Current Column: Chicago Tribune — February 8, 2010
Breaking up Motorola hard to do
You bought the Droid.
And one day, if all goes according to plan, you can buy shares in Droid Inc.
Motorola Inc., parent of the Droid smart phone and its siblings, has said it will proceed with the spinoff of its struggling handset division, and it’s easy to imagine why.
This particular strategic option has much more momentum than the alternative of keeping the Schaumburg-based technology pioneer together.
Motorola is shrinking fast, shedding another 11,000 workers in 2009 as revenue plunged 27 percent. So if it’s going to be busted up, the parts might be worth more now than later, even if the economy recovers.
Co-Chief Executives Greg Brown and Sanjay Jha recently restated again their commitment to a breakup, with Brown telling analysts the pair has been “continually working on the appropriate structures for separation.” Although no one from the company would comment, the board of directors and activist shareholder Carl Icahn presumably will be keeping the pressure on as well.
The marketplace, however, may have other ideas. Before the “Moto-droid-a” spinoff becomes a reality, some big hurdles must be cleared. As analyst Bill Kreher at Edward D. Jones & Co. sees it, “It’s not going to happen until they can achieve profitability and really prove it is sustainable to investors.”
With the hand-held division losing money and unlikely to break even until the second half of the year, at best, Motorola as a practical matter can’t let it go without pumping in cash.
A new set of bids is said to be due in coming days for its set-top-box and cellular-infrastructure business, after a first round in November reportedly fell short. Proceeds would go to support handsets, as well as the two-way radio business that Motorola plans to keep, a business that got rolling decades ago under the old Galvin Manufacturing Corp.
Trouble is, set-boxes and networking makes money — operating earnings of $558 million in 2009. Motorola would miss that division, particularly if handset losses climb in the first half of the year.
But how else to raise cash? Over the years, the company has cut back on expenses, constraining the research and development that has been its traditional lifeblood. Employment has fallen to 53,000 from 64,000 at the end of 2008. Sales of $22 billion for 2009 were down by nearly half from the Razr-phone heyday of 2006.
Read complete columnCurrent Article: Chicago Tribune — December 28, 2009
Photo Gallery: feeding the hungry on Xmas
http://www.chicagotribune.com/business/chi-bix-christmas-dinner-dec23,0,7300139.photogallery
My Bio
Greg Burns is a senior correspondent specializing in business and economics at the Chicago Tribune. His column runs Mondays and Fridays. He previously served as the Tribune’s associate managing editor for business, responsible for financial news coverage, plus feature sections on real estate, jobs, transportation and personal finance. Before joining the Tribune, Burns wrote for Business Week magazine and the Chicago Sun-Times. He holds bachelor’s and master’s degrees from Northwestern University.
Read Greg’s complete CV.Past Work
Chicago Tribune Column — Feb. 4th, 2010
CME, CBOE seek security of exclusive indexes
With regulations looming that could weaken the financial might of U.S. exchanges, Chicago’s trading industry is counting on what’s commonly considered a sure thing.
From most angles, the exclusive right to list indexes such as the Dow Jones industrial average and Standard & Poor’s 500 looks like the safest bet around. But even those slam-dunk money-makers could be vulnerable under proposals taking shape on Capitol Hill.
Chicago’s CME Group Inc. is said to be bidding as much as $700 million for News Corp.’s Dow Jones index division, which reportedly generates licensing revenue of just $90 million annually.
The high price reflects monopoly power: Owning the indexes would enable the exchange to continue capturing practically all the volume while charging relatively high trading fees.
Similarly, the Chicago Board Options Exchange is banking on exclusive contracts such as its S&P 500 to boost results ahead of an expected initial public offering later this year. Most of its other core products face head-to-head competition on rival option marts.
It’s little wonder the exchanges seek a measure of certainty. The hopefulness of a year ago has given way to a sinking realization that changes aimed at Wall Street big shots could hurt as much as help the marketplaces.
Read complete articleChicago Tribune Column — Feb. 1st, 2010
No nibbles at perennial takeover bait Alberto Culver
Now here’s something new: Alberto-Culver Co. is not — repeat, not — on the verge of being acquired.
The word comes straight from JPMorgan Chase & Co., one of the biggest surviving investment banks.
After agreeing to buy a British skin-care company at the end of December, Alberto has become “a less-likely takeout candidate,” according to a recent JPMorgan report. In fact, the chances of a takeover appear to be “low.”
For decades, the Melrose Park-based personal-products company has dangled like bait for a hungry rival.
And for decades, no one has taken a bite. Alberto has stayed stubbornly independent in the face of a consolidating retail trade and ever-larger competitors, defying all reason from the investment-banking point of view.
It makes money. It grows. It zips around the ankles of the giant Procter & Gambles and Unilevers that so far have resisted paying the rich premium it would command.
Still, in recent years, speculation about its future has been continuous, and Alberto looked like a company that wanted to be bought.
Read complete article