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HEROES

Citicorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %> surged $37 5/8 to $180 1/2 today after the venerable international powerhouse commercial and consumer bank, incorporated days before the outbreak of the War of 1812, agreed to merge with financial services supermarket Travelers Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRV)") else Response.Write("(NYSE: TRV)") end if %>. Travelers shares finished the day up $11 1/16 at $72 3/4. The deal calls for Citicorp holders to receive 2.5 new Citigroup shares for each share they hold and for Travelers holders to receive one new share for each share they hold. Effectively a 2.5 for 1 Travelers for Citicorp stock swap, the deal valued Citicorp at $154.22 based on Friday's close, for a 7.9% premium to that close. Forming what is planned to be the first real U.S. universal bank since the enactment of the bank-busting Glass-Steagall Act in the 1930s, the merger was well received. The combined company will have a total prospective equity capitalization of around $172 billion, or about $30 billion higher than the deal valuation.

Just about anything related to the financial services biz moved up today, buoyed by the deal between Citicorp and Travelers Group. Merrill Lynch <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MER)") else Response.Write("(NYSE: MER)") end if %> added $10 1/2 to $97, Morgan Stanley Dean Witter <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MWD)") else Response.Write("(NYSE: MWD)") end if %> advanced $4 9/16 to $80, and Chase Manhattan <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CMB)") else Response.Write("(NYSE: CMB)") end if %> ascended $6 7/8 to $147. American Express <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AXP)") else Response.Write("(NYSE: AXP)") end if %> rose $5 3/4 to $104 3/4, J.P. Morgan <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JPM)") else Response.Write("(NYSE: JPM)") end if %> gained $10 13/16 to $144 3/4, Lehman Brothers <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LEH)") else Response.Write("(NYSE: LEH)") end if %> moved up $6 3/16 to $80 13/16, and Donaldson, Lufkin and Jenrette <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DLJ)") else Response.Write("(NYSE: DLJ)") end if %> parent Equitable Companies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EQ)") else Response.Write("(NYSE: EQ)") end if %> climbed $5 3/4 to $64 1/16. DLJ also gaining ground, rising $4 5/16 to $92. Not to be left out of the party, Memphis-based brokerage Morgan Keegan <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOR)") else Response.Write("(NYSE: MOR)") end if %> added $1 1/2 to $23 7/16, perennial bridesmaid PaineWebber Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PWJ)") else Response.Write("(NYSE: PWJ)") end if %> picked up $2 13/16 to $44 1/2, and Charles Schwab <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SCH)") else Response.Write("(NYSE: SCH)") end if %> tacked on $2 9/16 to $39 5/8.

Generic pharmaceutical maker Barr Laboratories <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BRL)") else Response.Write("(NYSE: BRL)") end if %> jumped $5 15/16 to $44 15/16 after The Philadelphia Inquirer reported over the weekend that a recent study of 13,000 high-risk breast cancer patients suggested that the drug tamoxifen decreased those patients' chances of developing breast cancer by as much as 45%. The American depositary shares of Britain's Zeneca Group PLC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ZEN)") else Response.Write("(NYSE: ZEN)") end if %>, which developed the drug as a breast cancer treatment, also rose $9 3/4 to $147 on the news. The results of the study are a boon for Barr, which obtained the U.S. distribution rights for tamoxifen when it settled a patent infringement suit against Zeneca in 1993. Under the agreement, Barr buys the drug from Zeneca at a discount to its average wholesale price and sells it as a generic. In fiscal year 1997, the drug represented 76% of the Pomona, N.Y.-based company's total product sales of $284.5 million. The firm estimates the drug, which is protected by a patent until 2002, could generate annual sales of $300 million in the U.S. and has applied to the FDA to manufacture the generic version at its own facilities.

