The Irish Independent reports that the the IDA was last night making a desperate 11th hour bid to save up to 900 jobs at a major multinational company.
Industry sources said the jobs are on the line at document processing giant Xerox (Europe).
Their work is due to be outsourced to computer giant IBM starting next month. Under the plan, they would become IBM employees but remain at their present workplace.
But now the staff have been told their new employer is already planning to make them redundant.
The jobs are at Ballycoolin industrial estate in Blanchardstown, Dublin - where Xerox currently employs more than 1,200.
The decision to outsource followed a three-month Xerox review of its operations here as it grappled with rising costs.
But the Irish Independent has learned that IBM now plans to further outsource those jobs to a cheaper location in central Europe.
It is understood that IBM is planning to introduce the redundancies in two tranches of 450 workers over the next two years.
Last night, the IDA was trying to negotiate with IBM to save as many jobs as possible.
These developments follow five weeks of negotiations involving the former Xerox workers.
Employee representatives were called to a meeting with Xerox on Monday.
They were told the jobs would be integrated into IBM's 'global delivery network'. But the Irish Independent has learned the extent of the potential losses.
The redundancies come after thousands of jobs have been lost here to cheaper locations in eastern Europe and Asia.
Workers at Xerox's centre in Dundalk, Co Louth will not be affected by the IBM deal. Higher wages, as well as growing inflation, are putting increased pressure on multinationals.
A number of call centre jobs have been lost to lower-cost economies over the past number of years.
The Irish Independent also reports that over €740m was wiped off the value of Bulmers/Magners producer C&C yesterday when the company issued its second profit warning in less than three weeks.
At one stage, the shares were down 27pc within a 10-minute period as they recorded their biggest slide ever.
The stock finished the day down over 27pc at €6 when nearly three quarters of a billion was wiped off the value of C&C.
The company said the impact of the bad weather both here and in Britain meant that its half year operating profit, for the period ended August 2007, will be down about 35pc on the previous year - 25pc higher than the guidance given in mid-July.
Chief executive Maurice Pratt told analysts in a conference call that July volumes of its Magners premium cider product were off 30pc.
In the more mature markets of the Republic and Ireland in the June/July period, volumes were down 16pc and 17pc respectively.
He told analysts that the drop in those two markets was "unprecedented" and that the company had never seen volumes fall "of that magnitude".
While the main reason for the drop in Britain was the bad weather, he added that competition, mainly from Scottish & Newcastle, was also an issue.
In the conference call he added the company would attempt to offset these losses by cutting cost, but he said C&C would be maintaining its Magners marketing campaign.
Yesterday, he said he would not give any guidance on the second half of the year, although some analysts have speculated that the overall cider market for the second half would be a couple of points down.
Analysts said yesterday the news came as a surprise given that the company said in mid-July that full year profit would be the same as last year.
They are now expected to weigh up the relative importance of the bad weather and increased competition.
Last week Diageo chief executive Paul Walsh said the current vogue for cider could be just another fad. "Cider will be there, but I'm not sure the boom we've seen is a sustainable proposition," he said.
But Simon Russell, a spokesman for the National Association of Cider Makers in Britain, has insisted that cider is here to stay regardless of Magners difficulties.
C&C said yesterday that the operating profit guidance does not include its soft-drinks unit which it is selling to Britvic.
Other C&C products include Tullamore Dew whiskey.
The Irish Times reports that a retired chartered accountant who was criticised in the Ansbacher inspectors' report on illegal off-shore accounts has been disqualified, on grounds of unfitness, from involvement in the management of any company for five years.
In the High Court yesterday, Mr Justice Brian McGovern issued the disqualification order against John J (Jack) Stakelum after finding the evidence established Mr Stakelum had engaged "in a calculated way" in activities which facilitated tax evasion and had used an elaborate scheme to conceal monies from the Revenue authorities.
Mr Stakelum went so far as to destroy all records when he retired in 1998, the judge said. He "simply did not accept" that Mr Stakelum, as a chartered accountant, was unaware of the implications of this.
On that ground alone, Mr Stakelum's conduct displayed a lack of commercial probity, he found.
