By Compiled from Times wires
Published July 17, 2003
PRICES, PRODUCTION RISE: Consumer prices rose modestly in June, and manufacturers boosted production by the largest amount since the beginning of the year, a pair of hopeful signs for the economy's revival. The 0.2 percent advance in the Labor Department's consumer price index for June was the first increase since March. That eased - but didn't erase - concerns that the country could be headed for deflation, an economically dangerous long-term slide in prices, analysts said. A report from the Federal Reserve showed factory output increased by a solid 0.4 percent in June, the second month in a row that production went up and the best showing since January.
VIRGIN AIR FOR U.S.: Richard Branson, the British billionaire entrepreneur who founded Virgin Group Ltd., plans to begin operating a low-cost airline in the United States in the first half of next year to take advantage of growing demand for budget travel. Branson said he wants a 49 percent stake in the carrier. His voting stake would be restricted to 25 percent to conform with U.S. law. Branson created Virgin Atlantic Airways, Britain's second-largest airline.
RAYTHEON CONTRACT MODIFIED: Raytheon Co.'s operations in St. Petersburg have received a $15.7-million modification to a previously awarded Naval contract for work on the Cooperative Engagement Capability progam, a high-tech communications network deployed on Navy ships and aircraft. Work will be done in St. Petersburg and Largo and is expected to be complete by June 2004.
BOEING TAKES CHARGE: Boeing Co. said it will take a second-quarter charge of about $1.1-billion as a result of its ailing satellite businesses, reflecting higher launch costs and weakened demand. The aerospace giant said it is pulling out of the commercial satellite launch business and will focus exclusively on the U.S. government as a satellite customer, resulting in higher mission costs.
MIRANT STOCK DUMPED: Shares of Mirant Corp., an Atlanta power producer that declared bankruptcy late Monday, plunged on expectations that stockholders will lose their investment as creditors seek repayment. The shares fell 85 percent from Monday's close on the New York Stock Exchange to 29.5 cents in over-the-counter trading. Mirant declared bankruptcy after failing in talks with bondholders and banks to refinance $4.9-billion in debt. The company had a $1.125-billion loan come due Tuesday.
LORAL SEEKS PROTECTION: Struggling to recover from an industrywide slump, satellite maker Loral Space & Communications Ltd. filed for Chapter 11 bankruptcy protection and will sell its six North American satellites to Intelsat Ltd. for up to $1.1-billion. Loral said it will reorganize around its manufacturing operations and its remaining network of five satellites. Those satellites - three in space now and two scheduled to launch within nine months - can serve markets in South America, Europe and Asia that Loral hopes will see faster growth. The company plans to use the proceeds from its other satellites to pay off $959-million in secured bank debt.
MICROSOFT ANNOUNCES FLAW: Microsoft Corp. acknowledged a critical vulnerability Wednesday in nearly all versions of its flagship Windows operating system software, the first such design flaw to affect its Windows Server 2003 software. Microsoft said the vulnerability could allow hackers to seize control of a victim's Windows computer over the Internet, stealing data, deleting files or eavesdropping on e-mails. The company urged customers to immediately apply a free software repairing patch available from Microsoft's Web site.
AMSOUTH BROKER SUSPENDED: The National Association of Securities Dealers fined former Tampa broker Dalton Thomas Poole $10,000 and suspended him from the securities industry for two years. The association said that while working for AmSouth Investment Services in Clearwater, Poole falsified client information on an application for an annuity and forged a client's initials on a form. Poole could not be reached for comment. He consented to the findings without admitting or denying them.
CEOS GUARDEDLY OPTIMISTIC: Chief executives of big companies have become more optimistic about the economy, but they expect growth to remain weak enough for job cuts to continue through at least the end of the year, according to a survey released Wednesday by the Business Roundtable, a lobbying group of CEOs. The executives predicted that a new recession was extremely unlikely. But few of the 117 executives polled planned to increase their spending on new factories and equipment, and 42 percent said the size of their work force would shrink in the next six months while only 16 percent said it would grow.
NAACP GRADES BUSINESS: The retail industry does a poor job of hiring and promoting blacks and also gets a low grade for its marketing and charitable work in the black community, the NAACP said in its first review of the sector. Retailers got an overall grade of D in the report released at the NAACP's annual convention. "It is very obvious that in that industry the time for change is now," said NAACP President Kweisi Mfume. The NAACP also released similar reports Tuesday on three other industries - lodging, telecommunications and banking. All three received Cs.
US AIRWAYS SHUFFLES THE DECK: US Airways Group Inc., which exited bankruptcy protection in April, shuffled managers in finance, operations, and marketing and planning after the departure of some executives in those departments at the airline. The executive change leaves the seventh-largest U.S. airline with a 30-person management team.
UNITED BOLSTERS LOW-FARE CARRIER: United Airlines parent UAL Corp. plans to assign 40 airplanes to its new low-cost, low-fare carrier during the first year of operation as part of efforts to compete with discount carriers for leisure travelers. The world's second-largest airline company is reorganizing after seeking bankruptcy protection in December. United told its creditors committee earlier this year that it ultimately wanted to place 134 of its 428 U.S. planes at the new unit, which might fly to 34 U.S. cities including Seattle, San Antonio and Miami. UAL closed its United Shuttle low-cost unit, which operated mainly on the West Coast, in 2001.
