With investors losing patience, H. Wayne Huizenga struggles to drive up the company's stock price.
H. Wayne Huizenga's basic business concept has been simple: Buy up the competition, woo investors with double-digit growth and then bail out to the highest bidder. The Fort Lauderdale native parlayed a single garbage truck into the largest waste hauler in the nation, Waste Management Inc. He later transformed a tiny chain of video outlets in Texas into a nationwide media-retailing behemoth called Blockbuster. In the process, he has become one of the nation's wealthiest people and gained a reputation as one of America's shrewdest corporate tacticians.
Huizenga's latest venture, AutoNation (NYSE-AN), hasn't followed the script, however. Huizenga has acknowledged that he's stumped by the tumbling stock price of his national chain of new- and used-car retailers. Even after a major restructuring and annual earnings growth of near 100%, shares of AutoNation are going nowhere. The stock traded recently at $12 a share, down from around $33 two years ago.
Huizenga may have reason to be puzzled. In less than four years, the Fort Lauderdale-based company's annual sales have grown from zero to more than $20 billion. The largest Florida-based company, AutoNation ranks 83rd on the Fortune 500. On Fortune's list of fastest-growing companies, it ranks 38th. The company employs more than 60,000 people, mostly at the nearly 500 new- and used-car franchises it has scooped up across the nation. Along the way, Huizenga added three auto rental companies -- National Car Rental, Alamo Rent A Car and CarTemps USA -- to the mix. In 1998, the company recorded annual revenue growth of 76% and an earnings increase of 97%. Similar figures are expected this year.
But the road has not always been smooth. Early on, the company miscalculated the profitability of its used-car superstores and decided to shut down its regional reconditioning centers, moving the operations to local dealers. More recently, it has been hurt by the poor performance of its rental-car unit, due to an industry price war and problems with National's new computer reservation system.
Some analysts say the company's response to its slipping stock price may have only made investors more skeptical. In short, they say, management panicked. In quick succession the company sold its electronic security and solid waste divisions, shifted emphasis from used- to new-car sales, and changed the name of the company to reflect its core auto business. In August, AutoNation shocked many analysts by announcing intentions to dispose of its once highly touted auto rental unit. In a six-week period last summer, the company ousted President John Costello, rental unit President William Lobeck and co-CEO Steven Berrard, a long-time Huizenga partner and ally who helped found the company. In September, after an extensive search, Berrard's post was turned over to Michael J. Jackson, a highly regarded industry veteran formerly with Mercedes-Benz.
All that maneuvering has left a company that only faintly resembles Huizenga's initial inspiration. "The inconsistency of vision has definitely hurt them," says Sheldon Sandler, managing director of Bel Air Partners, a consultant to the auto retailing industry. "I think they have a very bright future, but they are still a young company that has made some mistakes and is still figuring out the best way to address them."
While most investment firms still rate AutoNation a buy or strong buy, analysts believe the company must show it can grow consistently without an endless string of dealer acquisitions to pump up its bottom line. Sandler says consolidation companies may simply have fallen out of favor on Wall Street. Indeed, all of Huizenga's other young companies -- Republic Services, Extended Stay America and Panthers Holdings Inc. -- face depressed share prices. "After any success, and Huizenga has had a couple of them, Wall Street is quick to place a crown on someone's head," says Sandler. "But when things go wrong, they're just as quick to knock it off."
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New GlobeCast Studios in Miami, when completed by year-end, will offer TV and film producers the largest soundstage east of Los Angeles. GlobeCast, a unit of France Telecom, is the leading provider of audio and video production and transmission services in the Americas.
Miami-Dade County -- South Florida's bid to host the Pan American Games in 2007 is dead. The bid, which could have brought in 5,000 athletes from 40 countries, failed to receive support from the Miami-Dade County Commission after extensive lobbying by anti-Castro groups opposed to Cuba's participation in the quadrennial event.
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