In addition to the requirement that conduct complained of must display a lack of commercial probity before a person may be disqualified, a deterrent element may also be necessary in certain circumstances in deciding whether to disqualify, the judge said.
In this case, there was evidence that Mr Stakelum had engaged in secretive conduct to facilitate tax evasion. He was satisfied the evidence established that Mr Stakelum was unfit to be concerned in the management of a company.
The disqualification order was sought by the Director of Corporate Enforcement arising from the inspectors' report on the affairs of Ansbacher (Cayman) Ltd and related matters from 1971 to 1999.
The inspectors found evidence tending to show that the affairs of Ansbacher were conducted with intent to defraud the Revenue and that Ansbacher may have committed a number of criminal offences, including conspiracy to defraud.
They concluded that Mr Stakelum gave assistance, but not "knowing assistance", to Ansbacher in carrying out its Irish business.
The inspectors found that Mr Stakelum had provided a deposit-taking service, that some deposits were held offshore, that he provided a withdrawal service in Ireland, made use of a non-interest bearing account to hide that business from the Revenue and that the service was carried out in secrecy. The inspectors concluded that Mr Stakelum, acting through Clyde Enterprises (formerly Business Enterprises) operated a current account in an AIB branch which did not attract interest.
When he received an Irish pounds deposit from a client, he lodged it into the Clyde account where it was incorporated into a float of funds until another client wished to withdraw money from an offshore account.
Mr Stakelum would give funds to the late accountant Des Traynor who moved them offshore. The withdrawal would then be funded out of the float. The inspectors found evidence tending to show Mr Stakelum that provided a mechanism whereby Irish residents could withdraw their offshore funds here and concluded that he carried out that business with intend to defraud the Revenue.
Mr Justice McGovern rejected arguments that because section 160 of the Companies Act came into effect on August 1st, 1991, the court could not take account of conduct before that date. In any event, he was satisfied there was evidence that at least some of Mr Stakelum's criticised activities occurred after August 1991.
He also rejected arguments that because the activities complained of occurred a long time ago and Mr Stakelum had not benefited from them, is retired and no longer engaged in business, the court should not make a disqualification order.
The Irish Times also reports that non-executive directors' support flies in the face of a unanimous Supreme Court ruling.
In the face of a unanimous Supreme Court ruling that DCC executive chairman Jim Flavin illegally held insider information when selling the firm's stake in Fyffes, the company is defending Mr Flavin by selectively invoking favourable aspects of the High Court ruling in the case.
Despite the clear conclusion of the highest court in the land, DCC's non-executive directors have unanimously given Mr Flavin their full support. This vote of confidence comes from some of the most senior business people in Ireland, among them former Bank of Ireland chief executive Maurice Keane and former AIB chief Michael Buckley.
They have been unstinting in their support for Mr Flavin, even though the ruling of the Supreme Court has the effect of overturning the High Court judgment at large. To back him, they are relying exclusively on a narrow part of the High Court ruling that was not appealed by Fyffes and was, therefore, not tested by the Supreme Court.
In correspondence with the Irish Association of Investment Managers and in a stock exchange statement, DCC said the Supreme Court ruling "did not imply that Mr Flavin had used price-sensitive information" when selling the Fyffes stake.
Making reference to citations of Miss Justice Laffoy's High Court ruling by the Supreme Court, DCC underlined the finding of the lower court that "the evidence is not open to the interpretation that Mr Flavin used the information". DCC also underlined the High Court finding that the "information simply had no bearing on the share sales".
DCC said such findings of the High Court stand. "No appeal was made against the strong findings of the High Court on this matter and the Supreme Court judgment did not interfere with them." However, this ignores the fact that the Supreme Court was silent on that question because it simply did not examine it.
"No appeal was brought from this decision and so the matter is not before this Court," said Mrs Justice Denham in her judgment.
For all their eminence and seniority, DCC's non-executive directors were themselves silent on the core finding of the Supreme Court that Mr Flavin was in breach of the law when selling the Fyffes stake.
Mrs Justice Denham said the wording of the relevant part of the 1990 Companies Act was plain and clear. "The section provides that it shall not be lawful for a person who is connected with a company to deal in any shares of that company if by reason of his connection with that company he is in possession of information that is not generally available and which is likely materially to affect the price of those shares," she said.
