SBC CUTS THOUSANDS OF JOBS: SBC Communications Inc. said Tuesday that it is cutting 3,000 to 4,000 jobs this quarter. Walt Sharp, a spokesman for SBC in San Antonio, Texas, said the reductions, representing about 1.7 percent to 2.3 percent of SBC's work force, will come as a result of employee buyouts and attrition. No layoffs were planned. By year end, SBC will have slashed its work force by nearly 30,000, or roughly 15 percent, since late 2001. More cuts are expected next year.
SCRUSHY TO CHALLENGE LAW: Fired HealthSouth CEO Richard Scrushy will challenge the Sarbanes-Oxley Act, the new corporate corruption law under which he's been charged with fraud, his lawyers said Tuesday. While Scrushy is set for trial Feb. 2, both sides agreed a delay was needed because of the challenge and the fact the government has more than 1-million documents to turn over to the defense. Separately, a federal judge is scheduled today to sentence the first five of 15 former HealthSouth executives who agreed to plead guilty in the case. And, a lawyer for Scrushy disputed an affidavit filed by the Internal Revenue Service that says he has paid $21-million in legal fees with money obtained through the alleged fraud.
MEDCO FACES NEW CHARGE: An additional federal charge has been filed against Medco Health Solutions Inc., and two former company officers have become defendants. Diane Collins, a Tampa resident who was vice president/general manager of Medco's Tampa II facility until January 2001, is accused of destroying and directing the destruction of patient prescriptions to avoid paying penalties for delayed fulfillment. Robert Blyskal, vice president of Medco until March 2003, is charged with covering up the destruction of prescriptions in Tampa and making misleading statements to the government. Medco now is accused of making improper payments to an insurer in return for a government contract. Executives at Medco, which processes prescriptions for insurers, have denied all charges. The company said Tuesday it will ask by Dec. 30 to have the amended complaint dismissed. Collins' attorney, Jack Fernandez of Tampa, said he had not seen the lawsuit and was unable to comment.
PROGRESS COMPLETES HINES UNIT: Progress Energy Florida has completed a natural gas-fired generating unit at its Hines Generation Complex in Polk County. The 516-megawatt unit will supply electricity to the company's 1.5-million customers in St. Petersburg and Clearwater and central Florida, Progress said. Progress already has a 482-megawatt gas-fired plant operating at the Hines site. Construction of a third unit at Hines is scheduled to begin in February and be completed in December 2005. The utility also plans a fourth unit at the site.
FUND EXEC PLEADS GUILTY: A former senior executive at Security Trust Co. pleaded guilty Tuesday to charges that she facilitated illegal mutual fund trading in a scheme that cost investors millions - the latest admission of wrongdoing in an industrywide scandal. The plea by Nicole McDermott comes two weeks after New York Attorney General Eliot Spitzer and the Securities and Exchange Commission accused her, along with two other top executives, of stealing millions of dollars worth of fund shares through unlawful trading. The complaint said hedge funds that placed improper orders made $85-million in profits, on which Security Trust made $5.8-million.
GAP FOUNDER STEPS DOWN: Gap Inc. founder Donald Fisher said Tuesday he is stepping down as chairman of the retailing icon that he started 34 years ago as a frustrated shopper trying to find a better-fitting pair of jeans. Fisher, 75, will relinquish the chairman's title to his son Robert, a former Gap executive, after the San Francisco company's annual meeting in May. He intends to remain on the board as chairman emeritus and continue to advise Gap's chief executive officer, Paul Pressler, whom Fisher recruited in 2002.
VERIZON LISTS BUYOUT COSTS: Verizon Communications Inc. said it will have expenses of as much as $3.7-billion through March for pension costs and early retirements of 21,260 employees. That includes a fourth quarter charge of $2.8-billion, or 99 cents a share after taxes, for the early retirements announced last month, Verizon said. The company will also have pension charges of $700-million to $900-million mainly in the first quarter. The workforce reduction will save Verizon about $1-billion a year before taxes, the company said.
AOL CUTS 450 JOBS: America Online is laying off 450 people, or 2 percent of its work force, as the struggling Internet service provider consolidates its software development operations in California. AOL spokesman Jim Whitney said Tuesday the company would also close its software development offices in San Francisco and San Diego as it consolidates its development efforts in Irvine and Mountain View, Calif. Whitney, confirming a Wall Street Journal story, said the job reductions would leave AOL with a work force of 19,000. Whitney said 100 of the people being laid off would be offered the opportunity to relocate.
HP CONSOLIDATES UNITS: Hewlett-Packard Co. announced Tuesday it would consolidate five business units into four and give two executives new roles in an attempt to boost sales to corporate customers. During HP's annual analyst conference in New York, chairman and chief executive Carly Fiorina also reiterated her bullish outlook for the Palo Alto computer maker. HP has estimated earnings per share will jump 20 percent in the next quarter, and on Tuesday Fiorina predicted the company would boost earnings per share by 20 percent throughout fiscal 2004. It's unclear if the reduction in business units will result in layoffs.
GLOBAL CROSSING EMERGES: Global Crossing Ltd., a company synonymous with the telecommunications industry's rip-roaring boom and humbling comedown, emerged from bankruptcy Tuesday after spending nearly two years reorganizing in Chapter 11. Global Crossing has new directors and top executives. It has cut its work force in half, moved its main offices from Beverly Hills, Calif., to Florham Park, N.J., and slashed long term debt to just $200-million from $11-billion. Federal investigations and lawsuits by shareholders and employees still hang over the company.
NASD, STOCK ANALYST SETTLE: The National Association of Securities Dealers said it reached a settlement with a former research analyst at Banc of America Securities charged with issuing research that contradicted his personal opinions. Andrew Hamerling was suspended from working for a NASD-registered firm for nine months and given a $125,000 fine payable only if he returns to a NASD-registered company. Under the settlement, Hamerling neither admitted nor denied any wrongdoing, the NASD said. He currently works for a hedge fund in New York that is not required to register with the association.
AURORA FOODS FILES CHAPTER 11: Aurora Foods Inc., producer of Duncan Hines baking mixes, Lender's bagels and various syrup brands, has filed for bankruptcy protection under a previously detailed plan to be folded into the maker of Vlasic pickles and Swanson frozen foods. Aurora, which filed the prearranged Chapter 11 bankruptcy plan Monday in Delaware as part of its planned hookup with Pinnacle Foods Holding Corp., said it has secured $50-million of debtor-in-possession financing pending court approval. Aurora chairman and interim chief executive Dale Morrison said "it will be business as usual at Aurora during the restructuring process."
NASDAQ SUED OVER FLURRY: The Nasdaq Stock Market was sued for canceling trades in Corinthian Colleges Inc. after a technical failure Friday led to a 33 percent plunge in the share price. DL Capital Group Inc., an Edison, N.J., firm that bought shares of Corinthian, filed suit in Manhattan federal court on behalf of all those who traded shares from the point when technical difficulties began, until 12:30 p.m. Friday, when Nasdaq announced it would cancel trades made during the glitch. Trading was halted for an hour during the confusion.
4-WEEK T-BILL RATE FALLS: The Treasury sold $15-billion of four-week bills Tuesday at a discount rate of 0.895 percent, down from 0.935 percent last week and the lowest since 0.890 percent on Nov. 1
