Hits & Misses
(Business 2.0) – [HIT] Score one for the little guy. It was a moment execs at TiVo wanted to pause, rewind, and savor: In April a Texas jury handed the company a $74 million judgment in its lawsuit against Dish Network parent EchoStar Communications, in which it claimed that the satellite giant's DVRs infringed on its "time-warp" patent. Though TiVo is hardly out of the woods--the company has lost about $700 million since it was founded in 1997 and was stung by key partner DirecTV's plans to market an alternative DVR--some analysts were optimistic that the verdict will help it strike licensing deals with cable and satellite companies that have similarly skipped past its intellectual property rights. TiVo stock hit a 52-week high of $9.49 on the news.
[HIT] Two words: green plastic. Oil companies aren't the only ones cashing in on crude's surge to $75 per barrel. Take NatureWorks, a nine-year-old Cargill subsidiary and the only commercial maker of plastic resin derived from corn instead of petroleum. Thanks to oil's rise, the company's earth-friendly polymer--which consumes 68 percent less fossil fuel than conventional plastic--has become price-competitive far sooner than expected. NatureWorks saw its sales rise 230 percent last year, and in November it landed millions in new business with Wal-Mart, providing material for everything from produce packaging to gift cards.
[HIT] Who's laughing now? Want to sell a product that sounds so silly it gets mocked all over the Web? It'd be hard to top Procter & Gamble, which suffered nary a nick from the launch of its six-bladed Gillette Fusion razor. The formula? First ignore the bloggers and their 15-bladed Photoshop parodies. Next create a straight-faced commercial touting your advanced grooming lab ("Unintentionally hilarious," said Advertising Age); run it during the Super Bowl, the Olympics, and March Madness; roll out 190,000 in-store displays--and bingo: After five weeks you've got a top seller, with 57 percent of the U.S. razor market. And since, as everyone knows, it's all about the blades, note that Fusion cartridges sell for 30 percent more than blades for the older Mach3 series, which brought in more than $1 billion during the past year.
[MISS] Feeling blue. Once a Wall Street high flier, JetBlue has hit some serious turbulence: The low-fare carrier just reported a second consecutive quarterly loss after being in the black since its takeoff in 2000. According to Prudential analyst Bob McAdoo, erstwhile CFO of 1980s forerunner People's Express, JetBlue's woes stem from drifting off its original course: short- and moderate-haul flights from its JFK base to upstate New York, New England, and Florida. Thanks to an aggressive expansion plan in which it has taken delivery of a new plane about every three weeks, the airline has been flying longer routes and opening new hubs. But 17 of 20 markets added since 2004 have been unprofitable, while overcapacity on popular routes has left little pricing power to offset higher fuel costs. In late April, JetBlue announced plans to defer delivery of a dozen new planes, sell a few from its existing fleet, and return to an emphasis on medium- and short-haul flights.
[MISS] Rude awakening. Still think all publicity is good publicity? French drugmaker Sanofi-Aventis has learned otherwise. On March 8, the New York Times ran a chilling story about "Ambien drivers"--people who took the top-selling sleep aid and awoke at the scene of traffic accidents. Six days later, another story cited cases in which Ambien users "claw through their refrigerators like animals." Not surprisingly, Ambien sales fell off in March, with new prescriptions dropping 16 percent. More surprising was the company's sleepy reaction: Its response campaign didn't appear until three weeks after the original article. Even then, the ads prominently noted that "Ambien prescribing information has always included these events ... as possible rare side effects."