Grinding Gears
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."

In the News

Fort Lauderdale -- BankAtlantic (NYSE-BBX) continues its aggressive expansion outside traditional banking services with the acquisition of Boca Raton-based Levitt Corp., the 70-year-old homebuilder best known for its post-war Levittown developments in the Northeast U.S.

Falling oil prices and heavy debt have forced Hvide Marine (Nasdaq-HMAR) to file for Chapter 11 bankruptcy protection. The 41-year-old shipping and towing company, which laid off 15% of its 3,400 employees worldwide last spring, hopes reorganization will allow it to remain afloat without additional layoffs. In June, J. Erik Hvide, whose father founded the company, resigned as chief executive after 29 years in the post.

Florida Panthers Holdings, the publicly traded company created to offer shares in the National Hockey League's Florida Panthers, has changed its name to reflect the company's expanding interest in hotels and real estate. The new name: Boca Resorts (NYSE-RST). Although originally touted as an opportunity for community investment in south Florida's pro hockey team, the company now derives 80% of revenues from its nationwide portfolio of upscale hotels.

Indian River County -- Florida Chamber of Commerce Executives gave Indian River Chamber of Commerce the 1999 Florida Chamber of Commerce of the Year award.

Miami -- The latest international corporation setting up Latin American headquarters in Miami: Daimler Chrysler. A package of tax refunds and other incentives helped persuade the company to relocate its Latin American and Caribbean operations here from its current base in Auburn Hills, Mich. About 30 employees will transfer.

Federal regulators have seized Peoples National Bank -- Florida's only black-owned bank -- and sold its assets to Boston Bank of Commerce, another black-owned institution. The Miami-based bank has reopened under the name Peoples National Bank of Commerce. Regulators say Peoples had become severely undercapitalized and suffered from improper lending and accounting practices.

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.

Michigan-based Taubman Center acquired a 50% stake in Dolphin Mall, a 1.4-million-sq.-ft. entertainment and value-shopping complex planned for west Miami-Dade that is nearly a year and a half behind schedule. Taubman, a prominent player in the mall industry nationwide, is expected to bring leasing clout to the $270-million project.
As a step toward initiating passenger service at Opa-locka Airport [FT, "Grounded," August 1999], a Scottish company plans to build two maintenance hangars at the little-used facility. Once completed, the $80-million project is expected to create about 300 air-transport and service jobs. Stagecoach Aviation, a subsidiary of one of Britain's largest publicly traded companies, believes the money-losing airport can accommodate overflow passenger traffic from Miami International, one of the nation's busiest airports.

Pompano Beach -- Freightliner Trucks of South Florida will move its headquarters from North Miami to Pompano Beach following completion of a $4-million, 58,000-sq.-ft. sales and service facility near the intersection of Copans Road and I-95.

West Palm Beach -- In a move to consolidate its operations, Florida Crystals Corp. is leaving the town of Palm Beach for a new 23,000-sq.-ft. headquarters on North Clematis Street in West Palm Beach.

Overheard
Codina Group, the development firm where Jeb Bush worked before heading to Tallahassee, is shaking up the south Florida commercial real estate scene with its big push into Broward and Palm Beach counties. The company, led by Cuban emigré Armando Codina, has been the premier developer of office and industrial space in Miami-Dade County for nearly 20 years as well as a major broker and property manager. But recently the group has snared some big projects up north: It snagged the much-coveted contract to build National Council on Compensation Insurance's new 1,000-employee headquarters in Coconut Creek after NCCI's deal with CarrAmerica Realty fell through. Codina Group also is developing about 400,000 square feet of Class A office space in Weston, and the company says it will be announcing two major deals in the Broward/Palm Beach area soon. Many Codina executives -- including Bush when he was there -- have nudged Codina to expand even further statewide. But he's not interested. "If I can't drive there and get back in time for lunch with my mother, it's too far," Codina says.