"The test, as to whether the information is likely to affect the price of the shares, is objective. Thus the subjective view of Mr Flavin is not the test, nor is the view of the directors the test. The test is whether the information would be likely materially to affect the price of the shares, if it were generally available."
Mr Flavin held trading reports which were not generally available and those reports constituted bad news for Fyffes, according to the High Court.
DCC made a profit of €85 million on the transaction. Between legal fees and damages, the company could now be facing a bill for €110 million. That DCC claims its aggregate liability will not exceed €50 million suggests the firm is still likely to take a significant financial hit as a direct result of Mr Flavin's actions.
The judgment casts new light on a case that was previously referred to the DPP.
The company is already facing fresh scrutiny from Director of Corporate Enforcement Paul Appleby, who indicated yesterday that his office was examining the ruling.
Mr Flavin and DCC's board want to tough it out. The wisdom of that course will be determined in the future.
The Irish Examiner reports that women are starting families later in life with most first-time married mothers in their 30s, new figures have revealed.
Official births, marriages and deaths figures for last year also show how one-in-three Irish babies are born out of wedlock — the highest rate since records began in 1864.
According to the Central Office of Statistics (CSO) figures released yesterday, the average age for a married woman having her first child is 31 years and five months.
The average age of a first-time unmarried mother is 25 years and two months while the average age of all first-time mothers is 28 years and eight months.
Last night, Fine Gael family affairs spokesman David Stanton said the Government faced a potential population time bomb unless ministers inquire into and address the financial and social reasons for adults starting a family later in life.
“It may very well be that people are putting off the decision to have children until they are more economically secure. But if people leave it later in life to have children then they could be having fewer children and that could lead to a demographic problem of a declining population.”
CSO figures show Ireland’s long-term fertility rate is 9.5% below what is required for the population to replace itself over the coming years, indicating a potential for a declining population. But last year the number of registered births came to 64,237 while the number of deaths was 27,479, giving Ireland its largest natural increase in population since 1982.
The report also revealed a declining trend in under-age girls getting pregnant. Last year, 48 schoolgirls aged 15 and under had a baby, down from 67 girls in 2001.
Last night, the Rape Crisis Network of Ireland (RCNI) called on the Government to address as a matter of urgency the loopholes in statutory rape laws.
RCNI spokeswoman Clíona Saidléar said: “This is a child protection issue (for the young mothers) and they remain at risk until the country sorts out the statutory rape laws.”
The office of the Minister for Children said an all-party committee was being set up so TDs could look at changing the Constitution to expressly forbid sexual acts between minors and adults.
The Financial Times reports that Germany’s leading industry lobbyist warned Berlin on Tuesday not to follow France’s lead in raising the state’s influence on the economy in response to the challenges of globalisation.
Jürgen Thumann, the chairman of the BDI industry federation, told the FT in an interview the “economic patriotism” championed by Nicolas Sarkozy, the French president, was among the factors fuelling a protectionist zeitgeist in Europe.
“This zeitgeist exists. But I do not have to follow the zeitgeist. On the contrary, it encourages me even more to fight the temptation of protectionist measures.”
“We cannot on the one hand call for the liberalisation and deregulation of European energy markets while on the other hand granting France an exemption,” Mr Thumann said, alluding to EDF, France’s state-owned electricity utility, which enjoys a monopoly at home but has been acquisitive abroad.
Mr Sarkozy’s protectionist tone, his hands-on industry policy and his free-riding foreign policy moves have ruffled feathers in Berlin. German officials this week called his offer, last week, to provide up to three nuclear reactors to Libya “immoral”.
Yet the challenges of globalisation, which inspires as much fear in the German public as in the French, have led to contradictions.
That was illustrated by Mr Thumann’s endorsement of Chancellor Angela Merkel’s plans to shield industry from investments by cash-rich foreign governments, raising the likelihood of a decision on erecting such protective measures next month.
Mr Thumann said the government should set up a mechanism modelled on the Committee on Foreign Investments in the United States, which vets foreign acquisitions of potentially strategic US assets.
Business leaders have had difficulties squaring their calls for state protection against unwelcome investors with their rejection of protectionism in principle.
