And Rescue???
Now it is merging!
In the last year WMX lost a $91 million judgment when the Federal judge also called WMX management totally corrupt and greedy; fired their CEO; hired another CEO who quit in three months; faced overwhelming pressure to restructure from investor groups, Soros and Lens,; and now face huge investor lawsuits for their profit lies.
Then on March 10, 1998 WMX and USA Waste announced a merger of their two companies. The company will be called Waste Management and former WMX shareholders will hold 60% of the new company's stock. USA Waste CEO John E. Drury will become the new CEO. This ends the almost desperate search by WMX for a new CEO and may end the series of disasters happening almost monthly.
This surprise merger followed the extensive report of billions in charges and multi-year restatements of the WMX profits. On February 24, 1998 WMX Acting CEO Miller released an extensive report of a six year review that shocked investors and Wall Street. Over a seven year period the company lowered profits by $3.5 billion! Almost immediately after this announcement Standard and Poors and Moody's reduced the WMX rating by an unusual two points. Profit estimates for 1998 were greatly reduced. Piper Jaffray analyst reduced expected earnings from $1.63 to $1.10. Then with further revelations from WMX, 1998 WMX profits are now projected at $.93 per share! However, with the newly announced merger, WMX will be able to face the numerous class action investor lawsuits for what WMX calls its "incorrect," "misstated" "mistakes" in recent annual reports.
One might ask more basically, "What is happening at Waste Management?" A positive view would be that WMX found a much-needed top management team of the three top US Waste executives. The CFO (Chief Financial Officer) is Jerome York, former CFO of IBM and Chrysler (Wall Street Journal, 3/12/98). York guided turnaround and down sizing of those two companies. One can expect major down sizing in the new company, more than the 1200 manager types already announced. In CEO John Drury the 58,800 employee Waste Management gets a top flite aggressive exec who knows the business and has shown great success. Whether the new management team can clean up the mess at Waste Management, time will show. The comparison of the past and new management can be summarized by the statement out of the Soros group (big WMX shareholders). They say the company is moving "from one of the most incompetent managements I've ever encountered (Waste Management) to one of the better ones (USA Waste)."Soros says the merger is a good deal for investors.
Although the investors may fare better in the new merger of the third and largest waste companies in the world, there is no assurance that the people and the society will fare well at all. Initial information shows that the 17,700 employee USA Waste owns 182 landfills to only 137 owned by WMX. With USA Waste sales of $2.6 billion (WMX sales are $9.2 billion), this suggests many inefficient, older, or even Superfund type landfills held by USA Waste.
The Wall Street Journal ((2/27/98) in an article on WMX reports that the waste industry has problems because of the great success of recycling. They report that Americans recycle 27% of their trash and will increase it to 35% by 2010. That is good news. But it is bad news for Waste Management. This means that the amount of trash has not grown to feed the WMI landfills (now 319 of them!). It is this basic conflict of interest by Waste Management that Greenpeace has spelled out. Recycling reduces WMX profits! At the same time their that trash volume stays level, average prices at landfills have dropped almost ten percent in the last year from $39 to $36.50 per ton.
The STOP Waste Management campaign continues with a bigger target than ever!