ATA Grounded, RIM Soars
Regional carrier ATA Airlines goes bankrupt for the second time in four years. New interest in smart phones pushes up BlackBerry sales, and RIM profits. And concert promoter Live Nation tries to figure out the future of music with Jay-Z.
NEWS AT A GLANCE
ATA closes up shop
Indianapolis-based carrier ATA Airlines canceled all flights, effective this morning, and filed for bankruptcy protection. ATA said its latest effort to remain solvent collapsed after it lost an important contract for its military charter business. (AP in Yahoo! Finance) ATA emerged from two years in bankruptcy in February 2006, under the ownership of private equity fund MatlinPatterson Global Opportunities Partners. Last month it said it was leaving its Chicago-Midway hub and cutting routes to save money. (Bloomberg) All 2,300 employees are now out of work, ATA said. The airline’s 29 airplanes carried about 10,000 passengers a day. (Indianapolis Business Journal)
New BlackBerry users boost Research in Motion
BlackBerry maker Research in Motion reported that its fourth quarter profits and sales both doubled, due to a strong influx of subscribers. Profits rose 120 percent, to $412.5 million, beating Wall Street expectations. Sales grew 102 percent, to $1.88 billion. (CNNMoney.com) Canada-based RIM said it added 2.18 million customers during the quarter, giving it more than 14 million subscribers. (Reuters) The growth was fueled by consumers, not businesses. New consumer interest in smart phones, due largely to Apple’s competing iPhone, helped RIM, said Canaccord Adams analyst Peter Misek. “I think the iPhone was the single biggest blessing RIM ever had,” he said. (AP in Yahoo! Finance)
Schering-Plough cuts jobs on Vytorin woes
Drugmaker Schering-Plough said it will slash $1.5 billion in expenses by 2012, largely though cutting 5,500 jobs, or 10 percent of its workforce. Schering’s stock has plunged nearly 29 percent since a study unveiled last weekend recommended that doctors limit use of its blockbuster cholesterol drugs Vytorin and Zetia. The two drugs account for an estimated 60 percent of Schering’s profits. (The Wall Street Journal) The study found that Vytorin—a combination of Zetia and Merck’s Zocor—was no more effective at reducing artery plaque than the much cheaper Zocor alone. (Bloomberg)
Jay-Z and the art of the new deal
Concert promoter Live Nation is about to seal a $150 million record contract with entrepreneurial star rapper Jay-Z, in another sign of chaos in the record industry. The deal, which gives Jay-Z financing for his own wide-ranging entertainment venture in addition to touring and record commitments, follows less comprehensive Live Nation deals with Madonna and U2. As record sales decline, Live Nation and other nontraditional players are vying with the major labels to stake a claim in artists’ total earnings, including from tours and merchandise. “Everyone’s trying to figure it out,” said Jay-Z. “I want to be on the front lines in that fight.” (The New York Times, free registration)
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