Mr Thumann, whose family business, Heitkamp & Thumann Group, controls more than 50 per cent of the world market for battery components, is keenly aware of the importance of open markets to Germany’s powerful export-led recovery.
“We support the free movement of capital and oppose all barriers to investment. Our motto is: no protectionism,” he says.
“The only thing I’m saying is that when state funds, for example from Russia and China but not only from these countries, seek to invest in key industries or companies in Germany and other countries, then I can understand that the government sees a certain need for control.”
Mr Thumann is less preoccupied with potential threats to national security and more concerned about foreign states siphoning off know-how and patents.
“We cannot rule out the possibility that states may have other interests than private investors and do not follow the rules of the market,” he says.
Flushed with currencies from their booming exports, China, Russia and other emerging countries have created state-controlled funds holding an estimated $2,500bn (€1,800bn, £1,200bn), according to Morgan Stanley. The danger, Mr Thumann says, is that while private-sector investors seek high returns, states are guided by political motives.
Politicians have focused on the risks posed by sovereign wealth funds. But Mr Thumann says state-owned companies are equally problematic. A large German investment by Gazprom, the Kremlin-controlled gas giant, would be acceptable only “as long as we are convinced that Gazprom acts like a company and is being managed as a company and not exclusively and directly as an instrument of the Russian government”.
The “universe” of sectors that enjoy protection should “be kept small” and should not include banks or even energy companies. “What should be clear is that we are not talking about industrial policies à la française.”
The FT also reports that US stocks tumbled in late trading on Tuesday as investors responded to more bad news about the subprime mortgage market, bringing an end to the worst month for US equities in three years.
Stocks gave back earlier gains as two mortgage insurers warned of a possible $1bn subprime loss and shares in American Home Mortgage Investment, a leading lender, plunged 90 per cent after it said it could no longer fund home loans.
Several hedge funds were hit by subprime mortgage losses and – in a demonstration of the extent of the turmoil – the German state bank, KfW, said it would bail out IKB, a German lender with US subprime losses.
The S&P 500 index fell 1.3 per cent to 1,455.19, bringing its loss for July to 3.2 per cent, its worst month since July 2004. It also marked the first time that the benchmark had fallen in consecutive months since March-April 2004. The yield on the 10-year Treasury bond fell six basis points to 4.74 per cent, its lowest level since May as investors sought the safety of government debt.
Larry Kantor, of Barclays Capital, said: “Problems in the structured credit markets are still unfolding, and it is hard for anyone to know when it will end or how much damage will ultimately result.”
American Home, which boasted a book value of nearly $20.6bn at the end of the first quarter, warned last week that it had to pledge more cash to its lenders after suffering losses. Its shares plunged as they resumed trading yesterday after a halt that lasted a day and a half.
American Home’s problems were particularly worrying because it specialises in “Alt-A” borrowers, consumers with credit ratings one step above the subprime designation assigned to people with particularly tarnished credit histories.
It emerged on Tuesday night that Bear Stearns, which has seen two of its credit hedge funds implode in recent weeks due to their exposure to the subprime market, has suspended investor withdrawals from a third hedge fund.
The problems at the Bear Stearns Asset-Backed Securities fund, which has about $850m of prime and Alt-A securities, was first reported by the Wall Street Journal. Bear Stearns said the fund had no leverage and that it did not believe it was “prudent” to sell assets to meet redemptions in the current market environment.
Moody’s said on Tuesday it was “refining” its rating methods for Alt-A mortgage loans in response to rising delinquencies. It said weaker Alt-A loans were performing like stronger subprime loans, “signalling that underwriting standards were likely closer to subprime guidelines”.
Mortgage Guaranty Investment Corp and Radian Group, two mortgage insurers, slid after they said their combined investment of more than $1bn in a subprime mortgage company may be worthless.
MGIC and Radian said they could be forced to write down their entire investments, valued at $516m and $518m, respectively, in Credit-Based Asset Servicing and Securitization (C-Bass), an issuer, servicer and investor in credit sensitive mortgage assets. C-Bass said the state of credit markets meant it had been subject to an “unprecedented amount of margin calls from our lenders”.