Drowned out by the media hoopla surrounding Citicorp's merger with Travelers Group was another, less earth-shattering banking merger today between Security First Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SFSL)") else Response.Write("(Nasdaq: SFSL)") end if %> and FirstMerit Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FMER)") else Response.Write("(Nasdaq: FMER)") end if %>. Security First gained $5 1/2 to $27 7/8 after FirstMerit offered to convert each Security First share into 0.8855 of a share of FirstMerit stock. The deal is valued at about $256 million, or $29.28 per Security First share. Based on the $22 3/8 per share closing price of Security First shares on Friday, the price represents a pretty rich premium of 31%. FirstMerit's CEO expects the merger will be accretive to earnings "in the first full year," adding that the bank will suspend its plan to buy back up to 1.5 million shares because of the merger. Apparently, the deal is not very popular in Security First's home base of northeast Ohio, as Cleveland-based brokerage firm McDonald & Co. reduced its rating on the company today to "underweight" from "hold."

QUICK TAKES: Biopharmaceutical company Gilead Sciences <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GILD)") else Response.Write("(Nasdaq: GILD)") end if %> jumped $7 1/8 to $43 1/4 after the firm said a study indicated that its Preveon drug reduced the HIV RNA, or viral load, of HIV patients when used with a combination of other anti-HIV drugs... Wire-based money transfer firm Moneygram Payment Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MNE)") else Response.Write("(NYSE: MNE)") end if %> was lifted $1 5/16 to $16 7/8 after agreeing to a tender offer by airline caterer and fellow money transfer services company Viad Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VVI)") else Response.Write("(NYSE: VVI)") end if %> at a price of $17 per share... Drug developer Eli Lilly and Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LLY)") else Response.Write("(NYSE: LLY)") end if %> tacked on $2 9/16 to $61 1/8 after Furman Selz upgraded the company to "buy" from "hold"... Cable TV system operator Tele-Communications Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TCOMA)") else Response.Write("(Nasdaq: TCOMA)") end if %> rose $13/16 to $32 1/4 after the company was raised to "buy" from "hold" by NationsBanc Montgomery Securities.

Local access network (LAN) and wide area network (WAN) technologies firm Datatec Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DATC)") else Response.Write("(Nasdaq: DATC)") end if %> moved up $1/2 to $6 after software maker Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> selected the company to assist its clients in installing and testing Microsoft's upcoming Windows 98 and NT 5.0 operating systems... CSK Auto Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAO)") else Response.Write("(NYSE: CAO)") end if %> added $1 3/8 to $25 5/16 after Salomon Smith Barney, Lehman Brothers, and Morgan Stanley Dean Witter started coverage of the retailer of auto aftermarket parts with "buy" ratings... Los Angeles-based real estate brokerage Kennedy-Wilson Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KWIC)") else Response.Write("(Nasdaq: KWIC)") end if %> rose $6 1/2 to $41 after obtaining an exclusive contract to sell a 3,000 acre plot of land in the Kohala Coast region of Hawaii.

Restaurant operator Ruby Tuesday <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RI)") else Response.Write("(NYSE: RI)") end if %> gained $3 3/16 to $35 3/4 after reporting fiscal Q3 EPS of $0.54, beating the First Call mean estimate by a penny. The company also announced plans to spilt its stock two-for-one and repurchase up to 2 million shares... Internet advertiser THINK New Ideas <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: THNK)") else Response.Write("(Nasdaq: THNK)") end if %> picked up $2 9/16 to $29 7/16 after agreeing to buy Seattle-based marketing firm Herring/Newman Inc. for $3 million in cash and stock... Cooper Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CBE)") else Response.Write("(NYSE: CBE)") end if %> was lifted $2 7/16 to $67 13/16 after Salomon Smith Barney raised its rating on the company to "buy" from "outperform"... The American depositary shares of ING Groep N.V. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ING)") else Response.Write("(NYSE: ING)") end if %> rose $3 3/16 to $66 after Bloomberg News reported that the Dutch insurance giant is thinking about selling its American property and casualty insurance unit, which could fetch up to $1 billion.

