Crains New York - May 21, 2012 - (Page 32)

CHEAT SHEET Avon spurns smaller rival Coty and its wingman, Warren Buffett BOY MEETS GIRL. Last month, beauty company Coty Inc. extended its hand and offered to buy struggling cosmetics giant Avon Products Inc. for $10 billion. The larger company rebuffed Coty, which then polished its bid—and gained billionaire investor Warren Buffett as a backer— before ringing Avon’s bell again earlier this month with a $10.7 billion offer. SHE’S JUST NOT THAT INTO YOU. Avon asked for a week beyond Coty’s May 14 deadline to mull things over. Coty walked. Avon shares tanked, plummeting 10% to close at $18.71 on May 15. NEW GAL IN CHARGE. Avon’s got a new leader, by the way. Former Johnson & Johnson executive Sherilynn McCoy took over from longtime CEO Andrea Jung last month, and Ms. McCoy’s got some serious blemishes to expunge. In addition to dealing with overseas bribery allegations, she must reverse sinking sales and get Avon on the technological map, as it lags rivals like Sephora. “She’s got enough experience to give Avon a good look with a fresh set of eyes,” said Connie Maneaty, an analyst at BMO Capital Markets Corp. I WILL SURVIVE. Coty appears to be over Avon. (It may even move on to its own IPO, some Wall Streeters think.) As for Avon, analysts say it’s not completely past its prime, provided Ms. McCoy works some makeover magic. Investment company Richemont Holdings could be Avon’s next suitor. Advice: Bring flowers. —adrianne pasquarelli THE WEEK ON THE WEB CRAINSNEWYORK.COM I bloomberg news t was a big week at Citi Field. The Bloomberg administration struck a deal with the Related Cos. and Sterling Equities, the real estate company controlled by Mets owners Fred Wilpon and Saul Katz. They plan to build a 1.4 million-square-foot mall and parking garage at Willets Point, Queens, next to the Mets’ stadium. The catch? The first phase won’t begin until 2025, three years after the entire project was scheduled to be completed. ¶ “They are back to square one,” Michael Rikon, a lawyer representing Willets Point property owners, told The New York Times. ¶ In the first phase of the plan, the developers will build a new parking lot for the stadium, a hotel and a small amount of retail. Only after that will they build a million-square-foot retail and entertainment complex, tentatively dubbed Willets West, on a parking lot just west of Citi Field. If that goes off without a hitch, the developers will consider constructing some housing. ¶ The Willets Point deal wasn’t the only big news for Citi Field last week. Major League Baseball announced plans to bring the five-day All-Star Game festivities to the stadium in 2013. City tourism officials salivated, projecting $115 million in direct economic activity, $76 million in indirect activity and almost 180,000 visitors. A few economists pooh-poohed those estimates, but maybe they’re just Yankee fans. ESPADA GUILTY. Former Democratic state Sen. Pedro Espada Jr. was found guilty of four counts of theft. He had been charged with stealing $448,000 from Soundview Health Center in the Bronx, a nonprofit he helped start and—if the state gets its way—end.The Department of Health moved to close the clinic’s medical services, meal deliveries and housing assistance. The jury deadlocked on four additional counts of theft, fraud and conspiracy. Mr. Espada faces another trial on those charges. … STOP ’N’ RISK. After a judge granted class-action status to a lawsuit challenging the New York Police Department’s controversial stop-and-frisk tactics, Police Commissioner Ray Kelly announced policy changes aimed at ending racial profiling. The suit alleges that NYPD officers disproportionately stopped African-American and Hispanic males without cause. A New York Civil Liberties Union survey shows that the NYPD stopped 168,126 black men between the ages of 14 and 24 last year. … XOXO, NEW YORK. Gossip Girl may be on its way out, but six TV pilots recently filmed in the Big Apple received a green light,putting 2012 on track to be the city’s busiest TV production year yet.Though set locations have yet to be determined, industry locals are confident the series will be made here, pushing the made-inNYC tally to 25. Newly picked-up shows include three on CBS, two on ABC and one on NBC. —emily laermer Verizon, NY’s new No. 1 Continued from Page 1 wake of the financial crisis. Verizon Wireless, a joint venture with British telecom Vodafone (which owns a 45% stake), generated $70.2 billion in revenues last year, up 11% from 2010. Despite a saturated market, the Verizon unit signed up 5 million new subscribers last year,giving it an industry-leading total of 107.8 million. And there’s more growth to come. Verizon is poised to bring wireless connections to everything from GPS systems to customer billing, and to offer television shows on mobile devices, pending regulatory approval of a deal with cable operators. Most critically, Verizon is rolling out a next-generation high-speed wireless network, called 4G Long Term Evolution, or LTE.The aim is to provide faster video and data downloads and safeguard a reputation for quality that over the years has helped the company outperform archrival AT&T. “The network is the foundation of who we are,” said Nancy Clark, Northeast area president of Verizon Wireless. “No one else is close.” At least not yet. Verizon’s LTE service, which is more cost-efficient and up to 10 times faster than 3G, covers two-thirds of the country. AT&T’s,by contrast,will not be fully deployed until the end of 2013. Second-mover advantage Verizon’s reputation for network quality goes back to its genesis as Bell Atlantic Mobile. But a turning point came with AT&T’s exclusive launch of the iPhone in 2007. The data demands of the wildly popular smartphone put unexpected strains on AT&T’s networks.The Dallas-based carrier has been doing reputationdamage control ever since. Verizon, in the years following the iPhone launch, invested in its network while building out a successful line of Android smartphones. By the time the company started to carry the iPhone in February 2011, it was prepared. “Verizon got to be the leader by focusing more on network excellence than anybody else,” said Roger Entner,founder of Recon Analytics. “That was fused into its DNA.” The successful launch of its iPhone has helped Verizon Wireless gain market share. It ended 2011 with 39.1% of much-coveted postpaid subscribers—cellphone customers with two-year contracts— up from 37.7% the year before. AT&T gained only a 10th of a percentage point, for a total of 31%, according to research firm AtlanticACM. In other businesses, however, Verizon has not fared as well. The company has been criticized for spending $23 billion since 2004 on the rollout of its FiOS network for television, phone and broadband. Verizon insists the investment, a major legacy of former CEO Ivan Seidenberg, has paid off. With 4.4 million video subscribers as of the first quarter, FiOS is credited with keeping the company’s wireline business profitable. Wireline includes old-fashioned landlines as well as fiber-optic cable. FiOS is also widely seen as superior to what the competition offers. But analysts have questioned whether it was worth the money, and some are skeptical of Verizon’s business as a whole, pointing to the pressure on profits from iPhone subsidies. Carriers discount each device, paying around $450 of its cost. In the fourth quarter of last year, Verizon Communications posted a $2 billion loss attributed mainly to pension charges, but the costs of signing up 4.2 million iPhone customers played a role, too. “Verizon is well run,” said Barclays analyst James Ratcliffe, who rates the stock “equal weight,” which is tantamount to “hold.” “But the wireline business has minimal growth, and the wireless business has growth but a lot of competitive pressures.” The company also faces potential disruptions as it tries to negotiate a cost-saving contract with the wireline division’s 45,000 unionized workers. Getting a grip on costs Investors don’t seem to mind.The company’s stock closed Friday at $41.53, up 12% from a year earlier. And Verizon Wireless appears determined to get a better grip on costs. In April, for example, it added a $30 fee for smartphone upgrades. The company has also talked about having content providers, not just subscribers, pay for data usage. And last week it announced that, starting this summer, customers with unlim- ited data plans will have to pay the full cost of a new iPhone when they upgrade—or move to a more expensive plan. In addition, new Verizon Communications CEO Lowell McAdam—who was previously CEO of Verizon Wireless—has been preparing for the tectonic shifts taking place across the telecom and media industries. The company recently announced a joint venture with Coinstar, owner of DVD kiosk chain Redbox, to create a video-on-demand service that would compete with Netflix. It will launch in the second half of this year. More important, Verizon struck a strategic $3.6 billion deal with three cable companies—traditional rivals of the telecoms—for wireless spectrum, which has become increasingly precious as mobile users scarf down huge quantities of data. In March, Mr. McAdam said a marketing partnership with cable operators, if approved, could lead to pay-TV subscribers watching shows on mobile devices using Verizon’s LTE network. That scenario would further blur the lines between industries and add to the surge in wireless traffic on the company’s network. “We expect to see a lot of growth,” said Aaron Blazar, a vice president at Atlantic-ACM. 32 | Crain’s New York Business | May 21, 2012 buck ennis MAY 14-20 http://www.CRAINSNEWYORK.COM

