In January, we picked 10 entities — nine companies and an Indian Community — we thought would be big newsmakers in the East Valley during the coming year.
We were right. Mostly. Our 10 have made plenty of news. But we didn’t list the two major utilities or the big oil companies.
Two of the biggest East Valley business stories this year have been the cost of gasoline and the threat of rolling blackouts.
Anyway, with half of the year in the books, here’s an update on our 2004 Ten to Watch:
AMERICA WEST AIRLINES
Business: Commercial airline
Annual revenue: $2.3 billion
The outlook from the hometown airline isn’t as rosy as it was at the beginning of the year.
In January, America West said it expected to be profitable in 2004, the first time in three years the carrier has earned money without government assistance. And in April, the carrier beat analyst estimates and eked out a surprising $1.2 million first quarter million profit, the company’s fourthstraight quarter in the black.
But last month, CEO Doug Parker warned high jet fuel prices that added $100 million in unplanned expenses could prevent the company from being profitable in the second quarter and the rest of the year.
The carrier has experienced some operational problems, as well.
For three months in a row, the airline finished at or near the bottom in government rankings that track on-time flights among 18 domestic airlines. In May, the numbers improved as America West finished fourth among major carriers.
The future will be tricky as fall fare wars have already begun among low-cost carriers. Analysts say the price cuts could hurt an industry that continues to struggle despite passenger loads that have returned to pre-Sept. 11, 2001, levels.
The company’s stock has fallen about 40 percent since the beginning of the year.
Business: Electronic gaming machines
Annual revenue: did not disclose
The world’s second largest gaming device manufacturer, Atronic Americas and its sister companies, Atronic International and Atronic Australia, are part of the Gauselmann Group, a family-owned German company. At its Scottsdale site, the company markets, sells and manufactures devices for distribution across the nation. Its products can be found in Las Vegas and Indian gaming venues.
Sales of the company’s newest line, e-motion, have gone "exceptionally well," a company official said. The video slot machine is the industry’s first heightadjustable gaming device and was introduced earlier this year. First introduced as nickel devices, the firm will soon add a penny machine to their electronically linked Arizona Magic games, which allow players to win large jackpots by joining players in different locations through data networks. The company will also soon unveil a gaming machine to coincide with an upcoming television show called "Deal or No Deal."
The firm is also expanding its research and development efforts, hiring mathemeticians, programmers and graphic designers.
Business: Telecommunications Annual revenue: $5.04 billion
In the Valley: Cable TV, telephone, Internet
At the start of the year, Cox Communications was locked in a battle with Disneyowned ESPN, and customers were left wondering if the popular sports network would be dropped from their service.
Cox, the nation’s No. 4 cable TV company, was trying to hold the line on prices with the network. Cable providers said ESPN and other programmers were driving up the price of cable TV, while ESPN said that its cost was a small portion of what Cox charges.
In February, ESPN and Cox announced a nine-year agreement that will keep ESPN and affiliated channels available on the Cox cable TV system with no increase in basic cable TV rates, at least this year.
The agreement, which took effect April 1, calls for Cox to pay an average 7 percent annual rate increase to continue running ESPN programming.
Business: Consumer products Annual revenue: $1.3 billion
In the Valley: Division headquarters, research and development center
In March, German-based Henkel KGaA purchased Dial Corp. for $2.9 billion.
Henkel agreed to leave the soap maker and its staff based in Scottsdale.
Dial, which makes and markets Dial soaps, Purex laundry detergents, Renuzit air fresheners and Armour canned meats, has 2,900 employees worldwide, about 600 of them working from the company’s Scottsdale headquarters and research facilities. Henkel, which makes and sells personal care products, laundry detergents, cosmetics and adhesives in 126 countries, has annual sales of 9.44 billion euros — about $11.7 billion — with 50,000 employees worldwide.
The new parent is expected to boost Dial’s future with bigbucks backing, technology, and other synergies.
Headquarters: Austin, Texas
Annual revenue: $4.9 billion
In the Valley: Employs about 3,600 in Tempe and Chandler
The creation of Freescale is the result of Motorola program to spin off its semiconductor business into a separate company. Motorola announced the move last October, saying it would increase shareholder value for both companies.
In February the spinoff company was given its permanent name — Freescale — and in April it was legally established as a wholly owned subsidiary of Motorola.
Motorola launched an initial public offering of 121.6 million shares of Freescale on Friday.
The IPO amounted to 20 percent of the total shares of Freescale, with the remainder still being held by Motorola and its shareholders. Those share will be available for trading in six months.
