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Philip Morris Plans Name Change to Altria Group

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TIMES STAFF WRITER

Cigarette giant Philip Morris Cos. announced plans Thursday to change its name to Altria Group Inc., in what analysts called a move to distance the company from its most profitable but controversial product.

In an e-mail sent to the company’s 178,000 employees, Philip Morris chairman and Chief Executive Geoffrey C. Bible said shareholders will be asked to approve the new name at the firm’s annual meeting next April. The name will replace that of the parent firm, Philip Morris Cos.

Its operating units, including Kraft Foods, Miller Brewing, Philip Morris Inc.--the domestic tobacco company--and Philip Morris International--the global tobacco firm--will keep their names.

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The name change reflects a trend of companies adopting ethereal-sounding neologisms--or made up names--to highlight a new business focus or shed public-relations baggage. The wave of new names has included Accenture Ltd., formerly Andersen Consulting, Unisys Corp., formerly Sperry Corp. and Burroughs Corp., and Lucent Technologies, part of the spinoff of AT&T.; Another is Raymark Industries, which sought to shed the taint of asbestos along with its old name, Raybestos-Manhattan Inc.

Philip Morris executives said the change will help to clarify the diverse nature of the company’s businesses. But analysts and anti-smoking critics saw it as a direct result of the unsavory image of tobacco, which still accounts for two-thirds of its profits.

“Obviously, they’re trying to distance themselves a little bit from the tobacco side of their business,” said Brian Evans, managing director of Ashton Brand Group, a consulting firm in San Francisco.

Matthew Myers, president of the National Center for Tobacco Free Kids, called the name change a “hypocritical ploy to divert attention from the fact that [Philip Morris is] first and foremost a cigarette company, whose products are used by more children than the products of any other cigarette company.”

“The unfortunate problem is that nothing has changed but the name,” Myers said.

Spokesman David Tovar said Philip Morris had been considering the name change for more than a year. According to a statement, the name “Altria” comes from the Latin word “altus,” and reflects a desire to “reach higher” to achieve greater financial strength and corporate responsibility. Although some people might associate “Altria” with the world altruism, Tovar said that was not the intent.

Philip Morris has been engaged in a high-profile ad campaign to promote its involvement in fighting hunger and other social causes. The campaign began in the fall of 1999, when the company also launched a new Web site that made what at the time seemed like startling admissions about the risks and addictiveness of smoking.

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Martin Feldman, a tobacco analyst with Salomon Smith Barney, said he believed Philip Morris has tried to be less combative and more conciliatory since 1998, when it joined other cigarette makers in a sweeping litigation settlement with state attorneys general.

He said that in past scrapes with critics, Philip Morris “just said, ‘We’ll see you in court.”’

More than anything, the name change reflects a realization “that the old name stood for the old values,” Feldman said.

He said the new name will make no difference to investors, but over time might help the company to improve its public image. Feldman said he personally didn’t think “Altria” was a terrific choice, calling it “difficult to pronounce.”

The company was incorporated as Philip Morris & Co. in 1902, borrowing the name of a London tobacconist of the late 19th century.

Fueled by the phenomenal popularity of Marlboro, Philip Morris eventually grew into the world’s largest tobacco company. And despite a gradual decline in smoking in the U.S., the company has grown at the expense of its rivals, and now has a U.S. market share of about 51%. Marlboro alone outsells the combined brands of its competitors.

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The company had net sales last year of nearly $58.8 billion. But of $16 billion in year 2000 profits, $10.62 billion--or 66.1%--came from the domestic and international tobacco units.

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