Table of Contents for the Digital Edition of Crains New York - May 21, 2012

Crain's New York - May 21, 2012
Contents
Council Defies Mayor, Scares Business Leaders
Renegade Ceo Bucks Albany to Save His Hospital
Back to JPMorgan Chase’s Woes Have Some Local Bank Rivals Circling. in the Markets.
New York, New York
Hopes Rising Along B’klyn Waterfront in Sunset Park
Why Charlie Rangel Could Lose His Seat
Small Business
Viewpoint
Ibm Inside Big Blue’s Brain Trust, Which Pulled in More Than 6,180 Patents Last Year, the Most Ever by a Single Company. No Wonder the Stock Price Has More Than Doubled in the Past Five Years.
The List Our Annual Review of the New York Area’s Largest Publicly Held Companies, Ranked by Their 2011 Revenues.
What’s Up (And Down) at News Corp., Cbs, Bed Bath & Beyond, Vornado Realty, Mastercard, Jones Group, Revlon and Others.
For the Record
Classifieds
Real Estate Deals
The Week on the Web
Matchmakers Find Their Own Chemistry
Anne Fisher Tapping Into Human Emotions Pays Dividends
Hot Jobs
Executive Moves
Movers & Shakers Real Estate Veteran’s Surprising Switch
Gael Greene Dragonfly Lands on UES

Crains New York - May 21, 2012