The Miami Herald from Miami, Florida on January 3, 1996 · 19
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The Miami Herald from Miami, Florida · 19

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Miami, Florida
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Wednesday, January 3, 1996
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19
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r f ' r A WEDNESDAY JANUARY 3 1996 THE HERALD 3C IBUSINESS'BRIEFINGI NATIONAL "fork: Chrysler can afford annual $2B stock buyback From Herald Staff and Wire Reports And Bloomberg Business News Chrysler Corp is “cash-flow rich” and could afford to buy back $2 billion worth of stock each year until the next recession says the automaker’s former chief financial officer — now a lieutenant to dissident shareholder Kirk Kerkorian “Its business mix gives it a huge intrinsic profit-margin advantage over its competitors” because Chrysler sells more trucks than cars Jerome B York said in a speech Tuesday to the Society of Automotive Analysts York is the former Chrysler and IBM finance chief who signed on four months ago to help Ker-korian’s Tracinda Corp push the automaker for bigger payouts to shareholders Kerkorian who tried and failed to take over Chrysler last spring is its second-largest shareholder He has asked for veto-power over three seats on the company’s board and is threatening a proxy battle at the annual meeting in May over that and other demands “Our hope is that we reach a negotiated settlement with the company” York said in an interview after his speech but he would not speculate on how the dispute might end Manufacturing slows in Dec Manufacturing slowed in December amid overall economic sluggishness but the contraction was not as deep as in November a survey of purchasing managers showed Tuesday Business activity at industrial companies weakened for the fifth consecutive month with new orders tumbling and inventories building up at some firms the National Association of Purchasing Management said The group’s overall index of manufacturing growth inched up to 473 percent in December from 466 percent in November An index reading above 50 percent indicates an expansion of factory activity while a reading below 50 percent indicates a decline NAPM officials said the small increase meant business for manufacturers like makers of electronics and apparel was declining at a slower pace than others Rates mixed in T-bill auctions Interest rates on short-term Treasury securities were mixed in Tuesday’s auction The Treasury Department sold $141 billion in three-month bills at an average discount rate of 504 percent up from 491percent last week An additional $ 1 40 billion was sold in six-month bills at an average discount rate of 503 percent down from 504 percent Etc John F Maher has been named chief executive of Great Western Financial Corp the California financial institution that operates the fifth-largest banking company in Florida Maher 52 had served as president and chief operating officer of Great Western James F Montgomery 61 foN mer chairman and chief executive retains the title of chairman Time Life named George Artandi president and chief executive succeeding John M Fahey Jr 43 who is leaving to explore other opportunities Artandi 54 is president and chief executive of Book-of-the-Month Club also part of Time Warner Artandi will continue in that post as well Time Life is a direct marketer of books music and videos Host Marriott Corp said it spun off its Host Marriott Services Corp unit into a separate company Host Marriott Corp will continue to own hotels and real estate while Host Marriott Services will operate concessions at airports on tollroads and at sports and entertainment attractions Gen eral Motors Corp said its GMC Truck division is dropping the word “Truck” from its name Officials said the name change is effective immediately and follows consumer research showing consumers don’t necessarily want to be reminded that they drive a truck IN THE AMERICAS Mexico stocks at record high Mexican stocks surged 54 percent Tuesday to a record closing high boosted by a stable peso a strong performance on Wall Street and bargainhunting by investors The market’s key IPC Index finished up 15096 points at 292943 The prior record close was 288117 on Feb 8 1994 before the December 1994 peso devaluation that rocked Mexican financial markets INTERNATIONAL CompuServe incident disputed German authorities say the CompuServe online service decided on its own which sexually explicit Internet forums to ban its 4 million customers from viewing In addition prosecutors reiterated Tuesday that they never explicitly threatened CompuServe with criminal charges The statements appear to conflict with CompuServe’s explanation Thursday of why it blocked access to 200 newsgroups But a CompuServe spokeswoman repeated the company’s initial explanation Tuesday saying