The company said it wants to communicate more about its values, products, and employees through a new Internet site and nationwide television commercials. On the site, the company acknowledged that there's scientific evidence that smoking can cause cancer.
The company in June said it would embrace a public relations strategy of "no more bunkers" to help buff an image scarred by hundreds of suits by states, individuals, and the federal government. The new Web site, includes a statement that there is "overwhelming and scientific" consensus that smoking causes lung cancer and other serious diseases.
"After years of denial and deception ... this formal acknowledgment comes far too late, but still we must all welcome it," President Bill Clinton said Wednesday. "It can be the beginning of clearing the air."
The U.S. government last month sued Philip Morris and the tobacco industry to recover billions of dollars spent treating sick smokers, accusing them of "racketeering" by conspiring during decades of deceit to hide the risks of smoking.
The suit followed the industry's US$206 billion settlement with 46 states over health-related claims.
Philip Morris' research indicated that the public's perception of the company had fallen to an all-time low, said analyst Martin Feldman at Salomon Smith Barney.
"`The reason for the public statements must be to try and improve the attitude of Americans generally, and specifically, the attitudes of jurors," said Feldman. He rates the stock a "buy," though he's cautious about its short-term prospects.
The shares today fell 1.25 to 32.75 and earlier dropped to their lowest level in almost three years. Philip Morris' stock has lost 38 percent of its value this year, the biggest decline among the companies in the Dow Jones Industrial Average.
Will ads reduce public anger?
Philip Morris, which also owns Kraft foods and Miller Brewing, said the first ads will focus on the New York-based company's concern about issues such as hunger, domestic violence, and curbing youth access to tobacco.
The new site, for instance, provides a link to the U.S. Centers for Disease Control's information detailing advice for smokers who want to quit.
"For too long we have let others define who we are--now we will focus on getting our story out to the American people," said Steven Parrish, senior vice president of corporate affairs.
The statement on the risk of smoking is the company's most aggressive yet, said Salomon's Feldman.
Philip Morris wants to reduce some of the anger that the public--potential jurors in lawsuits--feels about the company and tobacco industry, he said.
"If they were successful in improving prospects in litigation, that might lead to an enhanced equity valuation," he said.
Philip Morris shares trade at 10 times earnings, less than the price-to-earnings ratio of 30 awarded the stocks in the Standard & Poor's 500 Index.
Today, the World Health Organization said it has begun an investigation into what it called a "systematic and global" attempt by the tobacco industry to undermine the United Nations campaign to control smoking.
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