MOBILE HOME RATES JUMP: State Farm Florida is raising its mobile home insurance by an average of 57.8 percent and by nearly 200 percent in some counties while appealing a state Office of Insurance Regulation decision disallowing the increase. The company is allowed by law to increase rates during an appeal. If it loses the appeal, it will have to refund any increases. Among the highest proposed increases for counties is 197.8 percent in Martin, 193.3 in Collier, 171.7 percent in Palm Beach, 133.2 percent in Indian River, 131.9 percent in St. Lucie, 127.4 percent in Brevard, 117.9 in Monroe, 117.8 in Broward and 107.9 in Sarasota.
P&G PEDDLES JUICES: Procter & Gamble Co., the largest U.S. household-products maker, is considering selling its Sunny Delight and Punica juice brands to focus on billion-dollar businesses such as Pringles snacks and Folgers coffee. Based in Cincinnati, P&G is soliciting offers for the refrigerated drink and juice brands that generated about $550-million in sales last year, spokesman Gary Dowdell said. Sunny Delight and Punica would fit better as part of a company where the juice business is a priority, Procter & Gamble said.
TENET GETS SUBPOENAS: Tenet Healthcare Corp. said it has received subpoenas from federal investigators in Los Angeles about physician relocation agreements at seven Southern California hospitals since 1995. The company, the nation's second-largest hospital chain, said Tuesday it does not know the extent of the investigation initiated by the U.S. attorney's office in Los Angeles, but it would cooperate with the requests. Separately, Tenet warned that its San Diego hospital could be indicted by a grand jury by the end of the week in connection with charges that millions were paid to doctors to refer patients to the hospital.
DEFENSE CONTRACTOR CLEARED: Defense contractor Micro Systems Inc. of Fort Walton Beach and its president, Thomas Ferguson, have been acquitted of charges by a U.S. District Court jury that they defrauded the Army and Air Force for $1.3-million. "I knew we'd be vindicated," Ferguson said after the verdict. Company owner Larry Cooper said Ferguson, suspended since February, will return and that he hoped Micro Systems, which specializes in control systems for unmanned aircraft, would go back to business as usual.
VIVENDI SPURNS MGM: Vivendi Universal turned down a bid for its show business empire from Metro-Goldwyn-Mayer Inc., saying $11.5-billion wasn't enough for coveted assets like Universal Studios and its theme parks, the Associated Press reported Wednesday. MGM had offered to sweeten an all-cash bid to $11.5-billion - but only if Vivendi agreed to a one-week ultimatum for more information about the companies it is selling.
Earnings
Ford Motor Co.: The world's second-largest automaker's profit fell nearly 27 percent in the second quarter, and the company said lower production will likely result in a bigger third-quarter loss than analysts expected even as it steps up efforts to slash costs.
The consensus estimate on Wall Street was for earnings of 19 cents a share. The company reiterated its goal of earning 70 cents a share for the year, which would beat current estimates, despite saying it expects a wider loss than analysts anticipate for the third quarter.
IBM Corp.: Big Blue announced Wednesday that its second-quarter earnings rose significantly and matched Wall Street's expectations, driven largely by strong growth in the technology services division.
Apple Computer Inc.: Third-quarter profits fell by 41 percent though revenues rose enough to beat Wall Street's earnings expectations. Apple officials attributed the increase in revenue - the highest level in 11 quarters - to robust sales of laptops and the iPod portable music player and sales increases in the education market.
Merrill Lynch: The nation's largest brokerage reported a 61 percent increase in earnings for the quarter ending June 27, crediting a strong fixed income environment and gains in investment banking.
AMR Corp.: American Airlines' parent company narrowed its second-quarter loss to $75-million, thanks to a hefty federal aid package. The carrier said its financial condition was improving, but it also announced plans to halve operations at its St. Louis hub.
Allstate Corp.: Second-quarter net profits jumped 71 percent as higher revenue from recent rate increases helped the nation's No. 2 auto and home insurer easily ride out a costly spring tornado season. The company also boosted its guidance for 2003 operating income to a range of $3.50 to $3.65 per share. The consensus Wall Street estimate had been for $3.47 a share.
Progressive Corp.: The third-largest U.S. car insurer said second-quarter profit rose 78 percent after the company added clients and raised prices. Progressive is growing faster than rivals by using the Internet and telephone centers to sell policies at lower cost. The company can offer some customers better rates than competitors because they were quicker to raise prices after the price-cutting of the 1990s backfired.
Kraft Foods Inc.: The nation's largest food and beverage company said it will pour an extra $200-million into marketing spending this year to try to boost sales for its most disappointing U.S. products - cheese, coffee, cold cuts and cookies - after second-quarter profit fell short of expectations as a result of slower-than-expected sales. Kraft cut its earnings outlook for the year to a range of $2 to $2.05 a share, up 2 percent to 5 percent from last year but well shy of Wall Street's $2.13-a-share estimate.
Cornerstone Community Bank: The St. Petersburg bank saw net income jump 67 percent in the quarter ended June 30 from a year earlier. But earnings per share remained flat after Cornerstone completed a stock sale in October 2002 that increased the number of outstanding shares by 480,000.
Paradyne Networks Inc.: The Largo maker of high-speed Internet access equipment reported a net loss in the quarter ended June 30 that widened dramatically from the same period last year. A sharp decline in sales overwhelmed modest gains in service fees and royalties, leading to a 27 percent drop in revenue from a year earlier. Paradyne's cash position weakened slightly from the end of last year, with cash and cash equivalents totaling $44.5-million, down from $47.7-million on Dec. 31.
