Reverse Spin: Merrill moves more than meets the eye

Hmm … Methinks someone might be shown the door a little earlier than expected.

Merrill Lynch & Co. Inc., the nation’s biggest securities firm, Tuesday named E. Stanley O’Neal president, putting him in line to succeed chief executive David Komansky, who is slated to retire in three years.

The move comes after Merrill’s board, which is said to be quite ticked off about the company’s poor financial performance of late, prodded Mr. Komansky, 62, to name a new president right away, according to some Wall Street observers.

Originally, Merrill wasn’t expected to name a new president until yearend.

For the record, Mr. Komansky insists he wasn’t strong-armed to pick a successor.

Mr. O’Neal will remain in charge of Merrill’s nearly 15,000 brokers – at least for a little while – but the competition for that job promises to be intense.

Merrill watchers say two prime candidates are Mr. O’Neal’s deputy, James Gorman, who heads the client relationship group, and Robert Mulholland, an executive director with the private-client group.

Economy still in slumber

Anyone who thinks Federal Reserve Board Chairman Alan Greenspan is being too aggressive in cutting interest rates, take note: The U.S. economy posted its weakest performance in more than eight years during the second quarter.

The Commerce Department on Friday said that gross domestic product – a thermometer to measure the nation’s economic well-being – climbed at an inflation-adjusted annual rate of 0.7% in the April-to-June quarter. That followed a 1.3% gain in the first quarter.

The second-quarter figure marks the economy’s most anemic quarter since a 0.1% contraction in GDP in the first quarter of 1993.

With numbers like that, it’s easy to see why Mr. Greenspan is hinting that more interest rate cuts may be on the way.

“The period of subpar performance … is not yet over, and we are not free of the risk that economic weakness will be greater than currently anticipated, and require further policy response,” the Fed chief told members of the Senate Banking Committee Tuesday.

The hunt is over

This fox got caught.

Eaton Vance Corp., the Boston money manager, said Thursday that it has agreed to acquire 80% of institutional money manager Fox Asset Management for about $62 million in cash and stock.

The deal calls for an initial payment of $32 million this year and payments of up to $30 million in 2005 and 2006 – contingent on the Little Silver, N.J., firm’s meeting financial performance targets.

Fat in the fire

So much for trying to look at the bright side.

Philip Morris Cos. Inc. on Thursday officially issued a big mea culpa for commissioning a study last month that concluded that the Czech Republic financially benefits from the premature deaths of smokers.

“For one of our tobacco companies to commission this study was not just a terrible mistake, it was wrong,” the New York company said in a statement.

“All of us at Philip Morris, no matter where we work, are extremely sorry for this. No one benefits from the very real, serious and significant diseases caused by smoking.” The study concluded that the Czech Republic saves $1,227 on health care, pensions and housing every time a smoker dies.

Cringe factor

Lately, hearing news about struggling telecommunications giant Lucent Technologies Inc. is like listening to fingernails on a chalkboard.

The company, based in Murray Hill, N.J., Tuesday posted a massive third-quarter loss and said it would pare its already decimated work force by 15,000 to 20,000 jobs.

Taking into account the Tuesday sales of its fiber-optic-cable unit and two plants, the latest job cuts will reduce Lucent’s work force to about half the 106,000 employees with whom it started the year.

Major disconnect

Is there no end to the telecom bust? Little more than a year ago, it seemed that JDS Uniphase Corp. and many of its industry peers could do no wrong.

But on Thursday the San Jose, Calif., company had many of Wall Street’s most unflappable analysts reaching for their aspirin and nitroglycerine tablets when it announced that sagging sales and large write-downs had led to a $50.6 billion loss for the latest year. It plans to increase job cuts to 16,000, from 9,000 it had announced earlier.

The staggering loss inspired a host of analysts to immediately lower their revenue targets for JDS and many investors to bail from the stock Friday.

The loss is believed to be the biggest one-year deficit ever posted by a company that is based in North America.