Word: rjr
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...impact of the settlement last week, the stock of several tobacco companies took a drubbing. Among them was Philip Morris, which plunged $17.50 a share to finish trading for the week at $111.50--a drop of 13.6% or $14 billion in market value. Also punished was stock of RJR Nabisco, parent company of R.J. Reynolds (Winston, Camel), which closed at $31 a share on Friday for a five-day drop...
...send the valuation of tobacco rocketing skyward -- Philip Morris stock rose $6 in February on rumors that a deal might be near. Wall Street seemed pleased by the settlement news: Brooke Group, the parent company of Liggett, rose 5/8 to 47/8, while Philip Morris tumbled 61/8 to 1157/8 and RJR Nabisco fell 3/4 to 311/2. But Philip Morris won't be following Liggett's lead, at least until the company decides that it's share of the some $600 million Big Tobacco spends annually fending off lawsuits is too much...
...been smoking lately, you'd think the Surgeon General had just discovered that it's the paper, not what's wrapped inside, that makes cigarettes deadly. In just five months, shares of the nation's biggest tobacco company, Philip Morris (Marlboro), have risen 47% while shares of No. 2, RJR Nabisco (Winston, Camel), have jumped 39%. Sure, the industry just won a slew of important court cases. But that's hardly news. Big Tobacco has been snuffing out liability claims in the courts for decades. What's new is a persistent buzz that some kind of deal...
...RJR and others have signaled interest in a resolution. Last week Britain's B.A.T Industries bemoaned a 65% increase in its annual legal tab. Big Tobacco pays $600 million a year defending itself. The problem is that as long as the companies keep winning in court, the amount that strikes them as reasonable is not much more than their legal bills. And that's too bad, because now is when they could cut their best deal. The markets, President Clinton and plaintiffs' lawyers all seem eager. It's time to quit blowing smoke and bring this battle to a close...
...area where an investor can jump in," says Alan Ackerman, a market strategist at Fahnestock & Co. While stock prices of the big tobacco firms used to rebound quickly after bad news, August has been the long goodbye. Philip Morris plunged from $104.66 a share to $88, and RJR Nabisco from $30.75 to $25.50. Loews Corp., parent of Lorillard Tobacco, slipped from $80.66 to $74.75. "This has all the makings of a tobacco Chernobyl," says Ackerman. Not if you ask the accountants. Overall, profits and sales in the industry are up this year, and sales abroad are strong...