MGIC shares fell 15 per cent to $38.63 while Radian’s sank 9.9 per cent to $36.21. Fitch Ratings downgraded the insurer financial strength rating of MGIC to AA from AA+ and said it had placed Radian’s debt ratings on rating watch negative.
Hedge funds also suffered. Braddock Financial of the US said it was closing its $300m Galena fund after subprime losses. Another fund said to have suffered is Highland Capital’s special opportunities fund, which was down 17.5 per cent in June.
Australia’s Macquarie Bank said investors in one of its mutual funds could lose up to 25 per cent of their money. Separately, Axa insurance group has also warned that two of its funds have been badly dented.
The New York Times reports that Rupert Murdoch finally won his long-coveted prize yesterday, gaining enough support from the deeply divided Bancroft family to buy Dow Jones & Company, publisher of The Wall Street Journal and one of the world’s most respected news sources, for $5 billion. Dow Jones said early today that the companies had signed a definitive merger agreement after the boards of both companies voted last night to approve the deal.
For Mr. Murdoch, the verdict represents the pinnacle of his long career building the News Corporation into a $70 billion media empire that already includes more than 100 newspapers worldwide, satellite broadcast operations, the Fox television network, the online social networking site MySpace and many other parts.
Combined with the planned beginning of the Fox business news channel in October, the purchase of Dow Jones makes Mr. Murdoch the most formidable figure in business news coverage in this country, perhaps worldwide.
It also gives a larger voice in national affairs to an owner whose properties often mirror his own conservative politics.
The decision signals the end of an era for Dow Jones and the Bancroft family, an intensely private clan that for generations had allowed The Journal to operate independently and become one of the nation’s most prominent and trusted newspapers, even as its finances deteriorated.
Dow Jones said today that family trusts and family members representing about 37 percent of the total shareholder vote had committed to support the deal.
For four months, some three dozen members of the family had engaged in an intense, sometimes tearful debate about The Journal’s future, at times pitting siblings against one another and children against their parents.
The final decision was in doubt well past the 5 p.m. Monday deadline set for the family. In a twist in already tortured negotiations, some family trustees demanded that the News Corporation pay the fees for the family’s bankers and lawyers — which could reach $40 million — in return for their support. After an exhausting night of conferences calls, the deal was made.
James B. Lee of JPMorgan Chase & Company, who has represented clients in some of the biggest deals in history, said of Mr. Murdoch, “nobody else I have ever banked could have pulled it off.”
For the rest of the industry, the deal, which follows the recent sale of Knight Ridder and the pending sale of the Tribune Company, again raises the question of whether newspapers can exist independently of giant media conglomerates, as advertising dollars migrate to the Web and readers have access to vast new sources of online information.
Mr. Murdoch has talked of pumping money into The Journal, bolstering its coverage of national affairs and its European and Asian editions, which could pose a serious challenge to competitors like The Financial Times and The New York Times. That could mean losing money in the short run, something Mr. Murdoch has always been willing to do to attract readers and gain influence.
Some Dow Jones employees see having such a wealthy, engaged owner as an improvement after years of uncertainty. Still, there was no official announcement at The Journal’s newsrooms, where some reporters mourned the loss of independence.
“It’s sad,” said a veteran reporter at one of the domestic bureaus, who did not want to be named because of concerns over his career. “We held a wake. We stood around a pile of Journals and drank whiskey.”
News reports of the deal initiated an outpouring of comments on The Journal’s own Web site, many critical of the News Corporation, and some regrets from other shareholders.
“It’s a bad thing for Dow Jones and American journalism that the Bancroft family could not resist Rupert Murdoch’s generous offer,” James H. Ottaway Jr., a former Dow Jones executive and a major shareholder, said yesterday. “I hope Rupert Murdoch, and whoever follows him at News Corporation, will keep his promises to protect and invest in the unique quality and integrity of The Wall Street Journal, Barron’s and all the Dow Jones electronic news services.”
It will most likely take three to four months for the transition in ownership to take effect. At the family’s insistence, the News Corporation has agreed to retain the top editors at Dow Jones, including Marcus W. Brauchli, the managing editor of The Journal and Paul Gigot, The Journal’s editorial page editor, and has accepted limits on its ability to remove or replace people in those posts.