Advanced Micro Devices <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMD)") else Response.Write("(NYSE: AMD)") end if %> picked up $1 7/8 to $30 7/16 after Piper Jaffray started coverage of the chip maker with a "buy" rating and a 12-month price target of $40 per share... Networking solutions and software/hardware support services firm 4Front Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FFTI)") else Response.Write("(Nasdaq: FFTI)") end if %> tacked on $1 1/8 to $14 1/4 after Wheat First Union started coverage of the stock with a "buy" rating and a 12-month price target of $17.50 per share... Concentric Network Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CNCX)") else Response.Write("(Nasdaq: CNCX)") end if %>, a provider of Internet access and Web hosting services to businesses and consumers, was lifted $4 3/4 to $29 7/8 after agreeing to provide backbone data network services to broadband Internet services provider Teligent Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TGNT)") else Response.Write("(Nasdaq: TGNT)") end if %>.

Building materials retailer Wickes Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WIKS)") else Response.Write("(Nasdaq: WIKS)") end if %> gained $1 15/32 to $5 1/2 after announcing its same-store sales rose 9.5% in March compared to the same period a year ago... Botanical products developer Pure World <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PURW)") else Response.Write("(Nasdaq: PURW)") end if %> advanced $1 7/16 to $12 7/8 after reporting fiscal Q1 EPS of $0.19 versus $0.06 a year ago.

National Semiconductor Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NSM)") else Response.Write("(NYSE: NSM)") end if %> rose $3 7/16 to $23 11/16 today after announcing that its "PC on a chip," which combines a microprocessor with circuitry of more than a dozen additional chips needed to make a PC, will debut next June, potentially driving PC prices down to less than $400.

GOATS

It may seem like deja vu all over again for Bill Gates and Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %>. The computer software giant dipped $3 1/16 to $89 15/16 after The Wall Street Journal reported that the Justice Department might bring more antitrust charges against the company later this month. The new allegations would include violation of the Sherman Antitrust Act through "illegal maintenance and extension" of Microsoft's control of personal computer operating software. The case would also repeat allegations that the company violated a 1995 antitrust settlement by bundling its Internet Explorer software with Windows 95 and, now, Windows 98, which is scheduled to be released to computer makers May 15. According to the Journal, the Justice Department hesitates to block the imminent release of Windows 98 and instead may seek a court order requiring Microsoft to offer Windows 98 with and without Internet software. Microsoft can work around the restrictions on Windows 98 as it did with Windows 95. The much stickier issue is whether the company holds an unfair monopoly on operating software.

Software maker Oracle <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %> continued falling today, dropping $1 to $27 1/8 after losing nearly 7% on Friday following the company's warning on fourth quarter growth. At a meeting in San Francisco Thursday, the company told analysts not to expect growth rates to match those of last year and said it is working to increase sales of its applications software where it lags the growth rivals SAP AG, Baan Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BAANF)") else Response.Write("(Nasdaq: BAANF)") end if %>, and PeopleSoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PSFT)") else Response.Write("(Nasdaq: PSFT)") end if %>. While its competitors' applications software sales have been growing at 60% rates, Oracle's sales rose 30% last quarter. Oracle will need to see continued growth in applications to fuel its performance in 1998. However, the fact that total applications revenues grew 51% in the latest quarter (services and license) is a good sign.

QUICK CUTS: Telecommunications equipment company Lucent Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %> shed $3 3/8 to $69 1/2 after announcing it has paid $10 million for a minority stake in privately held Chip Express Corp., which specializes in laser-based technologies for rapid customization of semiconductor devices... Self-service solutions software company Edify Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EDFY)") else Response.Write("(Nasdaq: EDFY)") end if %> plummeted $6 7/8 to $11 1/4 after announcing it expects a first quarter loss of about $0.08 to $0.10 a share, compared with the First Call mean EPS estimate was $0.04... Biopharmaceutical company Cephalon Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CEPH)") else Response.Write("(Nasdaq: CEPH)") end if %> and biotechnology firm Chiron Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CHIR)") else Response.Write("(Nasdaq: CHIR)") end if %> fell after announcing that the FDA has cancelled the Peripheral and Central Nervous System Drugs Advisory Committee meeting so that the agency can continue its review of the companies' application for approval to market Myotrophin Injection for the treatment of Lou Gehrig's disease. Cephalon sank $3 3/16 to $12 3/16, and Chiron slipped $11/16 to $20 7/8.