German authorities specified which newsgroups should be banned THE STOCK MARKET Dow gains 60 points Stock investors searching for a hint of the future often look to January as a bellwether for the rest of the year If the first trading day of 1996 was any indication they had reason to smile Stocks rose strongly Tuesday led by blue chips and cyclical shares that track the the economy The Dow Jones industrial average which soared more than 33 percent last year rose 6033 points Tuesday to 517745 The Nasdaq composite index gained 652 to 105865 while the American Stock Exchange market value index rose 274 to 55097 THE MONEY LINE RRtMERATE 13-WEEK T-BILLS 26-WEEK T-BILLS S FLA AVG MONEY MARKET ACCOUNT S FLA 30-YR FIXED MORTGAGE RATE I t 850 504 503 259 729 f This battery battle may keep going and going The Wall Street Journal It’s not even on the market yet but already one of the most promising developments in batteries in years is generating controversy On Dec 14 the world’s two biggest battery companies announced virtually identical products: batteries for flashlights cameras and other electronic items that have built-in gauges showing how much power they have left When two points on a battery are pressed simultaneously a tiny switch inside the unit turns on an The US Patent and Trademark Office has mistakenly issued patents for the same idea — a built-in gauge that shows how much power is left in the battery — to competing inventors my indicator on the battery’s shell The problem is only one of the companies apparently holds legitimate patent rights to the breakthrough It seems that the US Patent and Trademark Office mistakenly issued patents for the same idea to competing inventors One battery behemoth Duracell International Inc of Bethel Conn licensed the built-in testing technology from Eastman Kodak Co which holds one of the disputed patents Arch rival Eveready Battery Co a unit of Ralston Purina Co did the same from the other patent holder Strategic Electronics of Reno Nev Now lawyers for all sides are trying to sort out the mess But Eveready and Duracell aren’t waiting — they’re revving up their marketing machines Both companies apparently have decided it’s more important to be in stores with the new batteries — and risk future penalties or other legal fallout — than let the other company reap a bonanza “These cases can take years to resolve” says Peter W Peterson a patent attorney representing Strategic Energy “They take forever” agrees Gregg Dwyer Duracell senior vice president and general counsel The new batteries are to be sold next spring Duracell initially will make them only in the AA size which is the most popular Eveready will offer them in AA C and D sizes “Test the power on the spot” trumpets Eveready’s advertising copy for its Energizer brand alluding to two green spots on the battery shell that show where to trigger the energy tester Duracell calls its new line “PowerCheck” batteries and likens its tester to a fuel gauge On Duracell’s version the more power a battery contains the longer a yellow stripe grows in a black box on the label On Eveready’s a sign reading “good” appears if the battery still contains at least 25 percent of its initial power Both units use essentially the same technology: An internal switch when activated creates a minute electrical current that warms ther-mochromic or heat-sensitive ink contained in the outer shell The process takes a few seconds For years industry researchers have been working on simple ways to indicate a battery’s strength Duracell features power-tester strips on some packages but the new batteries are more convenient and don’t require consumers to keep containers The new batteries are expected to sell for about the same price as current models Because both market-dominating companies will roll out the innovation prices are expected to be competitive As for the legal fight the stakes could be enormous Should the patent office decide that Strategic’s (Eveready’s) patent is valid “they could force us to cease selling” Kodak’s version acknowledges Dura- cell’s Dwyer If Strategic lost in what’s called an “interference” case it could face a patent-infringement ’ jaction filed by Duracell or Kodak Alternatively cross-licensing agreements might be negotiated — or the whole question could be rendered moot by further innovations Strategic’s inventors James R7 Burroughs and Alan N O’Kain received their first patent in May" 1991 according to Peterson of the' New Haven patent-law firm of Delio & Peterson Meanwhile an examiner in another section of the patent 1 office apparently unaware of that J action granted a patent to Kodak in October 1991 “They’ve acknowledged that there are two patents issued which disclose the same invention” Peterson says of the patent office Nonetheless he says the eventual loser will have no recourse against the government ' even though the error may cost it mil- lions of dollars