Word: tobacco
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Dates: during 1990-1999
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...public-health court, the American Lung Association reacted loudly. It opposes any limits on individual lawsuits or class actions, and expressed particular skepticism about the settlement's prohibitions on youth-oriented advertising. "The ability of the tobacco industry to reinvent itself and circumvent such restrictions," said Lung Association CEO John Garrison, "is remarkable...
...began quietly 30 years ago--with a handful of scientists who were concerned about the potential health consequences of smoke and a handful of nonsmokers who were bothered by the constant haze of smoke in their eyes--last week proved that it has achieved enough muscle to bring the tobacco industry to its knees. If the long-lasting cultural parade of Joe Camel and Marlboro Men and cigarette-waving screen stars is not yet quite over, the celebratory band, at least, has most certainly passed...
...memo to employees only hours after the deal was sealed, Steven Goldstone, CEO of RJR Nabisco, wrote that the historic agreement "radically changes the way we do business." No kidding. The tobacco industry in the U.S. will have to adjust from being a cash-rich, freewheeling marketer to one of the most regulated businesses in the U.S.; from an industry that can't advertise enough to one that can barely show its face. And to pay for the agreement, tobacco executives are going to install one of the biggest price increases in the history of consumer products: possibly more than...
Managing a company in that kind of flux could make even a nonsmoker reach for a butt. You can assume, though, that Big Tobacco thinks business will be better, or it wouldn't have come this far. Profit margins on cigarettes are now about 34%. Last year Philip Morris had an operating profit of $4.2 billion on domestic cigarette sales of $12.5 billion. Unquestionably, tobacco is a cash crop that can cover the settlement tab and still reward stockholders. And with advertising and legal outlays likely to be scaled back, the industry can recover some of its costs immediately...
...least that's what investors seem to think. Tobacco stocks fell Friday, the day of the deal. But it was mere profit taking after a two-week run-up in which shares of Philip Morris, the No. 1 tobacco company, jumped 9%, reaching a new high on Thursday, while No. 2 RJR rose 14%. Tobacco stocks have sold at a discount, compared with other packaged-goods company shares, because of the legal uncertainties. Many analysts expect the stocks to keep on chugging once Wall Street can reliably calculate the settlement costs. "As uncertainty is removed, the stocks move up," says...