The Bancrofts hope the arrangement, which they negotiated before the final deal, will restrict Mr. Murdoch’s ability to influence content, particularly in The Journal, but many media experts have said he has circumvented similar agreements in the past.
Mr. Murdoch first made his offer to Dow Jones’s chief executive, Richard F. Zannino, over breakfast on March 29, and made a formal written bid to the board on April 17, but the news did not surface until May 1.
On May 2, Mr. Zannino made a presentation to the Dow Jones board that made it seem to many of them that the company’s prospects on its own were poor and that he favored a sale. He later insisted that he had not meant to give those impressions, but even so, the presentation had a sobering effect, and most of the board clearly thought that the company should accept Mr. Murdoch’s $60-a-share offer.
That breakfast with Mr. Murdoch set in motion a four-month struggle among the Bancrofts. The family, which has owned Dow Jones since 1902, holds 64 percent of the shareholder vote, with most of the stock held in dozens of trusts with some three dozen beneficiaries. But the bulk of the voting power rests with a handful of the family’s oldest generation, and with longtime family lawyers, who are the primary trustees.
Some argued vociferously that Mr. Murdoch would damage the newspaper’s credibility, while others said that his $60-a-share offer — for a stock that was trading around $36 in April — was too good to pass up at a time when the newspaper industry was struggling.
At the outset, most of the elders opposed a sale, and were bolstered by newsroom employees who wrote letters arguing that Mr. Murdoch would wreck The Journal, and by the advice of longtime associates like Peter R. Kann, the recently retired former chairman and chief executive of the company, and Mr. Ottaway.
But many of their children, less wealthy and less steeped in the notion of Dow Jones as a family legacy, were more open to selling. A family Dow Jones stake that had been valued at about $750 million and generated about $20 million a year in dividends, mostly for the older generation, stands to become more than $1 billion even after taxes and could produce several times as much income.
Late last week, it appeared that the family might reject the deal, but then two pivotal family elders who had argued against the deal, Jane Cox MacElree and her brother, William C. Cox Jr., shifted positions; she relinquished voting control of some shares, and he switched sides and decided to support the sale, people close to the family said. That left things too close to call.
While the weeks after May 2 had been spent arguing over principles, the last few days were spent haggling over money. Before the deal had a clear majority in support, a lawyer for the family, Lynn Hendrix, based in Denver, who controlled trusts with 9 percent of the overall vote, insisted that those trusts would oppose the deal unless the News Corporation agreed to pay a premium for the supervoting shares that are mostly owned by the Bancrofts.
On Sunday night, David F. DeVoe, the News Corporation’s chief financial officer and a board member, called Mr. Hendrix, a partner at the firm Holme, Roberts & Owen, to draw a line in the sand.
Referring to the $60 price, Mr. DeVoe said, “I can six-zero-point-zero-zero,” a person briefed on the conversation said, “not six-zero-point-zero-one.”
When Mr. Hendrix kept pushing for more money, Mr. DeVoe made an unusual offer: the News Corporation would consider paying the fees and expenses of the bankers and lawyers advising the trusts. That amounted to an indirect way of sweetening the offer for the supervoting shares without adding much to the cost of the deal. Dow Jones, after consulting with the News Corporation, had already agreed to cover some of the costs of paying Merrill Lynch, the family’s primary financial advisers.
After a marathon series of conference calls that night that ran through Monday, involving Mr. DeVoe; Mr. Hendrix; Michael B. Elefante, the family’s primary lawyer and trustee; and Richard Beattie, a lawyer advising the Dow Jones board, a deal was brokered that would allow the Denver trust to vote in favor. The News Corporation agreed to pay advisory expenses for all of the family trusts, a figure that people involved in the talks said could reach $40 million, which translates to about an additional $2 a share for the Bancrofts.
The largest share, perhaps as much as $18.5 million, will be paid to Merrill Lynch, people briefed on the matter said. Another payment of as much as $10 million is expected to be paid to Wachtell, Lipton, Rosen & Katz, a law firm representing the family. Morgan Stanley, which advised the Denver trusts, and a series of law firms are expected to split the rest.
