"It is easier to resist at the beginning than at the end." -- Leonardo da Vinci
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It had to happen, but will it be enough? AOL Time Warner (NYSE: AOL) will lay off 2,000 employees to streamline newly merged America Online and Time Warner operations, adding to last week's announced 400 cuts at the CNN News Group. The jobs will come primarily from integrating website operations and information technology systems, though execs told The Wall Street Journal that all divisions were to look for possible employee savings. In a bonus for almost every one of the remaining 82,500 employees, the company will grant new stock options. Investors are watching closely whether this merger of new and old for can work, and clearing out some redundant operations makes sense. The AOL division will shed 725 people out of its pre-merger army of 15,000, or just under 5% of the total, mostly from its Dulles, Va. corporate HQ. AOL last saw such a chop when it acquired Netscape Communications in 1999 and axed 850 people -- half from the acquired browser prince. But AOL is a generous door closer, offering severance package reportedly including a minimum four months' salary and immediate stock option vesting. The company won't comment whether the same packages apply to employees from the Time Warner side of the house. Other cuts come from Warner Music Group, where 600 out of 13,000 will go. AOL Co-COO Richard Parsons told the Journal that "we are not touching the creative side of the house." Warner has lost its leadership status in the fiercely competitive industry noted for customers' ephemeral tastes. Time, Inc. will release 400 people from its 13,000, through subscription servicing center consolidation, and Warner Bros. film studio will shed 100 of 11,000 through website mergers. New Line Cinema plans to drop 100, or 20% of its staff, repositioning to make small- to medium-budget movies, according to Parsons. Little Nicky bombed to the tune of $50 million in losses, and Time Warner warns that this will pinch its Q4 top line growth. Seems Adam Sandler wasn't a big draw. Time Warner's New York HQ will lose 100 jobs, while Warner Bros. will continue to look for a way out of its store business. Time Warner Cable and Home Box Office won't cut beyond attrition. Whether more cuts will follow depends on the economy. Despite January's bump up in retail sales and Fed-inspired confidence from its mid-meeting rate cut, it's still not clear in which direction we're headed. Jeff Fischer added up AOL Time Warner's 2001 challenges in yesterday's Rule Breaker report. New to investing? Let The Motley Fool's Beginning Investing Online Seminar lead you to a profitable path. Register now! News to Go
Is there no end to Lucent shareholder pain? Telecom equipment maker Lucent Technologies (NYSE: LU) confirmed through a spokesperson that it will cut 10,000 jobs and take a charge of at least $1.2 billion in Q2. The cuts are part of a plan to chop $2 billion a year in expenses by Sept. 30, to turn the tide from Lucent's loss of $395 million, or $0.12 a share, for Q1 ending Dec. 31. With no rest for new management at the once-proud former AT&T (NYSE: T) unit, Lucent execs woke up this morning to a New York Times report that former CEO Richard A. McGinn left the company with $40 million sunk into an exclusive golf course complex. The company hoped to sell $1 million memberships to corporations, but the Times said that the "plan never materialized, though several high-ranking Lucent executives did play on the course." (Such a relief!) Lucent instead is seeking a buyer -- for which the company offers to be sole guarantor on a $45 million loan. Shares closed yesterday at $18.81, back to 1998 levels. Cable modem chip maker Broadcom (Nasdaq: BRCM) announced earnings after hours last night. Without acquisition and stock option compensation costs, EPS was $0.32, versus the Street consensus of $0.31. Revenue zoomed to $376 million from last year's Q4 total of $162 million, and the company predicts next-quarter sequential revenue growth of 22% to 23%, doubling for the year. Wow. Shares rose $4.63 during the day to $133.44, and hit $142.72 after hours, nestled between a two-week low of $72.38 and high of $275.75. Data storage giant EMC (NYSE: EMC) reported a 49% increase in Q4 profit, to $0.25 a share from last year's Q4 total of $0.17 a share, based on a 40% revenue increase to $2.62 billion from $1.88 billion. The company projected 33% to 38% revenue growth for 2001, over last year's 32% increase. EMC has recently entered head-to-head competition against Network Appliance (Nasdaq: NTAP) in the low- to mid-range server market. EMC stock closed up 4% to $79.56, gaining 46% since the beginning of the year. Motley Fool Research Analyst John Del Vecchio covers EMC for Fool Research. Sun Microsystems (Nasdaq: SUNW) and Microsoft (Nasdaq: MSFT) settled a lawsuit over a 1996 agreement giving Microsoft the right to license Sun's Java. Microsoft will pay Sun $20 million and may ship current products containing Java for seven years, though it may not use the Java trademark. The parties got the hint to settle when the trial judge issued an initial decision finding that Microsoft had infringed Sun's Java trademarks. It's hard to imagine that $20 million is more than a fly swat for Microsoft, which had cash and short-term investments reserves of $27 billion as of Dec. 31. Double your pleasure, double your fun was the word at Wrigley (NYSE: WWY), which met Street EPS estimates of $0.70 on net income of $78.4 million, against $0.64 a year ago. Western hemisphere sales dropped 4%, while Europe, Asia and Pacific sales were up 3%. The company announced a 2-for-1 stock split and a 9% increase in the quarterly dividend to $0.19 a share. Wrigley stock has beat the S&P 500 by 20% in the last year. Gum may not be high tech, but it apparently pays.
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