Business TodayCompiled from Times wires
© St. Petersburg Times
published August 16, 2002
ANALYST RESIGNS AMID TELECOM CONTROVERSY: Jack Grubman has quit as telecommunications analyst for Salomon Smith Barney amid growing controversy over his alleged conflicts of interest in touting the shares of WorldCom, Global Crossing and other fallen companies. In announcing the departure to employees, the company defended Grubman's work and integrity. Grubman, whose research reports once sent stock soaring, is being investigated by the government and securities industry for his unwavering recommendations for companies that were paying millions of dollars to his firm for investment banking services.
REPORTS REFLECT ECONOMIC STRUGGLES: The nation's industrial sector lost momentum in July and new claims for jobless benefits edged up last week, fresh signs of the struggles companies and workers face amid a sluggish economic recovery. The Federal Reserve said output at factories, mines and utilities nudged up 0.2 percent, a slowdown from the brisk 0.7 percent increase posted in June. In another report, the Labor Department said new applications for unemployment insurance rose by a seasonally adjusted 6,000 to 388,000 for the workweek ended Aug. 10. The more stable four-week moving average of claims, which smoothes out weekly fluctuations, moved up to 381,750.
MORTGAGE RATES HIT LOW: Rates for 30-year mortgages dipped to a new low this week, providing more fuel for the mortgage refinancing boom. In a nationwide survey, mortgage company Freddie Mac reported that the average interest rate on a 30-year fixed-rate mortgage dropped to 6.22 percent, the lowest level in 32 years of recordkeeping. The previous low of 6.31 percent was set last week.
FLORIDA REPORTS JOB GROWTH: Florida's job growth hasn't been great over the past year, but it's still been something to cheer about, Enterprise Florida president Darrell Kelley said. Kelley noted that Florida gained 25,500 net new jobs over the 12 months ended June 30. While that was 202,242 fewer jobs than were added the previous year, it was still more than any other state. Only 15 other states had positive job growth during the period. Kelley gave Enterprise Florida some of the credit, saying the public-private partnership assisted in the creation of 26,171 direct jobs.
SRI CHAIRMAN RESIGNS: Richard T. Isel, 58, has resigned as chairman and chief executive of SRI/Surgical Express Inc. in Tampa. The company, which provides hospitals with surgical supplies, said board member N. John Simmons Jr. will succeed Isel as chairman. While the company seeks a replacement as CEO for Isel, who founded SRI's predecessor company in 1991, the company will be run by an office of the president that includes chief operating officer Wayne R. Peterson; former chief financial officer James T. Boosales, who will handle sales and marketing; and newly named chief financial officer Charles L. Pope Jr. Pope had been chief accounting officer for the company. Isel remains SRI's largest shareholder with more than 14 percent of the company's common stock.
IMSG APPROVES RETURN TO BANKERS: Insurance Management Solutions Group has approved a plan to end its 3 1/2-year run as a public company, folding back into a unit of parent company Bankers Insurance Group of St. Petersburg. IMSG, an insurance outsourcing unit that has struggled to carve a niche, said in a Securities and Exchange filing that it would loan Bankers Insurance up to $7-million to help fund the "self-tender offer." The deal calls for paying minority shareholders $3.08 a share, or about $12-million, for the 32 percent stake in the company not controlled by Bankers Insurance. In a separate filing, IMSG said it was unable to file a second-quarter report in a timely fashion because of the discussions to go private and the "unreasonable" effort and expense a filing would entail. IMSG shares most recently traded at 20 cents.
BOEING GETS $9.7-BILLION CONTRACT: Boeing Co. won a $9.7-billion contract to build 60 new transport planes for the Air Force. The contract calls for Boeing to deliver the C-17 Globemaster planes by 2008. Boeing has been eager to land the contract as shrinking orders from the ailing airline industry have hurt its commercial airline business. The company has cut production in half since Sept. 11 and issued layoff notices to about 30,000 workers, most of them in Washington state. In a separate development, Boeing Co. and Machinists union negotiators agreed to call in a federal mediator with just two weeks left on the current contract. The thorniest issues are job security and pensions.