Software and professional consulting services provider Viasoft Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VIAS)") else Response.Write("(Nasdaq: VIAS)") end if %> shed another $2 29/32 to $15 5/32 after giving further guidance by saying it expects Q3 earnings to be between $0.12 and $0.14 per share. The First Call mean EPS estimate was $0.26... Robotic Vision Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ROBV)") else Response.Write("(Nasdaq: ROBV)") end if %>, which makes 3-D machine vision systems for inspecting semiconductor devices, tanked $3 9/16 to $9 after announcing that it expects Q2 results to be "significantly below" expectations due to a fall in orders and revenues in its semiconductor equipment group. Excluding charges, the company expects to report a loss of approximately $2.5 million... Oil and gas company St. Mary Land & Exploration <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MARY)") else Response.Write("(Nasdaq: MARY)") end if %> was drilled for $6 5/16 to $32 3/4 after reporting that its initial test at Atchafalaya Bay, in which the company holds a 40% working interest, has shown the zone to be non-productive.

Consumer products maker Sunbeam Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SOC)") else Response.Write("(NYSE: SOC)") end if %> continued falling, losing $2 1/8 to $32 1/4 after announcing on Friday that it will report a Q1 loss due to acquisition charges and a 5% decline in sales compared with the year-earlier period. Goldman Sachs removed Sunbeam from its "recommended list" and gave it a "market perform" rating, while Bear Stearns lowered its rating on the company to "neutral" from "buy." Coleman Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CLN)") else Response.Write("(NYSE: CLN)") end if %>, one of the companies being acquired by Sunbeam, fell $1 13/16 to $24 9/16... Electronics manufacturer DII Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DIIG)") else Response.Write("(Nasdaq: DIIG)") end if %> dropped $2 5/16 to $18 5/16 after announcing plans to restructure its Orbit Semiconductor subsidiary and take a one-time charge of about $1.54 per share. The company also said, excluding the charge, it expects about a $0.20 a share shortfall in fiscal 1998 earnings.

America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> lost $1 5/8 to $72 7/8 after the Frankfurter Allgemeine Zeitung reported that German media giant Bertelsmann AG sold 900,000 shares, or a fourth of its stake, in the Internet service provider and plans to use the proceeds to build up online services in Europe and Australia... Quick-serve sandwich restaurant chain Schlotzky's Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BUNZ)") else Response.Write("(Nasdaq: BUNZ)") end if %> sank $5 1/2 to $15 after saying it would be late filing its annual report because its accountant was collecting more information for the audit. The company hasn't released any additional information, causing many investors to expect the worst, analysts told Bloomberg... Alcatel Alsthom <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALA)") else Response.Write("(NYSE: ALA)") end if %>, one of the largest industrial companies in France, slipped $1 11/16 to $36 1/2 on profit taking and the early repayment or conversion of a 6.5% convertible bond, Reuters reported.

Pentium chip maker Intel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> lost $2 13/16 to $73 7/8 today, largely due to the seemingly monthly re-emergence of price-pressure concerns. The latest incarnation comes from National Semiconductor Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NSM)") else Response.Write("(NYSE: NSM)") end if %>, which announced that it expects to unveil its "system on a chip" by mid-year next year.

FOOL ON THE HILL
An Investment Opinion
by Jim Surowiecki

Know the Board

If you want to clear a room of individual investors quickly, just start talking about corporate governance. The people listening will either flee or, more likely, drift off into comfortable sleep. Unfortunately, while most investors find discussions about the makeup of corporate boards and the appropriate role of such boards either boring or arcane (if not both), neglecting to look at a company's board is a bit like neglecting to look at a company's bank account. In the long run, corporations with strong, independent boards do a better job of selecting managers, guiding strategy, and ensuring accountability. And, as recent events at Iomega <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IOM)") else Response.Write("(NYSE: IOM)") end if %> and Cabletron <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CS)") else Response.Write("(NYSE: CS)") end if %> suggest, strong boards matter most when your need for them is least expected.

