Week in Review
Boeing Ousts Chief Over Affair With Executive
Boeing Co. said it dismissed Chief Executive Harry C. Stonecipher, who had come out of retirement to restore the company’s tarnished reputation, after it learned that he was having an extramarital affair with a female executive.
The board demanded Stonecipher’s resignation after concluding that his relationship with the executive represented poor judgment on his part and “would impair his ability to lead.”
Stonecipher, 68, has not commented publicly.
Boeing took an unusually tough stance because Stonecipher had led a sweeping reform of the Chicago aerospace giant as it tried to recover from a Pentagon contract scandal that sent two executives to jail.
“He let everyone know that even minor violations would not be tolerated,” said Boeing Chairman Lewis Platt, “and when one does that, you have to live by that standard.”
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Japan’s Sony Picks Foreigner as CEO
Sony Corp. broke with convention and picked the head of its U.S. operations to replace Chairman and Chief Executive Nobuyuki Idei, marking the first time that the Japanese electronics giant has named a foreigner to the top job.
Directors elevated Howard Stringer, 63, chief executive of Sony Corp. of America, who for now also will continue to head Sony’s music and movie businesses. Idei, 67, resigned after nearly 10 years at Sony’s helm.
Sony’s board also tapped Ryoji Chubachi, who had overseen manufacturing operations and its components business, to replace President and Chief Operating Officer Kunitake Ando.
Sony said the changeover would occur immediately, although the appointments were scheduled to be voted on by shareholders June 22.
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ID Thieves Tap Files at Another Data Firm
Identity thieves have struck again, tapping personal data kept by information broker LexisNexis on more than 30,000 Americans, the company said.
Although apparently unrelated to a larger security breach at ChoicePoint Inc., the LexisNexis case prompted calls for tighter regulation.
LexisNexis, which is owned by London-based Reed Elsevier, said the identity thieves used stolen passwords to gain access to personal files containing names, addresses, Social Security numbers and driver’s license numbers.
Meanwhile, members of the Senate Banking Committee said they would press for new rules to protect the public.
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FCC Chief Exits as Bush Narrows Contenders
Departing Federal Communications Commission Chairman Michael K. Powell bade farewell to the agency he led through a thicket of controversies amid signs that the White House had narrowed to two the list of contenders for his job.
Bush administration officials are considering nominating FCC Commissioner Kevin J. Martin or Michael D. Gallagher, an assistant Commerce Department secretary for telecommunications, said FCC and industry sources. Both are Republicans.
Powell’s final meeting involved presiding over a vote by commissioners to extend “truth-in-billing” rules to wireless carriers, requiring that bills to consumers be “brief, clear, non-misleading and in plain language.”
Powell, who was often a lightning rod for critics, said that “government service is not lucrative; it takes a painful toll on you.” But, he added, “I’ve loved every single moment of it.”
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President of DirecTV Resigns Abruptly
The president of DirecTV abruptly resigned, a little more than a year after he was handpicked for the job by News Corp. Chairman Rupert Murdoch in the wake of his takeover of the satellite TV leader.
DirecTV executives said no successor would be named for Mitchell Stern. Sources said the company would be run by DirecTV Group Inc. Chief Executive Chase Carey and two News Corp. executives not yet named.
Sources said Murdoch was frustrated that DirecTV was not developing programming innovations or new channels.
Stern, who had been commuting between New York and the company’s El Segundo headquarters, said his bicoastal life had taken a toll on him and his family.
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Bronfman-Led Warner Music Files for IPO
Nearly a year after a group of investors led by Edgar Bronfman Jr. completed its purchase of Warner Music Group, the company took the first formal step toward going public.
A document filed with the Securities and Exchange Commission detailed plans to sell as much as $750 million of common stock in an initial public offering. The company did not say how many shares would be offered or at what price. Shares would be listed on Nasdaq or the New York Stock Exchange.
Bronfman, Warner Music’s chairman and chief executive, has been restructuring the company by cutting jobs and wages and slashing artist rolls.
In its SEC filing, Warner Music said proceeds from the IPO would be used to repay debt and for general corporate purposes.
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Critics Decry Any Role for Eisner in CEO Search
Dissident Walt Disney Co. shareholders Roy E. Disney and Stanley P. Gold alleged that company directors planned to let Chief Executive Michael Eisner sit in on interviews with his potential successors, making a “mockery” of the job search.
In an open letter to the board, the two said Eisner’s involvement would discourage candidates from applying, steering the search toward his choice, Disney President Robert Iger.
Spokeswoman Zenia Mucha denied that Eisner would participate in interviews with all candidates but did not elaborate.
A source close to the company said the board had discussed allowing Eisner to be present during interviews. Another source said that although Eisner would have a role in the search, candidates would have the option of interviewing without him present.
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Biogen Counsel Who Sold Shares Steps Down
Biogen Idec Inc.’s top lawyer, who sold shares the day the company told regulators that patients in a clinical trial of a multiple sclerosis drug had fallen ill, resigned.
A Biogen spokesman declined to comment on the abrupt departure of its executive vice president and general counsel, Thomas J. Bucknum. Bucknum could not be reached.
Biogen learned Feb. 18 that one patient, and possibly a second, had developed a rare and often fatal sickness after taking Tysabri, developed by Biogen and partner Elan Corp. Biogen reported the cases to the Food and Drug Administration. That same day, Bucknum sold 89,700 shares for $6 million, making a profit of $1.9 million, according to Securities and Exchange Commission filings.
Biogen said it was cooperating with the SEC in unspecified matters related to the withdrawal of Tysabri; legal experts thought the SEC could be looking at possible insider trading.
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Japanese Trade Panel Says Intel Abuses Power
Japan’s anti-monopoly commission accused chip maker Intel Corp. of abusing its market dominance by pressuring computer makers not to buy rival microprocessors.
The country’s Fair Trade Commission warned Intel that it could face prosecution if it failed to change its business practices in Japan. The company was given 10 days to respond formally to the charges. Intel executives denied wrongdoing.
The trade panel alleges that Intel violates anti-monopoly laws by offering discounts to five Japanese computer vendors on the condition that they restrict their purchases of processors from other manufacturers.
Intel said that its business practices were fair and that the Japanese commission had not taken into consideration antitrust principles commonly accepted around the world.
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Struggling to Recover, Fleetwood Ousts CEO
Fleetwood Enterprises Inc. replaced its chief executive, recalling from retirement a 30-year employee who helped build the company’s recreational vehicle business into an industry leader.
The Riverside-based company said Elden Smith, the 64-year-old former head of Fleetwood’s RV division, would replace Edward Caudill, chief executive since 2002.
The company has been struggling to recover from a persistent slump in manufactured housing.
The departure of Caudill, 62, comes after Fleetwood reported a wider-than-expected fiscal third-quarter loss and warned of a loss for the current quarter.
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U.S. to Take Over Some United Airlines Pensions
The federal agency that insures pension plans said it would take over the underfunded pensions of more than 36,000 current and retired ground workers at United Airlines, prompting a strike threat.
The Pension Benefit Guaranty Corp. said the ground workers’ pension plan was only 30% funded, with $1.2 billion in assets to cover $4.1 billion in promised benefits. It said United parent UAL Corp. had missed $363 million in payments to the plan.
Leaders of the ground workers union, the International Assn. of Machinists and Aerospace Workers, said they planned to meet Monday with United and the PBGC and threatened to strike if a compromise could not be reached.
