The Texas economy is one of the most robust in the world. Wildly profitable companies and ingenious entrepreneurs call this state home, and what happens here influences businesses around the nation. Here’s a slice of the profits, losses, big deals, and backroom decisions happening across Texas this week.
Chesapeakes and Valleys
Chesapeake Energy is dumping more of its East Texas territory in an effort to increase its cash flow and climb out of debt. On Wednesday the company put 57,000 acres of crude oil and liquid natural gas fields in the Woodbine Sand area up for sale. Chesapeake is suffering primarily due to falling natural gas prices, and MarketWatch reports that the move “further illustrates the cash-strapped company’s efforts to cut its debt to $9.5 billion by the end of 2012.” So far the company has sold off $2.6 billion in assets this year.
The Bottom Line: Chesapeake’s bleak financial situation is making the company — the second-largest natural gas producer in the U.S. — look like an attractive acquisition target. Bloomberg reports that Irving-based Exxon and other potential suitors “may see a chance to scoop up the largest holder of onshore drilling leases before gas prices rebound.”
Neiman for all Seasons
It was a solid spring season for Neiman Marcus, as the Dallas-based luxury department store managed to boost profits by 35 percent over the same three-month period last year. Earnings increased to $62.6 million for the third quarter, compared to $46.2 million in 2011, the Wall Street Journal reports. Executives attribute the jump to the return of wealthy customers, who are spending more as the economy improves.
The Bottom Line: This is much-needed good news for the luxury clothing chain, which is gradually digging its way out of debt following its $5.1 billion leveraged buyout in 2005. Neiman is still about $2.8 billion in debt, according to the WSJ.
Seven’s Year Rich
7-Eleven is continuing to ramp up its aggressive expansion strategy, with plans to open thousands of new stores in 2012. About 630 of them will be in the U.S. and Canada, which will break a record the company set last year, the Dallas Business Journal reports. Last year the Dallas-based convenience store chain opened about 4,600 new locations worldwide, adding up to a total of more than 46,000 stores in 16 countries — more units than any other company in the world, according to the Huffington Post. By comparison, McDonald’s has 33,000 locations globally.
The Bottom Line: Along with 7-Eleven’s growth comes a surge in profits: The company generated about $76.6 billion in global sales in 2011. Analysts attribute the chain’s success to its strategy of allowing franchisees to personalize their stores to suit local needs.
Time Warner Cable reiterated this week that it isn’t getting any closer to picking up the Longhorn Network, an ESPN-owned station dedicated to University of Texas athletics that launched last year. A Time Warner spokesman told the Austin Business Journal that “at this time, there aren’t plans to carry the Longhorn Network.” Much to the chagrin of Austin-area UT fans, the region’s primary cable and satellite providers have thus far declined to broadcast the channel because distribution negotiations with ESPN are still in limbo. In Central Texas, the network is currently only available to Grande Communications customers. Earlier this month, UT Athletics officials said the Longhorn Network could broadcast as many as three games this season, up from two last year.
The Bottom Line: Despite Time Warner’s reservations, Longhorn representatives told the Austin Business Journal that they remain confident that a deal can be reached. ESPN is moving forward with construction of its new studios in Austin.
Winners of the Week: Dell Executives
Dell certainly knows how to send its people off in style. The company’s latest proxy statement reveals that its president of services, Stephen Schuckenbrock, received $1.9 million in relocation benefits to move to Plano from Dell’s Round Rock headquarters — a distance of about 200 miles. As the finance blog Footnoted points out, that works out to about $9,655 a mile. The generosity apparently begins at the top: The report also indicates that CEO Michael Dell’s 2012 compensation package is worth about $16.1 million, “more than 3.5 times what he made last year ($4.3 million).”
Loser of the Week: Coach America
Dallas-based charter bus operator Coach America announced this week that it will shut down in July and lay off its remaining employees, according to a report in the Dallas Business Journal. The company filed for bankruptcy in January, and its remaining assets were acquired last week by Stagecoach Group, a Scottish company with a transit network based in Chicago. The Dallas Business Journal reports that the purchase will allow Stagecoach to expand its operations into Texas and California.