TOP 10 STORIES / March 26-30
1. Electricity Rate Hikes a Jolt: State regulators bowed to the seemingly inevitable, adopting the largest electricity rate hike in California history. The Public Utilities Commission, voting unanimously, defended its action as the only way to keep the lights on for 24 million customers of the near-bankrupt Southern California Edison Co. and Pacific Gas & Electric Co. A new tiered rate structure, akin to a graduated income tax plan, will apply the highest rates to the highest levels of usage. As a result, about half of all residential customers can expect little or no change in their bills. Rate hikes could be as high as 46% for some customers. Business owners expressed concern about higher costs and the pain they must pass on to their customers. But some economists and industry lobbyists offered grudging acceptance, saying higher rates could lead to lower demand, fewer rolling blackouts and progress toward a longer-term solution to the state’s electricity crisis.
(A Times Staff Writer)
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2. PG&E; Nears Negative Net Worth: Pacific Gas & Electric parent PG&E; Corp., citing the huge gap between skyrocketing wholesale electricity costs and what it’s able to collect from ratepayers, said it expects to take a $4.1-billion after-tax charge against its fourth-quarter 2000 results. The company said another such charge might be necessary for the first quarter that ended Saturday. The charges could result in PG&E; having a negative net worth for the first quarter, which heightens the possibility that it might have to seek protection from its creditors in Bankruptcy Court.
(James F. Peltz)
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3. Disney Targets 4,000 Jobs: In its single biggest staff reduction ever, Walt Disney Co. disclosed plans to slash 4,000 full-time positions, or more than 3% of its work force, in response to the nation’s weakening economy. The move, which will begin with a voluntary severance program, follows layoffs at other media giants amid a rapidly slowing advertising market. The theme-park division will take the biggest hit, with 1,650 positions targeted, most of them in Florida. Details of other cuts weren’t revealed, but a source in the studio unit said the operation has orders to trim its staff by 10%. Disney’s decision prompted a jab from Mel Karmazin, Viacom’s chief operating officer, at a luncheon of entertainment executives. “That’s not how you should run a business,” Karmazin said in comments that some interpreted as a dig at Disney Chairman Michael Eisner, who has a reputation as a micro-manager.
(Times Staff Writers)
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4. Stocks Punished on Tech Warnings: After starting the week with high hopes, Wall Street was body-slammed Wednesday by profit warnings from former tech highfliers Palm Inc. and Nortel Networks Corp. Nasdaq fell 6% on its way to a 4.6% loss for the week, at 1,840.26. The Dow Jones industrial average fared better and managed a 3.9% gain for the week, closing at 9,878.78. But the broader Standard & Poor’s 500 index rose a meager 1.8% and at week’s end remained mired in a bear market--defined as a drop of 20% or more from a former peak. It was a fitting end to a quarter that saw Nasdaq fall 25.5%--its worst-ever first quarter. The Dow was off 8.4% for the period--it’s worst first-quarter performance since 1978--and the S&P; 500 fell 12.1%.
(A Times Staff Writer)
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5. Consumers Lifting Economy: Undaunted by reports of layoffs and weakness in the stock market, consumers became significantly more confident in March, the first time in five months they have grown more upbeat about their economic prospects, the Conference Board reported Monday. The rise in the business group’s closely watched consumer confidence index--to 117 from 109.2 in February--came as a surprise to most economists. New government figures released Friday showed that consumer spending rose solidly in February after an upwardly revised gain in January. Personal income grew for the fourth straight month. The reports indicate that consumers are helping to keep the economy from slipping into a recession.
(Times Staff Writers)
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6. Boeing Shifts Gears: Unable to find customers for its proposed super-jumbo jet, Boeing Co. said it was scaling back development of the 747X aircraft to refocus efforts on producing a mid-size plane that would fly faster, longer and higher than existing airliners. The “sonic” cruiser would fly at nearly the speed of sound, allowing it to cut a Los Angeles-to-New York flight by about an hour. The move concedes the large commercial market to Airbus Industrie’s new A-380 super-jumbo jet, but deals a counterpunch to its archrival, which doesn’t have an answer to the new plane.
(Peter Pae)
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7. Musicians Mobilize: Major recording artists from virtually every genre of popular music are mobilizing to take on the industry with demands for better contracts, beefed-up copyright protection and free-agency status. Should the efforts by such artists as Tom Petty, Merle Haggard and Courtney Love succeed, the economics of the music business would be radically rewritten. The Recording Artists Coalition, co-founded by singer-songwriter Don Henley, plans to lobby Congress on Tuesday on digital copyright issues as part of its agenda and may join forces with Artists Against Piracy. And Love reports that several artists, including Prince, are signing on to her effort to form a union for recording artists.
(Chuck Philips)
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8. Conexant and Rivals Slash Forecasts: Conexant Systems Inc. said it will lay off more than 1,500 employees, or nearly 20% of its work force. It also warned that plummeting demand, even in its most-promising networking equipment business, will result in a loss for the latest quarter. Rival communications chip maker PMC-Sierra Inc. also warned of profit weakness and said it will cut 230 jobs, or 13% of its staff. Camarillo-based Vitesse Semiconductor Corp. cut its profit expectations in half.
(Karen Alexander)
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9. Burlington Sued Over Hearing-Loss Claims: Workers filed two federal lawsuits against Burlington Northern Santa Fe Corp., alleging the company manipulated them and conspired to keep compensation settlements low in job-related hearing-loss claims. In a suit filed in Seattle, workers accused the railroad of colluding with union lawyers to keep hearing-loss settlements at less than $65,000 and out of court in as many as 4,000 cases. A separate lawsuit filed in Minneapolis alleges that the company failed to protect workers from deafening job noise for decades and then duped 4,000 to 10,000 of them into settling claims for less than $3,000 apiece.
(Lisa Girion)
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10. NorthPoint Cuts Off Customers: Bankrupt NorthPoint Communications Inc. began shutting down its high-speed Internet network, cutting off service to tens of thousands of customers nationwide. On Friday, California’s Public Utility Commission ordered the company to restore service to about 40,000 customers in the state, but it remained unclear whether service would be restored any time soon. NorthPoint sold its equipment and some other physical assets to AT&T; Corp., but AT&T; decided against picking up NorthPoint’s customers.
(A Times Staff Writer)
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These and additional stories from last week are available at https://www.latimes.com/business, divided by category. Click on “Money and Investing,” “Entertainment Business” and other topics.
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Please see Monday’s Business section for a preview of the week’s events.
