Business TodayBy TIMES WIRES
© St. Petersburg Times
published February 4, 2003
REPTRON DOWNGRADED TO "D': Standard & Poor's downgraded Reptron Electronics' credit rating Monday in the wake of last week's bond default. The ratings service dropped the Tampa electronics company from a "B-" to a "D," indicating that it is in default on its debt. Reptron failed to make an interest payment to bondholders and is attempting to restructure its debt. Low credit ratings make it more difficult and more expensive for a company to borrow money.
MANUFACTURING POSTS THIRD MONTHLY GAIN: U.S. manufacturing activity grew for the third straight month in January, though at a slower pace, as worries about a war with Iraq dampened optimism. The Institute of Supply Management's manufacturing activity index came in at 53.9, below December's revised 55.2 but above analysts' expectations of 53 for the month. The above 50 reading indicates the sector is still growing.
CONSTRUCTION SPENDING UP: The Commerce Department said construction spending rose 1.2 percent in December, with home building the main source of strength, marking the biggest gain in 10 months. While the residential side has been strong, the commercial side has remained weak. Spending on commercial projects by private builders fell by 1.9 percent in December, the Commerce Department said.
WORLDCOM SLASHES 5,000 JOBS: WorldCom Inc. will cut 5,000 jobs, or 8 percent of its work force, as new chairman and CEO Michael Capellas pushes to lead the telecom giant out of bankruptcy this year. The Clinton, Miss., long-distance carrier, which estimates the cost cuts will save $2.5-billion annually, also said it will consolidate networks, renegotiate supplier contracts and trim its far-flung network of facilities, slashing square footage by 26 percent.
HEFTY CHARGE FOR HEAVY BAGS: Delta Air Lines is charging $25 for checked bags weighing more than 50 and less than 70 pounds, joining other carriers that tightened their weight allowances. As before, the airline will charge $80 for each bag weighing more than 70 pounds. The $25 fee does not apply to elite-level fliers or travelers in first or business class.
FORMER TYCO LAWYER FACES MORE CHARGES: Prosecutors expanded their case against Tyco International Ltd.'s former general counsel Mark Belnick by charging the one-time prosecutor with first-degree grand larceny, falsifying business records and scheming to defraud. Belnick, 56, who helped conduct the U.S. Senate probe into the Iran-Contra scandal, is accused of accepting a $12-million unauthorized loan. He pleaded innocent to the charges.
AMERICAN CUTS FLIGHT ATTENDANTS: AMR Corp.'s American Airlines, the world's largest carrier, will cut 750 more flight attendant jobs to match a reduction in flights as the company struggles to cut operating costs. American plans to eliminate 355 jobs on April 1 and an additional 395 on May 1, all in St. Louis.
BANKER PLACED ON LEAVE: Credit Suisse First Boston placed the head of its global technology group on administrative leave after an internal probe found he may have known regulators were eyeing his firm when he told his staff to "clean up" their files two years ago. CSFB revisited the matter with Frank Quattrone last week, when it uncovered an e-mail exchange between the star investment banker and former in-house legal counsel David Brodsky, people close to the situation said.
STEINMART CEO BEGINS: Michael D. Fisher, 55, took over Monday as chief executive of Stein Mart Inc., replacing John H. Williams, who retired after 23 years at the Jacksonville apparel chain. Fisher had been chief operating officer. Williams remains vice chairman.
FORD BUCKS DOWNWARD TREND: General Motors Corp. and Chrysler Group said their U.S. vehicle sales declined in January, while Ford Motor Co. reported its sales rose 4.8 percent. Analysts had predicted an incentives-led sales blitz in December would lead to a sluggish start for 2003. Sales of GM cars rose 23 percent compared with the same month in 2002, but the world's No. 1 automaker saw light truck sales drop nearly 19 percent. The Chrysler Group of DaimlerChrysler AG reported sales fell nearly 12 percent, with car and truck sales both off about 12 percent. Ford car sales were up 8.7 percent compared with the same month in 2002, and light truck sales rose 3 percent.
DELTA TRIES FOOD SALES: Delta Air Lines is testing sales of meals and snacks on select flights between Fort Lauderdale and New York this week. The selections include Mrs. Fields cookies and Pizzeria Uno sandwiches and cost from $2 to $7. Delta will begin selling food on its low-fare carrier, Song, which starts flying April 15, and may expand the sales to regular Delta flights.
KEY3MEDIA FILES CHAPTER 11: Los Angeles-based Key3Media Group, which operates the giant Comdex trade show, filed for Chapter 11 bankruptcy protection. The company has been buffeted by declining attendance at its signature trade show, along with a slumping technology industry and dwindling public fascination with the personal computer. Key3Media said its recapitalization plan, if approved, would leave the company in the ownership of investment bank Thomas Weisel Capital Partners.
TREASURY AUCTION: Interest rates on short-term Treasury securities rose in Monday's auction. The Treasury Department auctioned $19-billion in three-month bills at a discount rate of 1.155 percent. An additional $17-billion was auctioned in six-month bills at a rate of 1.185 percent. The new discount rates understate the actual return to investors -- 1.175 percent for three-month bills with a $10,000 bill selling for $9,970.80 and 1.209 percent for a six-month bill selling for $9,940.10. In a separate report, the Federal Reserve said Monday that the average yield for one-year constant maturity Treasury bills stood at 1.32 percent last week, unchanged from the previous week.
Humana Inc.: The Louisville, Ky., managed care company posted a loss because of employee-severance and legal costs.
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