In the case of Iomega, for instance, the sudden departure of Kim Edwards as CEO means that the company's future -- and that of its shareholders -- rests in the hands of its board of directors, which appointed James Sierk, a longtime member, as an interim CEO and is currently in search of a permanent replacement for Edwards. Yet it seems safe to say that the vast majority of Iomega investors don't know who's on the board or what their relationship to current management is. Given the fact that Edwards' resignation was described as "a mutual decision," the Iomega board was clearly not a shill for the CEO, as too many corporate boards still are. But in many ways Iomega investors are now navigating in the dark. They knew, and presumably trusted, Edwards, who built the company into a $1.7 billion firm while making the Zip drive into one of the hottest PC peripheral products ever invented. They know much less about the board and how it will go about deciding on a new CEO.

This isn't to say that the Iomega board made the wrong decision in letting Edwards go, since there's a plausible case to be made that companies need different kinds of leadership at different stages of their development, and that Edwards may not have been the right person to push Iomega to the next level. But it is to say that many investors adopt a paradoxical approach when they evaluate companies. Living as we do in a time when the cult of the CEO is in full bloom, we're constantly bombarded with images and articles reminding us that CEOs are the crucial players in a company's success. The ever-more-lavish compensation packages that CEOs receive have as their only justification this faith that the man on top is responsible for increased sales, profits, and market share. (Otherwise his pay shouldn't rise more than that of the rest of management.) Logically, then, the process by which CEOs are selected should be of overwhelming importance to investors, and the willingness of corporate boards to replace CEOs who don't perform should be an important part of evaluating any company. But all indications are that the strength or weakness of a board plays no real role in investor decisions. It is, at best, an afterthought.

What's striking about this is that institutional investors have adopted a very different stance toward the question of corporate governance. In fact, it's safe to say that the mantra of "shareholder value," which CEOs now invoke at the drop of a hat, is almost entirely the product of institutional investors' efforts to make corporate managers more accountable to their boards, in part by making boards more accountable to shareholders. Institutional investors, in other words, understand that a corporate universe in which managers are responsible to no one but themselves is a corporate universe in which capital will be mis-allocated, and in which the long-term health of corporations is put at risk by unlimited managerial discretion.

It's no coincidence that if one looks at the companies whose boards are consistently rated among the country's best in terms of independence -- which means board members are not tied to the company in any way -- and accountability to shareholders -- which means board members can be easily voted out of office -- one finds some of the strongest companies in America, including GE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %>, Compaq <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %>, Intel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %>, and Johnson & Johnson <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JNJ)") else Response.Write("(NYSE: JNJ)") end if %>. And if one looks at the companies whose boards are consistently rated among the nation's worst, one finds some of the least impressive companies in America, including Dow Jones <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DJ)") else Response.Write("(NYSE: DJ)") end if %>, AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %>, and Archer Daniels Midland <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ADM)") else Response.Write("(NYSE: ADM)") end if %>. There are, of course, exceptions, most notably Disney <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DIS)") else Response.Write("(NYSE: DIS)") end if %>, but even with regard to Disney CEO Michael Eisner's refusal to plan seriously for succession, coupled with a pliant board, makes that company's future less certain than it should be.

Peter Drucker was fond of saying, "In every major business catastrophe of the last forty or fifty years, the board members were apparently the last people to be told that something was awry." In the last decade and a half, we've made great progress toward preventing that kind of isolation and toward ensuring that boards take an active role in shaping the broad strategic vision of their companies. But there's still much further to go.

In the case of Iomega, for instance, if Edwards was essentially dismissed because his plans for an heavy investment in marketing the Zip did not work, then the board needs to be asked why it didn't advise against those plans before they were implemented, rather than after. In the case of Cabletron, where the CEO was unceremoniously dismissed just six months after being brought to turn around the company and replaced by one of the firm's co-founders, the board needs to be held responsible either for its misstep in picking the CEO or for its cavalier acquiescence in the new CEO's power grab. The mark of a great company is its ability to manage succession well and to bring new leaders aboard without throwing the entire business into turmoil. And the only way to do that is to have an active independent board that can place the interests of the company as a whole above those of any individual manager.

CONFERENCE CALLS

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Contributing Writers

Brian Bauer (TMF Hoops), another Fool
Jennifer Silber (TMF Amused), Fool at last
Editing