Crains New York - May 27, 2013 - (Page 13)

L A R G E S T C O M PA N I E S REPORT INSIDE The List NY area’s largest publicly held companies PAGE 15 Taxes Where are region’s big firms making their money? PAGE 19 FOR THE FULL LIST of 250 largest publicly held companies or any Crain’s list, go to www.crainsnewyork.com/list Coach fashions its future BY ADRIANNE PASQUARELLI Lew Frankfort pulled a rabbit out of a hat in April when he reported third-quarter earnings for Coach Inc., the accessories company he has run for nearly two decades. In the aftermath of a rare disappointing holiday season in the second quarter, the company’s share price dropped 15%. And investors, concerned that diminished handbag sales and Coach’s spending in new regions would hurt earnings, began dumping shares.But in April, Mr. Frankfort surprised analysts and investors alike by announcing—poof!—a 6% increase in net income and a 7% jump in sales, to $1.2 billion, for the quarter ended March 30. The stock rose more than 10%, to $55. Mr. Frankfort had done it again. “I’ve never drunk my own KoolAid,” said the 67-year-old executive. “We’re a performance-driven culture, and our results speak for themselves.” Yet by this time next year, the See COACH on Page 14 STOCKED UP Shares of Coach stock have gone stratospheric since its IPO nearly 13 years ago, with total returns that make a stockmarket star like Amazon seem almost ho-hum in comparison. 2,448% Total returns, October 2000 to May 2013 735% LEW FRANKFORT, Coach’s outgoing CEO, has built the luxury brand into a powerhouse. 32% S&P 500 Amazon buck ennis Facing a change at the top and rivals’ gains, luxury brand is at a turning point Coach Source: Bloomberg Spinoff glut has companies fattening up bottom lines Media giants lead the way as firms get rid of unwanted businesses BY AARON ELSTEIN These days,Time Warner Inc.CEO Jeffrey Bewkes sounds like someone extolling the benefits of a new diet plan. “Following the spinoffs of Time Warner Cable and AOL, we quick- ly saw the benefits of making Time Warner smaller, more nimble and more focused,” Mr. Bewkes said on a conference call with investors in early May. He’s not kidding. Not only is the once-bloated conglomerate feeling more nimble, focused and quite possibly perkier, but since it started slimming down in March 2009, its shares are up by an amazing 273%. That’s more than double the pace of the Standard & Poor’s 500. In the five years before Time Warner decided to shed unwanted corporate flab, its stock had sunk by 50%. 273% No wonder the newother newspapers. The look Time Warner is eager spinoff is set to take effect to shed even more of itself. by the end of June. INCREASE in Time Warner’s Now it’s planning to hive In addition, Hess share price since off Time Inc., its magaCorp. earlier this year said the company zine-publishing division. it would spin off its gasstarted shedding It’s not alone. Years afstation business in order to assets in 2009 ter many of New York’s devote its energies to oil leading companies went and gas exploration. on acquisition binges, purges are Boosting efficiency underway in earnest. New York Stock Exchange parent News Corp. is in the process of creating a separate company that will NYSE Euronext is getting ready to keep its cable, movie and entertain- spin off its Paris-based Euronext ment assets far from the madding division as it prepares to be acquired crowd of the New York Post and its by Atlanta-based Intercontinental Exchange. Last year, U.S. companies spun off a record $150 billion worth of assets, according to Thomson Reuters, and so far 19 of these corporate separations have taken place this year. The rationale is that getting rid of unwanted businesses helps make companies more efficient and frees management of the newly independent enterprise to take whatever steps are necessary to maximize shareholder value. A 2009 academic study lent some credence to this view, demonSee SPINOFF on Page 19 May 27, 2013 | Crain’s New York Business | 13 http://www.crainsnewyork.com/list

Table of Contents for the Digital Edition of Crains New York - May 27, 2013

In the Boroughs
In the Markets
Small Business
The Insider
Business People
Opinion
Alair Townsend
Greg David
Steve Hindy
Report: Largest Companies
The List
Classifieds
For the Record
Real Estate Deals
New York, New York
Source Lunch
Out and About
Snaps

Crains New York - May 27, 2013