So far the spinoff has been accomplished with minimal disruption to Freescale’s East Valley workforce. The company has been doing some selective hiring to fill under 100 newly created positions locally.
Headquarters: Falls Church, Va. Business: Leading defense contractor
Annual Revenue: $19 billion for entire corporation
In the Valley: General Dynamics C4 Systems, based in Scottsdale; Spectrum Astro Space Systems division in Gilbert.
Defense contractor General Dynamics figured to have a good year, and so far that’s been the case in 2004. The Scottsdale-based C4 Systems division has won new contracts and stepped up delivery of its secure communications equipment to the United States armed forces in Iraq.
But the biggest local news has been the company’s acquisition of Gilbert-based Spectrum Astro, along with 525 employees and the brand-new Factory of the Future, a stateof-the-art satellite assembly and test plaant in Gilbert. Spectrum Astro, a designer and developer of mediumsized space satellites, has become part of the C4 Systems division, keeping it locally managed.
Business: Pharmaceutical maker and marketer
Annual revenue: $248 million
In the Valley: Corporate headquarters
Medicis, which has carved out its niche in dermatological, pediatric and podiatric prescription products, set its sights this year on the lucrative field of cosmetic dermatology, the fastest-growing segment of dermatology, driven by the aging babyboomer population.
In 2003, the company spent $160 million, nearly two-thirds of its annual revenue, for the exclusive North American rights to Restylane, a collagen alternative that had been popular in 60 countries, including Canada, for several years. Then Medicis invested millions more to hire and train a dedicated sales force of 40 and to develop the materials to accompany and promote the product.
In January, Restylane hit the U.S. market. Medicis sales soared 31 percent in the quarter that ended March 31, and the company’s assets topped $1 billion for the first time. Earnings jumped 36 percent.
Medicis has just announced it will spend $80 million to buy another injectable product with bigger particles from Restylane manufacturer Q-Med.
SALT RIVER PIMA-MARICOPA INDIAN COMMUNITY
Business: Salt River Gaming Enterprises (two casinos) and other endeavors
The scrub desert and farm fields that dominate the community’s landscape along Loop 101 are finally being transformed into business parks and shopping areas.
Last month, developer Opus West Corp. broke ground on the first phase of Opus Calendar Stick, a 270,000 square-foot, multibuilding office complex on 25 acres at the southwest corner of Via de Ventura and Loop 101. The first phase includes three buildings totaling 175,000 square feet.
Also last month, Rural/ Metro Corp., the emergency services company founded in Scottsdale more than 50 years ago, said it will move into the one of the buildings next year.
Opus and its development partner, Phoenix-based Mainspring Capital, are expected to break ground Wednesday on the $600 million, 209-acre Pima Center, a large planned business park west of Loop 101 and north of Via de Ventura.
Business: Makes stun guns
Annual revenue: $34 million
It’s been a memorable six months for Taser International, the Scottsdale-based producer of electric shock weapons for law enforcement agencies and the military.
The company continues to rack up record sales and earnings. Its stock price soared to new highs and then plunged on charges that its supposedly nonlethal weapons had been associated with more than 50 deaths. And the company broke ground on a new headquarters building, which is scheduled to open late this year in Scottsdale.
After soaring to nearly $60 a share on a split-adjusted basis in mid-April, Taser’s stock declined to $25.10 on June 17 on publicity about the deaths and investor disappointment with first quarter earnings, which nonetheless were a record. The stock has partially regained altitude based on recent orders.
Headquarters: San Francisco
Business: Financial services giant
Earnings: $5.7 billion in net income in 2002
In the Valley: Has more than 9,000 employees and more than 230 offices statewide.
Last month, about 300 Wells Fargo employees moved into the banking giant’s new Chandler campus as part of efforts to consolidate operations now spread throughout the Valley.
The workers were the first of about 2,000 Wells Fargo associates who will move into two buildings at the Ocotillo Corporate Center over the course of this year.
Wells Fargo is one of the largest banks in Arizona and is the No. 1 small business lender in the state and Valley. It has more than 9,000 employees and more than 230 offices statewide.
Also in late May, Wells Fargo announced that it plans to buy the investment assets of Wisconsin-based Strong Financial Corp. in a transaction that could be worth as much as $700 million.
10 to Watch
• America West Airlines
• Cox Communications
• Freescale Semiconductor
• General Dynamics
• Medicis Pharmaceutical
• Salt River Pima-Maricopa Indian
• Taser International
• Wells Fargo