Follow-Through

By Brendan Coffey Benjamin Fulford RiShawn Biddle Robert Langreth Michael Freedman Bernard Condon | 2002/11/11 | 857 words, 0 images

Shoemaker Skechers has run into a wall since we wrote admiringly about the $970 million (sales) company. Skechers' strategy is to produce quick knockoffs of expensive brands and anoint them with the elusive teen hip quotient through endorsement deals with the likes of pop queen Britney Spears.

But hipness can't overcome tight budgets. Sales dropped well below expectations in the crucial back-to-school shopping season. The shortfall caused the company's third-quarter results to come in under expectations and slashed the earnings outlook for the fourth quarter to half of Wall Street's original expectation of 26 cents a share. All that has taken its toll on Skechers' stock, which has tumbled 62% since June to $9.

Not all the news is bad, though. The company claims its spring 2003 lines were well received by buyers at trade shows, and the finicky fall fashion reviews still dubbed Skechers stylish, thanks in part to a new three-year deal with Spears.

-- Brendan Coffey

North Korea now admits, as we reported a year ago, that it does indeed have a nuclear bomb. Our indirect source, a defecting nuclear physicist then hiding in China, is now in South Korea supplying invaluable information about the regime's secret nuclear program. Her information has been posted on the Web in Korean and Japanese, with accompanying maps, by Osaka, Japan-based Kansai University professor Lee Young Hwa . Lee heads a North Korean dissidents' group that helped the nuclear physicist defect.

Among the defector's revelations: North Korea has a secret institute that is using political prisoners as test subjects to study chemical and biological weapons. North Korea has also recently set up a special commando training camp along the Chinese border. Most disturbing of all, the defector says North Korea is conducting research on "radioactive pollution and atmospheric science." That could mean a dirty bomb with the capacity to spread radioactivity throughout the atmosphere and kill millions of people.

-- Benjamin Fulford

When we last checked in with AstraZeneca , the British drugmaker was embroiled in a high-stakes legal battle over patent control of its bestselling Prilosec heartburn drug. The little purple pill's main patent had expired in October 2001. AstraZeneca had gone on the offensive, suing generic firms for infringing its patents--not on the medicine, but on the way it was assembled into a pill.

In October AstraZeneca was handed a legal victory when New York Federal District Court Judge Barbara Jones ruled that AstraZeneca's patents were valid and that three of the four generic firms' versions of the drug infringed those patents. The ruling means that at most one copycat is likely to reach the market in the near term. AstraZeneca shares soared 13% on the decision, while shares of generic maker Andrx Corp., one of the losers, were slammed down 40%. Andrx is planning to appeal. AstraZeneca's next hurdle comes in 2007, when its remaining Prilosec patents expire.

-- Robert Langreth

It seemed like a long shot when Archer Daniels Midland attempted to get a toehold in the Cuban food market three years ago. But ADM is already reaping the rewards. Eight months after our story ran, President Clinton signed a bill permitting food sales to Cuba, and in the last year the Decatur, Ill. company sold Cuba 330,000 metric tons of corn, soy and other commodities for $50 million. In September ADM was the primary sponsor of a Havana trade show where 270 U.S. food companies like Cargill, Sara Lee and Tyson Foods sold a total of $92 million in products.

U.S. law dictates that all payments from Cuba must be in cash, making the Communist state one of ADM's safest customers, according to Anthony DeLio , its point man on Cuba. At the trade show, Castro himself signed another $15 million contract with ADM.

-- Michael Freedman

A month after our exposé on home lender Household International , the company reached a preliminary agreement to pay as much as $484 million to settle abusive-lending charges made by dozens of state attorneys general and regulators. The payment would be the largest ever for a consumer lender. Our piece described how Household was lowballing the costs of its mortgages and even lying to attract borrowers at its branches in more than a dozen states. In our story, Household claimed the practice was not widespread; it still admits no wrongdoing.

-- Bernard Condon

Subway had only begun to bite into the fast-food market when our story ran a year ago. Since then, the 37-year-old privately held company has surpassed McDonald's to become the nation's largest fast-food chain, with 14,000 outlets. Though Subway's $5 billion in global sales pale next to its rival's $40 billion, Subway's sales are on the rise, up 27%in 2001. Subway is still pushing aggressively into the market, planning to open 2,000 new stores by year-end. Another bold move: a new "Tuscany" decor that includes brick wallpaper, stone floor tiles and chairs upholstered in red, green and wheat-colored faux suede.

-- RiShawn Biddle