Briefs (right)New Suitor Makes Higher Bid
For Heart Device Maker
By Barry Meier and Andrew Ross Sorkin
THE NEW YORK TIMES
Boston Scientific made a surprise bid Monday to acquire the Guidant Corp. for about $25 billion in a bold move to snatch Guidant from Johnson & Johnson, which last month agreed to buy the device maker for $21.5 billion.
The offer could spark a battle for control of Guidant, the nation’s second-largest maker of implantable defibrillators and pacemakers. Last month, Johnson & Johnson sharply lowered its original $76-a-share offer for Guidant to $63.08 a share, after declaring that recent recalls and investigations involving its heart devices had damaged the company’s prospects.
Boston Scientific’s bid, which is worth $72 a share in cash and stock, reflects its view that Guidant’s problems are manageable and overshadowed by the potential for vast profits, particularly from defibrillators, a type of implantable heart device that is one of the fastest-growing and highest-margin medical devices. Guidant said in its most recent quarterly report that gross margins on all its devices averaged 78.6 percent.
Neither Johnson & Johnson nor Boston Scientific sells defibrillators or pacemakers, but both have expressed an eagerness to enter the market as a way of driving growth, especially as other product lines begin to slow. The two companies are competitors in the arena of stents, tiny devices that are used to prop open clogged arteries.
Verizon May Sell or Spin Off Directory Division Next Year
By Ken Belson
THE NEW YORK TIMES NEW YORK
Verizon Communications said Sunday that it was considering whether to sell or spin off its directory business so it can concentrate more on providing wireless, data and phone services.
Verizon’s board has authorized the company, the second-largest telecommunications carrier after AT&T, to hire bankers to explore its options now that its purchase of MCI is almost complete. The company could sell or spin off the directories group, Verizon Information Services, in 2006.
“This is the right time for us to take action that helps us sharpen our focus on our three network-based businesses,” said Peter Thonis, a Verizon spokesman. “This move will give them additional flexibility to maneuver in a fast-moving marketplace.”
Verizon Information Services publishes 1,750 directories in 44 states and Washington. The division also operates SuperPages.com, which it says is the nation’s largest online yellow pages. The division generated $3.6 billion in revenue and $1.7 billion in profit before taxes and other charges last year, and it employs 7,300 people. Sales fell 5.7 percent last year, and they may slip an additional 2.4 percent this year, according to the investment firm Sanford C. Bernstein.
Directory businesses are typically more profitable than many other divisions at phone companies like Verizon because they require far less investment in equipment. Automation and revenue from Web sites have also improved profitability for phone companies. Qwest Communications, the smallest of the four big Bell operating companies, sold its directory business for $7 billion in August 2002.
Airbus and China Announce
$9 Billion Order for Jets
By Don Phillips and David Lague
THE NEW YORK TIMES PARIS
Airbus and China announced an order worth 7.7 billion euros on Monday for 150 single-aisle A320 jets and said they would consider building an assembly line for the aircraft in China.
The long-expected Airbus order, worth $9 billion, surpasses recent orders in China for Boeing aircraft. Both manufacturers regard China and India as the two top markets for aircraft sales in the next decade, and China is already hotly contested.
So far this year, Boeing has won orders from China for 122 aircraft, valued at $11.7 billion. Before Monday’s announcement, Airbus had secured Chinese orders for 66 aircraft worth $8.3 billion. The A320, with a seating capacity around 140 built around a single aisle, is Airbus’ best-selling plane.
An assembly line in China would give Airbus, whose headquarters are in Toulouse, France, an important edge. Airbus and the Chinese government signed a cooperation pact on Sunday that commits Airbus to buy at least $60 million in parts a year from China by 2007, rising to $120 million a year by 2010. In July, Airbus also set up the Airbus Engineering Center in Beijing, which has so far recruited 54 of a planned 200 Chinese engineers.
Boeing signed an agreement for a 70-plane order during a visit to Beijing last month by President Bush. Boeing has since said it is in negotiations with the Chinese for 80 more planes. The company won an agreement in January from six Chinese airlines for the purchase of 60 of its 787 Dreamliners, which are scheduled to enter service in 2008.
Rumsfeld Says the Media Focus Too Much on Negatives in Iraq
By David S. Cloud
THE NEW YORK TIMES WASHINGTON
Defense Secretary Donald H. Rumsfeld said Monday that news media organizations were focusing too much on casualties and mistakes by the military in Iraq and were failing to provide a full picture of the progress toward stabilizing the country.
“We’ve arrived at a strange time in this country where the worst about America and our military seems to so quickly be taken as truth by the press, and reported and spread around the world, often with little context and little scrutiny, let alone correction or accountability after the fact,” he said in a speech at the Johns Hopkins School of Advanced International Studies.
His criticism of the press, a theme to which Rumsfeld returns frequently in public and private statements, came only a few days after the Pentagon acknowledged that it had paid Iraqi newspapers to publish news articles that presented a positive view of developments in Iraq.