Biz People

Tough task for Jordan's successor

Michael H. Jordan (below), who rescued Electronic Data Systems Corp from bankruptcy in 2003, handed incoming Chief Executive Officer Ronald Rittenmeyer an unexpected act two: revive the turnaround Jordan started.

Electronic Data, the second-largest computer services company, has fallen 19 percent since reporting on August 1 that orders dropped 20 percent in the second quarter. Spending on new technology will slice into free cash flow, or cash profit from operations minus capital investment.

The report, Jordan's last as CEO, spooked investors and spoiled the chance for a smooth transition to Rittenmeyer, who took over on September 1. Analysts and shareholders looking for a quick bounceback are wrong. The stock may not rise for at least a year as Rittenmeyer retools the company to win more of the most profitable outsourcing contracts, said analyst Rod Bourgeois at Sanford C. Bernstein & Co in New York.

"Competition has gotten awfully fierce and you not only have to be the low-cost provider, but a full-service provider," said Diane Jaffee, fund manager at $10 billion Trust Company of the West in New York, which sold its Electronic Data shares in June.

Fixing Electronic Data may be the toughest challenge Rittenmeyer, 60, has faced after leading waste-management company Safety-Kleen Corp. and AmeriServe Food Distribution Inc through bankruptcy. He joined Electronic Data, based in Plano, Texas, in July 2005.

Firms may rise on activist's pressure

McDonald's Corp and Target Corp, under pressure from activist investor William Ackman (above right), may rise in New York trading today (Beijing time) after taking steps to boost returns for shareholders.

McDonald's, the world's largest restaurant chain, raised its dividend by 50 percent on Wednesday (local time). Target, the second-biggest US discount retailer, said it may sell its $7 billion in credit-card loans and increase stock repurchases.

The 41-year-old Ackman, McDonald's 11th-largest shareholder with a 1.6 percent stake, will collect $28.2 million from McDonald's $1.50-a-share dividend. He invested in the Oak Brook, Illinois, chain in 2005 and bought a stake in Target this year, discussing with management ways to lift their stocks.

Stake in Airbus firm not for sale

Lagardere SCA has no plans to sell its stake in European Aeronautic Defence & Space Co, the maker of Airbus aircraft, Chief Executive Arnaud Lagardere (right) said.

"Lots of people have approached us," he said in an interview. "We are not selling our stake in EADS. No one can decide for us whether we will sell the stake. We have to know what we want for EADS, and we want to make a European champion that is able to compete with Boeing."

EADS needs a defense business like Boeing Co, he said. Asked about prospects for combinations with Safran SA or Thales SA, he said, "If we choose only French companies, we will be making a fatal error." Boeing is the world's second-largest commercial planemaker after Airbus.

Lagardere, France's largest publishing company, yesterday reported a 28 percent jump in first-half profit at its media business.

(China Daily 09/14/2007 page16)