The issue of the News Corporation and Dow Jones paying the family’s advisers has raised questions in some circles — including among some family members, people close to them say — about the advice’s impartiality. Merrill Lynch, in particular, was viewed as an early supporter of the deal and was responsible in large part for making presentations to the family about the current and future health of Dow Jones.
The deal is also a windfall for an army of Mr. Murdoch’s bankers and lawyers. Mr. Murdoch was advised by Mr. Lee, who had helped Mr. Murdoch when he explored a bid for Dow Jones in 2001 and had set up Mr. Murdoch’s first introduction to Mr. Zannino.
Blair Effron, a former banker at UBS who started his own boutique firm, Centerview Partners, spent many nights holed up at Mr. Murdoch’s headquarters, as did Stanley S. Shuman of Allen & Co., the media investment bank.
To the last, people inside and outside Dow Jones who opposed the sale were trying to arrange alternative deals that would allow some Bancroft family members to sell and others to keep control of the company.
Yesterday, Leslie Hill, a family member and trustee who became something of a patron saint within the Journal’s newsroom for her opposition to the deal, resigned from the company’s board.
The NYT also reports that with generic competition looming for two of its blockbuster drugs and use declining for its drug-coated stents, Johnson & Johnson said yesterday that it would eliminate up to 4,800 jobs.
The cuts would amount to 3 to 4 percent of the company’s global work force of 120,000 people, with the pharmaceutical and stent divisions hardest hit by staff reductions. The company declined yesterday to say exactly where the cuts would take place, other than to say that it would close a Mountain View, Calif., operation and eliminate the jobs of 600 of the people who work there. An additional 200 people there will be relocated.
Johnson & Johnson, based in New Brunswick, N.J., said the job cuts and other streamlining efforts would save $1.3 billion to $1.6 billion a year. That will probably not be enough, though, to offset revenue losses from the expiration of patents on two important drugs over the next two years. Generally, when patents expire, brand companies quickly lose the bulk of their sales to generic competition.
The company’s top-selling drug, Risperdal, an oral treatment for schizophrenia and other mental conditions, is expected to lose patent protection next year. Sales last year for the oral Risperdal were $3.3 billion.
Topamax, a pill for epilepsy and migraine headaches, which had sales of $2 billion last year, is also expected to lose patent protection in 2008. But an application for pediatric use could extend the protection until 2009.
The company also has problems with its stent business. The company announced recently that United States sales of its Cypher drug-coated stent, for helping keep coronary arteries open, had declined by 41 percent. The decline has followed questions by some doctors about whether the benefits of drug-coated stents offset their risk of eventually causing blood clots.
In a note to clients yesterday morning, Glenn Reicin, a Morgan Stanley analyst, said the cost-cutting moves were positive for the company, whose shares ended the day up 43 cents each, to close at $60.50.
But Mr. Reicin questioned how the company would be able to make up for the revenue shortfall in its pharmaceutical division.
“The company still needs to flesh out an additional $1.1 billion from its pharmaceutical pipeline by 2010 from products that have yet to be identified,” Mr. Reicin told clients.
In a conference with investors yesterday morning just before trading began on Wall Street, the company’s chief executive, William C. Weldon, praised the company’s drug development efforts.
“I think we have a pipeline today that is probably as rich a drug pipeline as we’ve ever had,” Mr. Weldon said, adding that the company plans to file applications for Food and Drug Administration approval of 7 to 10 new compounds from 2008 to 2010.
The company became the third major drug maker firm in the last month to announce a layoff plan. Bristol-Myers Squibb said last week it planned a revamping, with details to be made public later this year. AstraZeneca said last week it would eliminate an estimated 7,600 employees, 10 percent of its work force, to achieve $900 million in annual savings by 2010.
Johnson & Johnson said it would take a charge of $550 to $750 million in the second half of this year to account for the revamping costs.
The Mountain View location to be closed is a facility of Alza, a Johnson & Johnson subsidiary that makes and markets several neuroscience drugs, including Concerta for attention deficit disorder and Invega, a newer product to treat schizophrenia.
The company said that 200 other employees who work at the Mountain View location for Alza and for another unit, Scios, will be relocated to other sites, including one in La Jolla, Calif.
