Business today

Compiled from Times wires

© St. Petersburg Times, published October 3, 2000

FEDS EXPECTED TO HOLD STEADY ON RATES: The Federal Reserve is widely expected to leave U.S. interest rates unchanged today amid signs the U.S. economy has moderated from its second-quarter pace and inflation remains under wraps. But the Fed will continue to signal that the risks remain weighted toward higher inflation in the face of high oil prices and tight labor markets, analysts said. Since the Fed's last meeting, the economy has continued to cool, with many expecting that growth slowed to a 2.5 percent to 3.0 percent pace in the third quarter, well below the second-quarter's 5.6 percent.

TECHS PULL DOWN NASDAQ: The Nasdaq Composite Index fell 103.92 to 3,568.90 as investors unloaded Internet and software-related issues. Chipmaker Intel fell $1.44 to $40.13; Microsoft was down $1.19 to $59.13 and Web portal Yahoo dropped $4.94 to $86.06. Computermaker Dell dropped $1.56 to $29.25.

CONSTRUCTION SPENDING RISES: After four straight monthly declines, construction spending jumped by a stronger-than-expected 1.4 percent in August, the Commerce Department said. Total spending rose to $794.5-billion at a seasonally adjusted annual rate. Commerce credited increased government activity for the rise.

MANUFACTURING ACTIVITY SLOWS: Manufacturing activity in the United States contracted for the second straight month, the National Association of Purchasing Managers said. The group said its production index rose to 49.9 percent in September, slightly better than the 49.5 percent recorded in August. The NAPM index uses 50 percent as a break-even point, with anything below indicating contraction.

DANKA SHARES FALL: Danka Business Systems' stock fell 31 percent, or 47 cents, to close at $1.06 per share, an all-time low. The reason for the drop and heavy trading was not clear. Some investors may have worried that Danka would be unable to make a $6.75-million interest payment due Monday, but a company news release issued shortly before the market closed said Danka did make the payment.

FARMERS TURN OVER SUGAR CROP: Florida sugar farmers Monday forfeited thousands of tons of refined sugar pledged to pay back millions of dollars in federal loans. U.S. Sugar, handed over about 30,000 tons of sugar to repay $12.6-million in loans, while Florida Crystals Corp. has forfeited about 14 percent of its 732,000-ton crop to pay back $37-million in loans. All told, sugar cane farmers will hand over about 10 percent of their crop worth $94-million to the federal government this year. A 30 percent drop in prices has made it impossible for growers to sell sugar on the market at a profit.

MUSIC INDUSTRY CHALLENGED: Two of the three appeals judges hearing Napster Inc.'s challenge of a court order that could effectively shut down the music-sharing Web site expressed skepticism with the recording industry's lawsuit, saying Napster cannot see or control what goes on between its users. Napster is seeking to lift a preliminary injunction -- issued July 26 by U.S. District Judge Marilyn Patel but currently stayed -- that found the company's software facilitates illegal copying of music. The three-judge panel did not say when it would rule.

BAY AREA MERGER: IBIS Business Internet Solutions, a Tampa Web design and software development company, has merged with Compass Marketing Services, a Clearwater company that provides marketing and order fulfillment services to help companies manage Web-based sales. Officials of the combined company, called Jagged Peak Inc., say it can now offer end-to-end e-business solutions ranging from the preparation of e-business plans, to the building of Web sites, to the analysis of online sales performance. Jagged Peak employs 60 people and wants to double its staff by next year.

XEROX WARNS OF LOSS: Xerox Corp. warned that it will report a third-quarter loss of between 15 cents and 20 cents a share, badly missing Wall Street expectations. The company blamed the problem on weaker-than-expected revenue in North America and Europe, and the failure to realize expected improvement in sales of its high-end products. Analysts had predicted per-share earnings of 12 cents a share. The warning was released after the close of regular trading, during which Xerox rose 31 cents to $15.31.

LUCENT SPINOFF: Four years after AT&T gave birth to Lucent Technologies with the spinoff of its communications equipment business, a third-generation Baby Bell was born as Lucent spun off the part that makes office telephone systems. Avaya (pronounced uh-VY-uh) begins life as a publicly traded company with 30,000 employees, nearly 1-million customers in 90 countries, and about $7.5-billion in annual revenues -- large enough for Standard & Poor's to grant immediate membership in the S&P 500 index of the biggest U.S. companies. Since Lucent is the nation's second most widely owned stock with about 5.3-million shareholders, nearly all of whom are getting Avaya stock as a special dividend, Avaya instantly becomes the third most widely held stock with about 5-million shareowners. MetLife remains No. 1 with about 9-million shareholders. Shares of Avaya dropped $2.75 to $20.19.

WAL-MART PLANS EXPANSION: Wal-Mart Stores Inc. plans to open more than more than 300 stores worldwide next year in one of the company's most ambitious expansion plans. Wal-Mart will open about 40 new discount stores and 170 to 180 new Supercenters in the United States. It plans to almost double the number of its Neighborhood Markets grocery stores, adding 15 to 20 next year, and add 40 to 50 Sam's Club discount warehouse stores. Some 100 Sam's Clubs will be remodeled. Separately, Wal-Mart has closed down its e-commerce site and said it won't reopen for "a few weeks." The company said that all orders placed before the closing will be filled.

DLJ INVESTS IN MEAT PRODUCER: Donaldson, Lufkin & Jenrette, Inc.'s investment arm agreed to buy IBP Inc., the largest U.S. meat producer, for $3.8-billion in cash and assumed debt. Once the purchase is completed in early 2001, DLJ Merchant Banking Partners III and affiliated funds will become majority owner of IBP through newly formed Rawhide Holdings Corp. IBP shareholders will receive $22.25 a share in cash, 22 percent more than Friday's close of $18.31. Shares of IBP rose to $21.75. DLJ stock fell 6 cents to $89.38.

BANK ACQUISITION: FleetBoston Financial Corp. is buying Summit Bancorp for about $7-billion, replacing it as New Jersey's largest bank. FleetBoston is currently the nation's eighth-largest bank with $181-billion in assets and 1,200 branches throughout New England. Summit stock was up 11 percent, or $3.63, to $38.13. FleetBoston shares fell 50 cents to $38.50.

TREASURY AUCTION: Interest rates on short-term Treasury securities rose in Monday's auction. The Treasury Department sold $10.5-billion in three-month bills at a discount rate of 6.075 percent, up from 6.005 percent last week. An additional $9.5-billion was sold in six-month bills at a rate of 6.040 percent, up from 5.985 percent. The new discount rates understate the actual return to investors: 6.257 percent for three-month bills and 6.318 percent for a six-month bill. In a separate report, the Federal Reserve said Monday that the average yield for one-year Treasury bills fell to 6.08 percent last week from 6.09 percent the previous week.

Earnings

Walgreen Co.

The Deerfield, Ill., company said sales at stores open at least a year rose 11 percent, boosted by an 18 percent gain in drug sales. Walgreen's fiscal quarter ended Aug. 31. The company said it plans to open 500 stores this fiscal year and move existing ones to more convenient locations. Results include a $20.6-million gain from a prescription-drug antitrust settlement.

Revenue 4thQtr $5.38-bil -- Year Ago $4.56-bil

Net Income 4thQtr $216.6-mil -- Year Ago $161-mil

Per Share 4thQtr 21 cents -- Year Ago 16 cents

Revenue Year $21.2-bil -- Year Ago $17.8-bil

Net Income Year $777-mil -- Year Ago $624-mil

Per Share Year 76 cents -- Year Ago 62 cents

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