As for the almost simultaneous announcements last month a spokeswoman for Duracell concedes that as soon as the company learned of Eveready’s news release it fired off its own “We wanted the trade to be sure to know we had it” too she says Associated Press “WE ARE RIGHT” With piles of documents in front of him Steven Parrish senior vice president of Philip Morris addresses reporters in Washington Tobacco companies filed 2000 pages of documents objecting to proposed FDA changes Cigarette makers blast proposed FDA rules WASHINGTON — (AP) — The five largest tobacco companies accused the government Tuesday of an “illegal power grab” by trying to regulate cigarettes with rules they said will cost $1 billion a year — paid mostly by retailers and advertising companies The cigarette makers submitted 2000 pages of arguments — and an additional 45000 pages of supporting research — to the Food and Drug Administration Tuesday the deadline for public comment on the FDA’s plan to curb teenage smoking by restricting how tobacco is sold and advertised The plan “strikes at many thousands of people in many thousands of businesses” said Philip Morris Vice President Steven Parrish “Make no mistake: In this fight we are not alone and in this fight we are right” But parents and children opposed to smoking were busy delivering last-minute pleas to the FDA too ' “We are amazed that people are so blind to see how easy it is for little kids to get cigarettes” said Morgan Lesko 1 3 who has been buying cigarettes since the second grade as part of Maryland’s efforts to expose illegal tobacco sales to minors And the attorneys general of 25 states said they can’t keep teens from smoking without federal help “Advertisements that encourage teen smoking undermine the laws and policies of our states” Connecticut Attorney General Richard Blumenthal wrote the FDA The FDA must consider and respond to each argument in devising its final tobacco rules As of Friday the FDA had received 570000 letters Form letters made up the bulk and aren’t considered separate votes on the rules so the agency listed 57000 different comments to consider before it received Tuesday’s mail The FDA couldn’t say how many people supported or opposed the rules “We will try and be as expeditious as possible” said spokesman Jim O’Hara It typically takes a year to finalize federal regulations The FDA wants to regulate cigarettes and snuff as medical devices that are intended to deliver an addictive drug — nicotine It proposed the restrictions to stop the 3000 US teenagers who begin smoking every day the government says 1000 of them will eventually die of a tobacco-related disease The rules include strong restrictions to limit cigarettes’ appeal to young people through sexy ads and the popular Joe Camel cartoon character as well as a ban on vending-machine cigarette sales and a requirement that cigarette companies pay $150 million a year educating teenw on tobacco’s hazards Stephan buys 6 brands for $12M STEPHAN FROM 1C going a restructuring acquired most of the brands when it purchased its Mennen subsidiary in 1992 “Colgate’s strategy is to focus on core brands” said Bob Murray vice president of corporate communications for Colgate-Palmolive The brand purchase is the latest for the Florida-based manufacturer which has grown substantially in recent years by acquiring other personal grooming products companies The company has also moved into ethnic products Sales in 1994 hit $245 million and revenue for the first three quarters of 1995 was running well ahead of the previous year The company produces shampoos hair treatments after-shave lotion dandruff removers and hair conditioners and sprays selling them to barber and beauty shops and retail distributors in the United States Shares closed Tuesday at $1650 up 88 cents 40000 jobs will be cut at AT&T AT&T FROM 1C package that included severance pay and a lump sum of up to 42 weeks worth of salary As of Friday’s deadline about 6500 had accepted the offer Those who chose not to accept knew that they could face involuntary layoffs with a smaller severance package The offer was made to South Florida employees in staff positions such as finance information systems human resources and public relations Johnson who turned down the package himself said he did not know of anyone who had accepted it More than half of the AT&T jobs to be cut are white-collar including supervisory administrative and marketing positions The rest are clerical and technical About 70 percent of the jobs are expected to be cut this year the company said Johnson expected that many of the South Florida employees affected would know this month and certainly before March 15 the last pay date for the first round of employees being cut involuntarily At&T said it would issue a new buyout offer to other employees to help decrease the number of job terminations needed But those who turned down the expired buyout offer