TOP 10 STORIES / MAY 28-JUNE 1
Jobless Rate Slips, but Economy Still Weak
The nation’s unemployment rate slipped to 4.4% in May from 4.5% in April, its first decline in nine months, the government said, but the job losses that have dogged the economy since last fall continued.
Economists had expected a slight increase in the percentage of Americans seeking jobs. But they noted that American employers trimmed payrolls by 19,000, on top of April’s reduction of 182,000 that marked the largest monthly job loss in a decade.
The unemployment report also failed to square with other figures that suggest the economy is still struggling to catch its balance.
A Times Staff Writer
Merger Between Lucent, Alcatel Falls Apart
After weeks of negotiations, troubled Lucent Technologies Inc. and France’s Alcatel broke off merger talks that would have created the world’s largest supplier of communications equipment. The proposed stock deal, said to be worth around $25 billion, fell apart when the two sides couldn’t agree on control issues such as the makeup of the combined firm’s board and management team, according to a source close to the companies.
Investors sent the stocks of both companies higher on the news.
Analysts said a Lucent-Alcatel deal would have faced skeptical shareholders on both sides, as well as tough scrutiny from U.S. regulators fearing foreign control of the sensitive technologies at Lucent’s Bell Labs unit. With its merger chances looking bleak and plenty of financial woes to resolve, Lucent said it will proceed with a seven-point restructuring plan it announced in January.
Elizabeth Douglass
Developers, Community Agree on Staples Plan
A coalition of community groups, unions and residents won an unprecedented package of benefits from developers of a massive hotel and entertainment complex around the Staples Center in exchange for their support for the project. Developers--including billionaire Philip Anschutz and media mogul Rupert Murdoch--agreed to hire locally, provide “living-wage jobs” and to build affordable housing and new parks.
The project is seen as vital to downtown revitalization, and support from the first-of-its-kind coalition clears the way for likely approval.
It also marks a historic victory for community organizers, as the agreement is believed to be the first nationwide to take such a broad array of community concerns into account.
Lee Romney
Medtronic to Buy MiniMed and Affiliate
Northridge-based MiniMed Inc. agreed to be acquired by Medtronic Inc., the world’s biggest medical device maker, for $3.28 billion. Medtronic also will acquire MiniMed affiliate Medical Research Group Inc. for $420 million in the move, which expands its aggressive acquisition campaign into the field of diabetes management.
Alfred E. Mann, who started MiniMed from a department in his former pacemaker firm, said he’ll step down as chairman and chief executive to devote attention to his other medical start-ups, including Valencia-based Advanced Bionics and Sylmar-based Mannkind Corp. He said the deal gives Minimed “a great partner with great resources.”
MiniMed will remain at its new Northridge headquarters and no layoffs are planned, Medtronic said.
The deal values MiniMed at $48 a share, a near doubling of the $25-per-share price seen in April before rumors of a MiniMed sale began circulating. MiniMed shares rose $2.77 to $46.77 on the news Wednesday and closed the week at $46.72.
Karen Robinson-Jacobs
Firestone Seeks Probe of Ford Explorer
Bridgestone/Firestone Inc. asked the U.S. government to launch a safety investigation of Ford Motor Co.’s Explorer, the latest salvo in a war of words and statistics between the companies over a series of fatal accidents involving the popular sport-utility vehicle and Firestone brand tires.
In requesting the probe, the Japanese tire maker cited a study by an Ohio State University professor that showed some Explorer models have a propensity to over-steer, or turn more tightly than drivers intend, after a tire failure such as a tread separation.
Ford sharply disputed the allegations, maintaining that “real-world data” show that the Explorer has one of the best safety records on the market.
Ford also reported an 11.6% drop in domestic sales for May, underperforming its U.S. rivals. General Motors Corp. posted an expected 0.4% rise in sales, as a surge in truck sales outpaced a slump in demand for its cars. DaimlerChrysler’s sales fell 8.3%.