EUROPA SAYS PETE FOUNTAIN JOINS BOARD: Europa Cruises Corp. of Madeira Beach says entertainer Pete Fountain has been elected to the board of directors of Casino World Inc., a wholly-owned subsidiary of Europa. Chairman and president Deborah Vitale says the company "is proud to have a man of Fountain's world renown associated with its Diamondhead, Miss., project." Through Casino World, Europa intends to develop a destination casino resort and hotel at its 404-acre site on the Bay of St. Louis in Diamondhead.
BEALL'S EXPANDING DISTRIBUTION CENTER: Beall's Inc. will spend up to $15-million to build a 150,000-square-foot addition to its distribution complex in Bradenton. The retail chain, which operates 445 department stores, gift shops and outlet stores in 10 states, is increasing the size of its Bradenton distribution facilities to 664,000 square feet. That's the total after Beall's moves out of 100,000 square feet of rented space in a former Sieman's plant. Beall's expects to increase its distribution center payroll by 200 jobs by 2005.
OFFSHORE TAX EVASION PURSUED: The government is seeking MasterCard records to identify tax cheaters whose offshore bank accounts cost the Treasury billions of dollars in annual tax revenue. The Justice Department asked a Miami federal judge to let the IRS examine MasterCard's files of credit cards issued by banks in 30 countries that are tax havens or permit secret bank accounts, including Switzerland and Bermuda. The General Accounting office says the Treasury loses $20-billion to $40-billion in tax revenue a year because of offshore accounts used by 1-million to 2-million people.
TYCO EXPANDS INTERNAL INVESTIGATION: Tyco International has expanded an internal investigation into its finances to include accounting practices dating to 1999. The company said in a securities filing that the Securities and Exchange Commission is looking at accounting issues, including the adequacy of some disclosures and the company's accounting treatment of security-monitoring contracts. It said the review has required Tyco to reclassify some items. The SEC also is examining how Tyco integrated companies it acquired and liabilities from the purchase-accounting method it used for acquisitions, Tyco said.
BRISTOL-MYERS MAY HAVE TO RESTATE RESULTS: Shares of Bristol-Myers Squibb fell after the drugmaker said it may have to restate results because it encouraged wholesalers to buy too many drugs as a way to pad its revenues. The Securites and Exchange Commission is investigating whether the sales promotion inflated Bristol-Myers' 2001 earnings by up to $1-billion. In a securities filing, Bristol-Myers also said the SEC examination might become "a more formal investigation." The company said it was unclear if it would have to restate results, and it didn't say by how much. Bristol-Myers' shares fell 95 cents, or 4 percent, to close at $22.66.
EISNER BUYS $10-MILLION IN DISNEY STOCK: Disney chairman and chief executive Michael Eisner bought $10-million of his company's shares as a sign of confidence in Disney's long-term prospects. Eisner bought 725,700 shares on the open market Wednesday at prices ranging from $13.55 to $14.49, according to a filing with the Securities and Exchange Commission. The purchase brings Eisner's stake in Disney to 13.9-million shares, and makes him the third-largest shareholder of Disney stock after the Bass family and Roy Disney, whose uncle Walt Disney co-founded the company. Disney is struggling with lower earnings from its ailing theme park, feature film and broadcast network divisions. Disney shares rose 65 cents Thursday to close at $15.15.
US AIRWAYS DROPS SAGINAW: US Airways says it is discontinuing service to Saginaw, Mich. It's the only city of 204 the carrier serves to loseservice in the immediate aftermath of US Airways' filing for bankruptcy protection. Saginaw has three daily flights to Pittsburgh on 19-seat planes operated as US Airways Express by Air Midwest. Air Midwest will end service Sept. 7, a decision made before the bankruptcy filing, US Airways spokesman David Castelveter said.
The Largo drug distributor took a special charge of $916,132 in the quarter ended June 30, the first quarter of its fiscal year, for legal fees and unpaid bills, resulting in a net loss. DrugMax is trying to increase its business of selling generic drugs produced by a joint venture with a manufacturer in India to improve margins.
The discount retailer said profit rose 27 percent in the quarter ended Aug. 3 as cost-conscious people bought more compact discs and pharmacy items. The results beat analysts expectations by 1 cent a share. Target shares closed up 27 percent, or $2.93, at $35.10.
Dell Computer Corp.
The world's No. 2 personal computermaker reported higher sales and a profit, as opposed to a loss a year earlier, in the quarter ended Aug. 2 as it sold more PCs and gained market share in corporate servers.
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