won’t get another chance Although not the severest US corporate downsizing the cut is the deepest ever for AT&T The company has gradually shrunk to 300000 employees from 373000 at the start of 1 984 after the government’s order to spin off local phone service into seven regional telephone companies Last fall AT&T announced What happens to AT&T’s Latin America headquarters in Coral Gables still hasn’t been finalized that it was breaking into three separate entities — a communications services provider a communications equipment maker and a computer maker It said it would lay off workers beginning this month but had not specified how many That news “was a very big surprise and big shock” said Edgardo Lertora marketing communications vice president for AT&T's Latin America headquarters “This is really something new in the history of corporate America” Some analysts had predicted that 20000 to 30000 jobs could be cut The market cheered pushing AT&T shares up 17 percent since Sept 19 the day before it announced its restructuring adding about $155 billion to AT&T’s market value in less than four months Tuesday’s news was welcomed by some “It shows they are very serious about cutting costs” said Hersh Cohen who manages the Smith Barney Appreciation Fund which owns 14 million AT&T shares “This is a company that is doing everything right” “This is a key milestone that puts us right on track in our plan to create three new companies that will be positioned as strongly as possible to succeed in their -markets” said AT&T Chairman Robert E Allen — “I truly wish we didn’t have to " do this downsizing I understand how wrenching it will be for employees and their families But 1 the actions we are announcings today are absolutely essential if our businesses are to be competitive” Allen said in a message to employees But Kathleen A Pyne an AT&T records clerk in Basking Ridge NJ said the impending cuts were “like an ax hanging over your head” “I know several of my manag- ers have been offered the package - and I don’t think any of them have taken it Many have young--? families so it’s going to be pretty! tough” she said Under the breakup AT&T’s 1 communications services busiV-ness which includes long dis- tance cellular service and cred- it-card calling will retain the ?-AT&T name Names for the oth- ers have not been selected AT&T did not detail what the new voluntary severance package will offer to non-management workers but noted that many are covered by labor agreements that entitle them to as much as 104 weeks of pay depending on seniority A voluntary severance deal offered to such workers would probably be more enticing AT&T spokeswoman Eileen M Connolly said V All workers leaving will be entitled to a year’s health bene- fits and up to $ 1 0000 for retraining and relocation Associated Press and Bloom--berg Business News wire services contributed to this report 7 First Union pays $589B for First Fidelity of NJ MERGER FROM 1C nia Connecticut Delaware and Maryland First Union said it plans to raise its signs over those branches this summer First Union also acquired a London branch as part of the acquisition The branch which employs 33 people provides corporate banking foreign exchange correspondent banking and trade finance services Tony Terracciano chairman of First Fidelity joins First Union as president Terracciano will be one of three executives in First Union’s office of the chairman with Crutchfield and vice chairman John Georgius The merger didn’t trigger any management changes at First Union National Bank in Florida although Byron Hodnett chief executive of the company’s Florida operation served as the merger coordinator for First Union First Fidelity shareholders will receive 135 shares of First Union common stock for each share of First Fidelity they own First Union closed Tuesday at $55875 up 25 cents Based on Friday’s closing price of $55625 and First Fidelity’s 785 million shares outstanding the deal is worth $589 billion That represents the richest bank merger ever but the record is likely to fall soon after Chemical Bank and Chase Manhattan complete their merger That deal is valued at $1059 billion Lorenzo Bdnfi enrico bal harbour shops 866-4117 Meet a Great Dane with -personality Marmaduke dally on the comics page of The Herald SAVE MONEY! 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Call today and get comparative rates for up to 7 of the most competitive companies in America Creative Financial Management “a complete insurance shopping service” Call in Dade 447-2030 Elsewhere 1-800-444-0636 Save Money Good news You can save money on the purchase installation and maintenance of an AT&T phone system NOW Simply buy thru Miami Information Systems and SAVE Call Today Dade 477-6565 Brow 930-9293 Miami Information Systems Maintenance agreements - adds moves & changes available ? c o A Jt- - - - --

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