partnership will yield mutual benefits: CLSA will leapfrog rivals including Goldman Sachs Group (GS) in one of the world's fastest-growing economies, while Citic will further its goal of expanding overseas.
BHP Billiton/Rio Tinto: The Taxman Wants a Bigger Cut
The Australian government's plan to boost taxes on mining companies will crimp earnings and perhaps even put a halt to expansion plans for giants such as BHP Billiton and Rio Tinto Group (RTP). The government figures that if the levy had been in place over the last decade it would have collected more than $30 billion in additional taxes from miners, whose profits have risen by $74 billion over the period. Other mineral-rich countries such as Chile and Brazil are also considering raising taxes on mining companies.
Nike: Upping the Score in China
In a May 4 meeting with analysts and reporters, Nike (NKE) Chief Executive Officer Mark Parker said the world's largest maker of athletic shoes will pursue acquisitions and partnerships with the goal of boosting annual revenue 41 percent by 2015. Parker wants to build up Nike's business in fast-growing developing markets. He's looking to double sales in China, which now contributes close to 10% of the company's overall revenues, within the next five years.
Avis Budget Group: Fighting for Control of the Steering Wheel
Dollar Thrifty Automotive (DTG) is suddenly the belle of the ball. The rental-car company agreed to sell itself to rival Hertz Global Holdings (HTZ) at the end of April for $1.27 billion. Then on May 3, Avis Budget Group (CAR) cut in, saying it wanted to make a "substantially higher" counteroffer. Avis may attempt a hostile takeover if Dollar's management doesn't allow it to peek into the company's books. Hertz is now under pressure to sweeten its bid for Dollar.