Business digest

EU TO STUDY CRUISE PROPOSALS: Carnival Corp. faces a four-month antitrust probe by the European Commission on the proposed acquisition of P&O Princess PLC. Carnival may be forced to sell assets to complete the acquisition as a result of the EU's investigation. Carnival said it will cooperate with the EU and with the Federal Trade Commission, which is also reviewing the transaction. European regulators have expressed concern that the combination might dominate the cruise travel market. Carnival is the world's biggest cruise line; Princess is third. P&O has been trying to block Carnival's advances by pursuing a combination with No. 2 operator Royal Caribbean Cruises Ltd. P&O Princess shareholders voted in February to delay a decision on the Royal Caribbean union to enable regulators to scrutinize the proposal as well as the Carnival bid.

MATTEL REVISES POLICY: Mattel Inc. revised its policy on severance awards following shareholder criticism of a $50-million sendoff that the toy company gave to former top officer Jill Barad. Under the new rules, Mattel in most cases won't grant a departing executive severance benefits that "significantly exceed" the requirements of the officer's employment contract, according to a filing with the Securities and Exchange Commission.

ORBITZ OPERATIONS QUESTIONED: The Department of Transportation and the Justice Department are separately studying whether the travel Web site Orbitz is getting special bargain fares that rivals can't. Orbitz is owned by the nation's five largest airlines. About 45 carriers have signed on as "charter associates," which obliges them to give Orbitz any of the super-low fares they offer on their own Web site. Many of these are unusually low fares. At issue is whether Orbitz is undercutting sites such as Expedia and Travelocity.com to such an extent that competition will eventually dry up, boosting ticket prices in the long run. Overall, online travel revenue is estimated to hit $20.4-billion this year from the U.S. leisure market alone, up from a previous $14.2-billion. Orbitz is owned by UAL Corp., American Airlines, Delta Air Lines, Northwest Airlines and Continental Airlines.

JETBLUE IPO: JetBlue Airways Corp. raised $158.5-million in its initial public offering after boosting the sale by 11 percent to meet demand from investors. JetBlue sold 5.87-million shares, or 14 percent of the company, at $27 each, up from the expected range of $25 to $26. The stock will trade today under the symbol JBLU on the Nasdaq Stock Market.

KRISPY KREME DISCLOSURE: Krispy Kreme Doughnuts has started voluntarily disclosing its four top executives' plans to sell their company stock, posting that information on its Web site within two trading days of advising the Securities and Exchange Commission. Securities experts said they know of no other company making it so easy to find disclosures of stock sales executives are considering. The move comes a week after Krispy Kreme disclosed details of its revised borrowing plan for financing a $35-million Illinois doughnut mix plant, revealing the loan's interest rate, term and lender. Krispy Kreme's lease arrangement was described as an "off-balance-sheet trick" in a Forbes magazine article that led to a 10 percent drop in Krispy Kreme's stock on Feb. 5. Its stock rose 15 cents Thursday to $40.02.

ANDERSEN DROPPING CLIENTS, TOO: Even as scores of companies dump it as auditor, ailing Arthur Andersen LLP is dropping some clients on its own amid growing questions over how much longer it can survive. Andersen told BNCCorp in a letter filed with the Securities and Exchange Commission that it is resigning as its auditor because of what it acknowledged is an uncertain future. "Given the uncertainties in our practice, it is not in our or your best interests to proceed as your auditors if there is a possibility we cannot complete what we started," the firm told the bank holding company. The resignation took effect last Friday. "I've never heard of a firm resigning and saying, "We're not sure we can complete your work,' " said Arthur Bowman, editor of Bowman's Accounting Report.

JOBLESS CLAIMS SLIDE: First-time claims for unemployment insurance fell by a seasonally adjusted 55,000 last week to 438,000, the Labor Department reported. Even still, the total claims number is inflated because of a fluke: Laid-off workers seeking to take advantage of a federal extension for benefits were required to submit new claims. The more stable four-week moving average of new claims, which smoothes out week-to-week fluctuations, rose last week to 433,750.

HSN NAMES COO: John Watson, former president and chief executive of Sunglass Hut International, has been named chief operating officer of Home Shopping Network. As second-in-command to network president Mark Bozek, he will oversee the St. Petersburg TV shopping network's growing international presence, affiliate sales and new business development. Sunglass Hut, a Miami company before it was purchased last year by Italian eyeglass framemaker Luxottica Group, sells sunglasses and watches in 2,000 stores on three continents.

SEC APPROVES XEROX FINE: Xerox Corp.'s top executives led a four-year scheme to inflate revenue by $3-billion to meet Wall Street's growth targets, the Securities and Exchange Commission said in approving a record $10-million fine against the copier company. The size of the penalty, the largest against a public company for financial fraud, reflects the magnitude of Xerox's financial fraud and its failure to cooperate with the investigation, SEC Associate Enforcement Director Paul R. Berger said. Xerox previously said it agreed to a preliminary settlement.

TROPICAL JOB CUTS DETAILED: A day after Gov. Jeb Bush boasted of 125 new jobs coming to an expanded Tropical Sportswear Int'l Corp. in Tampa, the company provided more details of the consolidation of its Savane Division. Tropical will take a $16-million pretax charge against fourth-quarter earnings for severance, lease termination and asset write-downs in closing its El Paso, Texas, administration building and fabric-cutting facility. About 60 El Paso workers will transfer to Tampa, while 140 others at what was a union shop will lose their jobs. Tropical, which makes men's and women's casual pants mainly in Mexico and the Dominican Republic, will emerge from the consolidation with a 12 percent reduction in its domestic work force. The relocation will save the company $4.5-million annually.

AEROSONIC LANDS CONTRACT: Aerosonic Corp. of Clearwater has received a contract to provide an integrated air data system for the Lockheed Martin Joint Strike Fighter project. The work will be performed at Aerosonic's avionics division in Charlottesville, Va. J. Mervyn Nabors, Aerosonic's president and chief executive, declined to disclose the size of the defense contract, but said it was the largest ever received by his company. He estimated it could result in a 25 percent increase in the Virginia plant's work force, which now numbers about 120. In Clearwater, Aerosonic employs about 150.

MERRILL GETS DELAY: Merrill Lynch & Co. won time to work out a settlement with the New York State Attorney General on how much to disclose about current and prospective investment banking clients in Merrill's stock research. Attorney General Eliot Spitzer agreed to extend until April 19 a judge's order forcing the biggest securities firm to spell out its relationships with companies it recommends to investors. Merrill shares fell $4.02 to $46.90.

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