Word: tobacco
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...tobacco stocks have 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...
...Tobacco investors have made it clear how badly they want a settlement. Late last month, for example, rumors swirled about a settlement under which tobacco companies would pay the hefty sum of $10 billion a year--more than the industry currently earns. Philip Morris stock promptly rose $6, creating $5 billion of market value and sending up a smoke signal so dense that even the long-in-denial tobacco industry had to notice. The burning question is this: If the market is ready to embrace such a costly settlement--and antitobacco forces, realizing they're getting nowhere fast in their...
...tobacco executives have the upper hand. Odds are they could go on winning in court for years. But they are just plain wrong to ignore the wisdom of the market. For starters, the $10 billion-a-year figure is a red herring. David Adelman, tobacco analyst at Dean Witter Discover, believes the industry could get the figure down to $3 billion or less. But even at the higher figure, "it's not a lot of money" under certain scenarios, notes Roy Burry, an analyst at Oppenheimer & Co. No industry has greater pricing flexibility, and every nickel-a-pack increase generates...
...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...
...Starr's remains impeccable." At the very least, as Joseph DiGenova, a former independent counsel and U.S. Attorney in the Reagan Administration, points out, "It's another unfortunate circumstance which is unnecessarily distracting." DiGenova faults Starr too for continuing his $1-million-a-year law practice, which includes tobacco clients, and for speaking at Clinton-basher Pat Robertson's Regent University. "Ken's a fine man, but he doesn't listen to criticism. He'd be better off if he had not represented certain clients or given certain speeches," says DiGenova. "He's made another terrible mistake, and there...