Hits & Misses
(Business 2.0) – [HIT] A NEW SALES CHANNEL. Virgin chairman and extreme-sports junkie Richard Branson broke a 40-year-old world record for crossing the English Channel in an amphibious vehicle when he piloted a Gibbs Aquada across the 22-mile strait in an hour and 40 minutes. Great for Sir Richard, but even better for U.K.-based Gibbs Technologies. Orders for the $115,000 sports cars (no doors, in case you were wondering) have doubled since the feat. Branson himself intends to buy a fleet of three-seat Aquadas to ferry his Virgin Atlantic first-class passengers down the Thames from London to Heathrow.
[HIT] THE NEXT SMALL THING. As Boeing and Airbus engage in a dogfight over next-generation long-haul superjets designed to carry hundreds of passengers on globe-spanning jaunts, Brazilian airplane maker Embraer has soared to new heights with its line of midsize jets used for flights shorter than 1,000 miles. In the first quarter, Embraer began shipping the 72-passenger E-170, its largest jet yet, and consequently more than doubled its net income year-over-year to $103 million. Next, Embraer will try to find out just how big regional jets can get: JetBlue has placed an order for 100 E-190s, a 100-seat Embraer now being put through its paces on test flights.
[MISS] BREWHAHA. Forget all the tea in China--beer is the beverage of choice for a growing middle class that downed $6 billion in suds last year. Looking to double its 10 percent share of the market, South Africa's SABMiller launched a takeover bid for regional beermaker Harbin Brewery. Already the proud owner of a 29 percent stake in Harbin, SABMiller planned to merge Harbin with another local brewer. But that didn't sit well with Harbin executives, who were already upset with SABMiller for letting its other local partner launch a price war on Harbin's home turf. With help from Harbin's management, archrival Anheuser-Busch outbid SABMiller, paying $688 million to increase its market-leading share from 15 percent to 19 percent.
[MISS] HOT WHEELS. With 30 percent of the market, Mitsubishi Fuso has long been the majordomo of trucks and buses in Japan. But its reputation has just gone up in smoke, thanks to its trucks' propensity to shed wheels and catch fire. Fuso execs recently admitted that the company had spent the last eight years trying to hide defects by secretly repairing vehicles rather than recalling them. In June, CEO Wilfried Porth authorized a recall of 450,000 trucks and buses; including earlier recalls, a total of 540,000 vehicles--more than 40 percent of the Fuso rigs currently on the road--stand to be fixed on the company dime.
[HIT] CLEAR SKIN ... AND EVEN CLEARER ACCOUNTING. The United States isn't the only nation that's been busily cleansing stock markets blemished by greasy executives. Brazil's New Market, a portion of the São Paulo Stock Exchange with stricter reporting rules and expanded shareholder rights, was designed to lure foreign investors with the promise of greater transparency. It worked. On May 26, Natura Cosméticos, Brazil's largest cosmetics company, raised $245 million in an IPO on the New Market--Brazil's first in more than two years. The offering was massively oversubscribed, with 70 percent of the interest coming from outside Brazil. Officials at the exchange expect the success of Natura's IPO to prompt at least six other Brazilian companies to list on the New Market by year's end.
[HIT] CHOP AND SHOP. Supermarkets trying to beat back Wal-Mart may have found a new role model. Terry Leahy, CEO of Tesco, the No. 1 U.K. grocer with $61 billion in annual sales, first stole a page from Wal-Mart's playbook, cutting $364 million in costs by streamlining distribution. Then he slashed prices, boosting sales 19 percent and profits 16 percent while keeping the Bentonville gang from increasing its 17 percent U.K. market share. International expansion helped, as did Tesco's online-delivery business, which hit $1 billion in sales for the first time last year.