Business digest

Compiled from Times wires

© St. Petersburg Times,
published August 17, 2001

DENTISTS, AETNA AT ODDS: The American Dental Association and two of its member dentists filed a proposed class-action lawsuit against Aetna Inc., charging the insurance giant with breach of contract, libel and unlawful interference with the dentist-patient relationship. The organization contends Aetna fails to pay non-plan providers' actual charges for services rendered. Aetna said the allegations lack merit.

RETAILERS STRUGGLE: Nordstrom Inc. said its fiscal second-quarter profit fell 15 percent, yet its results beat Wall Street's expectations by a penny. Net income dropped to $38.7-million, or 29 cents a share, after the department store company slashed prices to clear out slow-selling goods. Shares in Nordstrom fell 14 cents to close at $21.40. Also, slumping retailer Gap Inc. reported that second-quarter earnings dropped 52 percent to $89.7-million, or 10 cents a share. Excluding a one-time restructuring charge, Gap beat Wall Street expectations by a penny. Its shares dropped 25 cents to $23.35. Gap and Nordstrom released their results after the close of regular trading.

HUNTINGTON CEO ADDS TITLE: Huntington Bancshares Inc. named its president and chief executive, Thomas Hoaglin, to the additional post of chairman, effective immediately. Hoaglin, 52, succeeds former CEO Frank Wobst, who had been expected to remain chairman of the board and of the bank's executive committee through December 2002. Hoaglin took over from Wobst as CEO of the Columbus, Ohio, bank in February. Huntington is looking for a buyer for its business in Florida, a state that makes up almost a third of its franchise. Shares of Huntington fell 27 cents to $18.69.

WALTER UNIT STARTS VENTURE: A subsidiary of Tampa-based Walter Industries Inc. will begin marketing petroleum coke produced by a Virgin Islands plant in 2002. Applied Industrial Materials Corp. of Stamford, Conn., also signed deals with three refineries to handle their petroleum coke equipment, raising to seven the number of refineries where the company provides such services. Petroleum coke is a crude-oil byproduct used in steel plants, foundries and power plants.

UPS CHIEF EXECUTIVE RETIRES: James P. Kelly, chairman and chief executive of United Parcel Service, announced his retirement after 37 years with the world's top package delivery company. UPS said he will be replaced by the company's vice chairman, Michael L. Eskew. Kelly began working for UPS in 1964 as a package delivery driver in Secaucus, N.J. During his tenure, Kelly oversaw the company's 1999 initial public offering of stock, after 92 years as a private company, in what was at the time the nation's largest ever IPO.

STUDIOS FORM WEB VENTURE: Five major movie studios are backing a joint venture to provide Internet-based video on demand services. The agreement was revealed by executives from Sony Pictures Entertainment, Universal Studios, Paramount Pictures, Metro-Goldwyn-Mayer and Warner Bros, who said they will supply new and older releases. Equal shares of the yet-to-be-named company will be owned by the studios, which will use technology developed over the past year by Sony dubbed "Moviefly." It will offer movies that can be downloaded over high-speed Internet lines and played on computers using digital rights management tools and movie players from Real Networks and Microsoft. Separately, AOL Time Warner Inc. said it has created a new business unit to oversee all of the company's operations in next-generation cable TV services, including video on demand and nascent services such as AOLTV.

LUCENT, LENDERS IN AGREEMENT: Lucent Technologies reached an agreement with its lenders to modify the terms of its $4-billion in bank loans. The modification was necessary after the struggling telephone equipment company said last month that it would take a $9-billion charge in the current quarter as part of a restructuring plan. The terms of Lucent's bank loans, which it arranged in February, did not permit such a write-down. Lucent's shares closed at $6.32, up 10 cents.

TREASURY AUCTION: The U.S. Treasury today purchased $1.75-billion in government bonds from investors at an average yield of 5.458 percent. The Treasury received offers to tender $10.45-billion in face value of the bonds, paying interest rates from 7.25 percent to 11.25 percent.

GOLDEN BOOKS SALE REACHED: A partnership of Random House and the entertainment company Classic Media has agreed to acquire Golden Books Family Entertainment, the children's book company, for $84.4-million and the assumption of most of the company's liabilities. The agreement, which was approved Wednesday by the U.S. Bankruptcy Court in Wilmington, Del., ended the contentious bidding for the rights to the Golden Books stable of popular children's characters including Pat the Bunny, the Poky Little Puppy and the Saggy Baggy Elephant.

DELTA BUMPS MECHANICS PAY: Delta Air Lines is raising the salaries of its mechanics to make them the highest paid in the industry as they organize to join a union. Delta will increase pay on Oct. 16 by as much as 18.2 percent, bringing base pay of the highest-paid mechanics to about $71,700 annually. Delta opposes a campaign by the Aircraft Mechanics Fraternal Association to unionize the company's 10,000 mechanics. Chuck Starcher, a Delta mechanic running the union campaign, said he does not believe the pay increase will hurt the organizing effort.

FLIGHT ATTENDANTS IN COUNTDOWN: US Airways Group's Piedmont Airlines flight attendants will be free to strike Sept. 16 if they don't reach a new contract agreement with the commuter carrier by then. The National Mediation Board released the two sides from routine contract talks after the Association of Flight Attendants rejected arbitration. The release starts a 30-day "cooling- off" period before the 250 attendants may strike Piedmont, one of several carriers operating US Airways Express flights, including service from Tampa International Airport. Shares of US Airways fell 66 cents to $16.25.

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