Terril Yue Jones
Auditors Clear Xerox of Fraud
Struggling copier maker Xerox Corp. said an outside review of accounting practices sparked by misdeeds at its Mexican subsidiary found no instances of fraud. Investors, apparently relieved that the review didn’t turn up any serious infractions, Thursday lifted Xerox’s battered stock 10% to $9.91 on the New York Stock Exchange in response to the announcement.
Xerox Chief Executive Paul Allaire said that with the review by audit firm KMPG complete, the company “can now continue to focus on effectively executing its turnaround strategy, which remains on track.”
The company saw its stock tumble 80% last year amid increased competition, sluggish business equipment sales and a botched sales-force reorganization.
KMPG auditors also advised the company to spread out over three years a $120-million charge taken as a result of the problems at its Mexican operations, a move that would result in higher net income for the first quarter and a smaller loss for 2000.
Xerox shares closed the week at $10.60.
Karen Kaplan
Shareholders Deliver Setback to ICN Chief
Dissident investors in ICN Pharmaceuticals Inc. dealt a blow to controversial Chairman Milan Panic by winning a shareholder vote to put three insurgents on its board, setting the stage for a quicker breakup of the Costa Mesa drug maker.
The corporate setback may be the biggest the 71-year-old Panic has suffered since starting ICN in his garage in 1959. With his iron-willed leadership, he has fought through government investigations, sexual harassment accusations and two attempts by unhappy shareholders to limit his power.
The dissident group said it apparently won more than two-thirds of the votes cast Wednesday at the company’s annual meeting, but the final tally won’t be known for two to three weeks.
Panic said he had underestimated his opponents, but he minimized the magnitude of the loss. Barely containing his rising voice, he said he hoped the new directors would discharge their duties constructively and warned they would face the “challenge of Panic” if they did not.
Marc Ballon
Food Industry OKs Allergen Labeling
In an attempt to head off more restrictive legislation, food industry groups issued labeling guidelines that would make allergy-causing ingredients easier to identify on processed-food packages.
Scientific terms such as “albumen” and “casein” would be replaced on ingredient panels with simpler language such as “eggs” and “milk.” And small amounts of allergy-triggering substances such as peanuts previously exempt from disclosure because they were part of a product’s “natural flavoring” will now be displayed on ingredient lists.
But allergists and some consumer groups say the measures don’t go far enough to protect the almost 7 million Americans with food allergies.
Melinda Fulmer
Sun Microsystems Halves Expectations
Sun Microsystems Inc., a top supplier of high-end computers for Internet and telecommunications companies, slashed by half its profit expectations for the current quarter, citing poor sales in Europe. Sun said it now expects earnings of 2 cents to 4 cents a share, after predicting last month that profit would be “flat to slightly down” from the previous quarter’s 8 cents, on lower revenue than it projected earlier.
Analysts seeking a silver lining pointed to Sun’s belief that the economy won’t get much worse.
Shares of Sun, which already had lost a third of their value this year, tumbled $2.42 to $16.25 on the news Wednesday and closed off the week at $16.63 on Nasdaq.
Joseph Menn
Game Firm Interplay in Buyout Talks
Amid a rapid industry consolidation, software game maker Interplay Entertainment Corp. said it’s in talks with a suitor about the possible purchase of the company. Despite the news, the Irvine company’s stock fell 15 cents to $2.96 and closed the week at $2.76 on Nasdaq.
Interplay, a money-losing company that got a shot in the arm last month with a $5-million loan from Microsoft Corp., would not identify the potential buyer.
Video game publishing executives said Interplay has been attempting to woo prospective buyers for a month.
Leslie Earnest
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Please see Monday’s Business section for a preview of the week’s events.
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Xerox Boost
Xerox shares got a boost last week from news that an audit found no instances of fraud. The shares, which tumbled 80% last year, rose 10% on the news Thursday to $9.91 and closed the week at $10.60.
Friday: $10.60
Xerox, weekly closes and latest on the New York Stock Exchange
Source: Bloomberg News
