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CNN Live At Daybreak

Did Some Companies Incorrectly Blame 9/11 for Falling Profits?

Aired March 11, 2002 - 06:45   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: You know, every business sector imaginable said the events of September 11th hurt their bottom lines. But looking back, the question arises, did some of those companies use the terror attacks as an excuse for problems already in the pipeline?

CNN's Jim Boulden reports.

JIM BOULDEN, CNN CORRESPONDENT (voice-over): It's no surprise the terms "September 11th" and "terrorist attack" have been the main themes running through results season. Companies make the attacks directly for making a bad economic situation worse.

MARJORIE SCARDINO, CEO, PEARSON: Certainly, there was already an economic downturn. And so things were beginning to go down before September 11th. But it exacerbated it.

BOULDEN: But in the wake of September 11th, did consumers really eat less burgers at the oft bankrupt Planet Hollywood chain, while filling the seats at many competitors? And did terror-shocked consumers really buy less products from LB&H (ph) and less diamonds from De Beers, while still racking up huge Christmas sales?

The owners of London's Wembley Stadium said the attacks undermined attempts to sell its concert hall and ticket outfit. And just last week, Formica blames 9-11 for a drop in kitchen counter sales and filed for bankruptcy.

DAVID NORBURN, IMPERIAL COLLEGE: I was very saddened that so many highly paid people were blaming an event, which was utterly traumatic for the world, to prop up what was sagging earnings per share performance. And they were sagging not because of 9-11 in the main, they were sagging because the world economy was slowing down and the strategies which they had chosen did not take sufficient cognizance of this.

BOULDEN: New York-based DoubleClick was criticized when it cited the terrorist attacks in a profits warning on September 20th. DoubleClick claimed it took only nine days to see a softness in online advertising and software sales.

Scores of companies followed suit with third quarter warnings, even though the quarter was 75 percent finished by mid September. Then came the layoffs, especially in the air. ROD EDDINGTON, CEO, BRITISH AIRWAYS: Well we've taken nearly 6,000 jobs out of our business since the 11th of September, and our people have managed that process extremely well.

KEITH WADE, SCHRODERS: What was the most significant announcement to me was when Boeing announced that just after September 11th they were going to lay off 30,000 jobs. Now, I mean, Boeing had been under a lot of pressure for some time, but clearly, they took the opportunity as far as September 11th to announce the restructuring plans that really had been long overdue.

BOULDEN: Some companies resisted the terror temptation. London's low cost airline easyJet saw its passenger numbers climb throughout last year and said government should resist giving bailouts to struggling incumbent airlines.

STELIOS HAJI-IOANNOU, CEO, EASYJET: I think it could become the final edge (ph) (UNINTELLIGIBLE), and I think we should stop it before it spreads all over Europe and government subsidize and bail out were effectively bankrupt companies even before September 11th.

BOULDEN: Not since the Gulf War have companies debated the effects of such a major event completely out of their control.

(on camera): With economies now recovering, the drastic predictions of some companies after September 11th may look overdone. But economists say those companies that took steps to cut costs could be in line for a quicker return to profitability.

Jim Boulden, CNN, London.

(END VIDEOTAPE)

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