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Corporate Players: Keeping Score

By Bob Schwaller |

was just around the corner. In many cases, it was.

Braniff-When the red ink lapping at Braniff’s landing gear grounded its planes, many observers said it was the end. After 21 months and attempted rebirths with Pan American and PSA Inc. of San Diego (as well as an aborted purchase attempt by Hyatt Corp.), that same Chicago-based hotel company finally succeeded in getting Braniff off the ground. Now the airline has re-employed 2,200 former workers and flies 30 Boeing 727s to two dozen destinations. Wearing the black hat in the drama was the committee of five dozen lawyers representing Braniff’s creditors, which took all summer to okay the Hyatt deal. The white hats in the negotiations went to the Braniff employees. Their willingness to take huge salary cuts to go back on payroll convinced Hyatt chief Jay Pritzker to go ahead with the offer.

Diamond Shamrock-Once deeply involved in petroleum refining and petrochemicals, this $3 billion firm successfully shifted over to aggressive oil and gas exploration at a time when investors were instructing their brokers to get them out of the oil patch as fast as possible. To do it, Diamond Shamrock had to make two strategic acquisitions and drill the most expensive dry hole in the history of oil exploration. Late in 1982, the company picked up Sigmor and its refineries and service stations. In mid-83, Diamond Shamrock paid about $700 million for San Francisco’s Natomas Co., which had tripled its oil reserves and increased its daily oil production sixfold. The company had to write off $193 million from its ’83 income for its part in the dry Mukluk Well, drilled from a man-made island in the Bering Sea. “We drilled a magnificent, world-class prospect up there,” says vice chairman J. Avery Rush. “When it turned out dry, it was a magnificent disappointment.” While Diamond Shamrock keeps about half of its exploration and development dollars in relatively modest but reliable oil production in the United States, it continues to search abroad for more “world-class” prospects.

Dr Pepper-Dallas’ down-home contestant into the pell-mell soft drink derby was so misunderstood by stockholders that the company elected to take itself private. Facing tough competition from market leaders Pepsi and Coca-Cola, Dr Pepper experienced some below-par earnings announcements. Feeling stockholders breathing down his neck, chairman W.W. “Foots” Clements looked for (and found) investors who would be willing to buy out the public shareholders. To make the deal, Dr Pepper management fended off a takeover attempt, put its profitable Canada Dry subsidiary on the auction block and took the matter to its stockholders for a vote. If you don’t like the heat, the management said in effect, get out of the kitchen-sell your stock. They did, and Dr Pepper is now the property of Forst-mann Little, a New York-based investment banking firm.

LTV-A true giant in the Dallas economy, this multimillion-dollar defense/steel/oil service conglomerate has had more than its share of trouble. But it has fought back with spirit. First, two of the corporation’s three business segments-steel and oil service-ran into problems. Last year, it faced nothing but losses. But LTV pursued acquisitions of specialty steel plants and oil field equipment firms, capitalizing on the good deals available in depressed industries. It also bought American Motors’ military vehicle division for $170 million; and, if everything goes as planned, LTV will close a deal to buy Republic Steel, the nation’s fifth largest steel firm. Meanwhile, the corporation’s defense sector racked up several government contracts, including one $1.2 billion, five-year order.

Texas Instruments-The highly secretive electronics giant shed a troubling business line and is much the better for it. TI’s home computer products line accounted for only 3 percent of its business. But since the TI-99/A computer was introduced-five years ago to the month-it caused nothing but problems until the company put the corporate scalpel to it last October. By then, it had caused the first annual loss in TI’s history. “They lost their shorts,” is the succinct summary from Rauscher Pierce analyst Mike Van Deelan, who’s very bullish now that the company’s put the problem behind itself. Since then, the patient has undergone remarkable recovery. The market for semiconductors-TI’s bread and butter-has exploded, going into everything from cars to toaster-ovens. The bottom line, says Van Deelan, should be earnings per share of $11 to $13, compared to a loss of $6 a share in 1983.

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