TOP 10 STORIES / JAN. 1-5
1. Energy Woes Bring Rate Hikes, Stock Declines, Job Cuts: California’s electricity crisis amped up, with state regulators approving rate hikes for Southern California Edison and Pacific Gas & Electric of 7% to 10%. That was much less than the utilities and Wall Street were hoping for. The stocks of the utility parent companies plunged and the three big credit-rating agencies slashed the ratings of the utilities’ debt near or into junk-bond status. Edison announced 1,450 layoffs and planned service reductions to conserve cash. Gov. Gray Davis and the state Legislature were reported to be working on a plan to issue bonds to help the cash-starved utilities buy electricity. State Treasurer Phil Angelides proposed setting up a state power authority that would issue $10 billion worth of bonds to, among other things, buy the 75% of California’s power transmission systems now in private hands.
(Nancy Rivera Brooks)
*
2. Fed Makes Startling Rate Cut: The Federal Reserve surprised and pleased most observers with a steep, half-point cut in interest rates, signaling alarm over the economy’s unexpectedly sharp decline. The Fed acted a day after the nation’s purchasing managers reported the lowest manufacturing activity in a decade. More cuts in the federal funds rate are widely expected, although the U.S. unemployment report at week’s end showed the jobless rate unchanged at a minuscule 4%. Still, the evidence of a downturn continued to pile up, and the drumbeat of worrisome news added to momentum in Congress for a tax cut.
(Times Staff Writers)
*
3. Stocks Stage Brief Rate Rally: Wednesday’s surprise interest rate cut by the Federal Reserve couldn’t overcome investors’ concerns about slowing profit growth. Despite notching a record one-day gain of 14.2% on Fed Day, the Nasdaq composite index ended the week down 2.5%. The Dow industrials and the Standard & Poor’s 500 index also were in the red for the week. Jittery investors pulled Nasdaq down 159.18, or 6.2%, to 2,407.65 on Friday, leaving the technology-dominated index with less than 116 points of Wednesday’s nearly 325-point gain. The Dow fell 250.40, or 2.3%, to 10,662.01 on Friday, and the S&P; declined 34.99 to 1,298.35, a 2.6% loss for the day.
(A Times Staff Writer)
*
4. Holiday Sales Even Weaker Than Forecast: Retailers got a lump of coal for Christmas. Sales were surprisingly weak in December in what was perhaps the worst year-over-year performance in a decade, and several merchants warned of lower fourth-quarter profits as a result. Not even the heavy discounting before and after Christmas could lure enough paying customers, who disappointed retailers across the board, from discounter Wal-Mart Stores Inc. to upscale jeweler Tiffany & Co. Winter storms made matters worse in huge swaths of the Midwest and the East Coast, where shopping was impossible at the most crucial part of the holiday selling season.
(Abigail Goldman)
*
5. Auto Sales Drop in December: U.S. auto sales, often a national economic bellwether, plunged 8% in December to cap a three-month slide and set the tone for an anticipated industry slowdown in 2001. Despite the drop, sales for the year were the best ever, following another record in 1999, and most industry analysts expect only a moderate decline in sales this year. December’s fall was led by the Big Three U.S. auto makers. Most European and Asian brands saw U.S. sales rise, continuing a trend that had held all year. All three domestic makers have announced plans to shut factories for short periods early in the year to slow production.
(John O’Dell)
*
6. EToys Retrenches: EToys Inc. began dismantling its once-highflying operation, announcing 700 layoffs from its 1,000-person staff and closure of two warehouses. The Santa Monica-based Internet seller said it is also closing its European operations, cutting 78 jobs. Ironically, EToys’ bad news came as once-ailing Toys R Us Inc. reported December sales gains that one analyst called its best performance in a decade. Last month, EToys shocked observers by announcing that sales in the quarter ended December would miss its target by half and that it was exploring options such as a merger or asset sales.
(Abigail Goldman)
*
7. Talent Agencies Cutting Costs: Hollywood’s talent agencies are tightening their belts to build up financial reserves, another sign that the entertainment industry is preparing for a strike by writers and actors this year. The measures begun last week include deferring salaries and bonuses, cutting expenses and travel and skipping annual rituals such as the Sundance and Cannes film festivals. At United Talent Agency, which represents such stars as Jim Carrey and Harrison Ford, board members, partners and top-earning agents have agreed to contribute 20% of their salaries and bonuses to a company strike fund.
(Times Staff Writers)
*
8. Boeing Satellite Lands Major Contract: Boeing Satellite Systems of El Segundo landed a contract with a potential value of $1.3 billion from the U.S. military to develop a satellite-based communications network for the Air Force and the Army. The contract, which includes $160.3 million to design the system and options for up to six satellites worth more than $1.1 billion, is the largest since Boeing Co. acquired the world’s largest commercial satellite maker in October from Hughes Electronics Corp.
(Peter Pae)
*
9. Bertelsmann Names Music Chief: German media giant Bertelsmann appointed its chief creative officer, Rolf Schmidt-Holtz, to run the music division after the sudden death of Rudi Gassner. The promotion of Schmidt-Holtz comes as Bertelsmann is pushing to close a proposed merger with EMI Group to create the world’s biggest music conglomerate. Bertelsmann is counting on teaming Schmidt-Holtz, a former television executive, with Ken Berry, head of EMI’s music division, to run the new company as partners, sources said.
(Chuck Philips)
*
10. Fox TV Gets Chairman: Brian C. Mulligan, former chief financial officer of Seagram Co., was named chairman of News Corp.’s Fox Television, a position that has been vacant for six months. Mulligan, who served as co-chairman of Universal Pictures before joining Seagram, said a top priority will be to consolidate the pending purchase of TV broadcaster Chris-Craft Industries Inc.
(Sallie Hofmeister)
*
* 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.
* Please see Monday’s Business section for a preview of the week’s events.
