TOP 10 STORIES / March 19-23
1 Fed Cuts Disappoint: The Federal Reserve cut a key short-term interest rate half a percentage point to 5% in a drive to keep economic growth--but not necessarily the stock market--from falling further. Fed Chairman Alan Greenspan and his colleagues pointedly resisted a drumbeat of demands that they rescue the stock market from its latest troubles by slashing rates three-quarters of a point or more. In doing so, they effectively bet that the economy could repair itself even with stock prices far off their historic highs of only a year ago. The central bank policymakers coupled announcement of the rate cut, the third half-point reduction of the year, with a statement intended to reassure the public that they would do anything necessary to revive growth, which has slipped from more than 4% last year to nearly zero. (Peter G. Gosselin)
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2 Wild Week for Stocks: Is the worst over? That’s what investors--bulls and bears alike--were asking after last week’s roller coaster ride on Wall Street. On Thursday, after losing 472 points the previous two days, the Dow Jones industrial average went into a panic-driven free fall, plunging almost 400 points and entering bear market territory before staging a dramatic turnaround late in the day. Friday featured a mild follow-up rally that left the benchmark index down only 3.2% for the week, at 9,504.78. Analysts were heartened by strength in former market-leading tech stocks such as Microsoft Corp. and Intel Corp. and softening investor interest in drug makers and other stocks that are seen as refuges during bear markets. Investors who had hoped for a steeper rate cut from the Fed sent the Nasdaq down 4.8% on Tuesday to its lowest close in more than two years, but the index ended the week up 2% at 1,928.68. (A Times Staff Writer)
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3 Blackouts Hit Southland: Rolling blackouts came to Southern California for the first time, serving as a dramatic reminder that the state’s energy crisis is nowhere near being resolved. In all, about 1.8 million residential and business customers from Sacramento to San Diego suffered rotating, hourlong outages Monday and Tuesday. The statewide power grid remained stable at week’s end as a major power plant came back into service and the California Independent System Operator returned to normal operations. Cal-ISO added a dramatic bookend to the week’s events Thursday, disclosing a review of confidential pricing data indicating that independent power plant operators may have overcharged the California market by $6.3 billion in the last 10 months. The producers denied any profiteering, and lawyers and industry observers said prospects for a massive refund to taxpayers and the utilities were highly uncertain. (A Times Staff Writer)
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4 Workers’ Right to Sue Blocked: The Supreme Court ruled that companies can force employees to use arbitration rather than the courts to solve workplace disputes. Employers have long complained that lawsuits are costly and time consuming, and many have begun requiring workers to sign arbitration agreements as a condition of employment. In the 5-4 ruling, the court’s conservative majority erased legal doubt about whether unwilling employees could be forced to accept arbitration. The decision came in the case of a Circuit City salesman who sued the retailer under California’s civil rights law, claiming that co-workers harassed him because he is gay. The company went to court to block a jury trial, citing an arbitration agreement he had signed. (David G. Savage)
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5 Boeing to Leave Seattle: In a stunning blow to its hometown, Boeing Co. said it will move its corporate headquarters out of Seattle, where the company had grown from a fledgling wooden-airplane maker to the world’s largest aerospace concern. After 85 years in which the city and the company had become synonymous, Boeing executives said they have begun looking at Chicago, Denver or the Dallas-Fort Worth area as a new home. The surprise move, in which about 500 top executives will leave, is part of a larger corporate restructuring that will give more responsibility and autonomy to leaders of its three major divisions--the space and communications business in Seal Beach, commercial airplanes in Seattle and military aircraft in St. Louis. Boeing also will shift some work on its 757 jetliner from a Renton, Wash., plant damaged in last month’s earthquake to Wichita, Kan. (Peter Pae)
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6 Long Beach Boeing News Brighter: The outlook for 8,000 Boeing Co. employees who assemble the C-17 military transport in Long Beach brightened Friday when a top Air Force official said the Pentagon’s review of its future needs will probably recommend building more than the 120 C-17s already on order. “We’re looking forward to it actually happening,” said Boeing spokesman George Sillia in Long Beach. “We’ve been saying for years” that the Defense Department needs more of the airlifters, Sillia said. But he cautioned that the Pentagon has not made a final decision. (A Times Staff Writer)
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7 Mortgage Fraud Charges Probed: A federal judge appointed a special master to investigate government charges that Carlsbad-based PinnFund USA Inc. perpetrated one of the largest mortgage frauds in recent years. Securities and Exchange Commission officials say Chief Executive Michael J. Fanghella used $107 million in investor funds to pay for a lavish lifestyle that included $10 million in gifts for his porn actress girlfriend. Regulators accuse Fanghella and associate James L. Hillman of Oakland of issuing phony accounting statements to disguise the transfer, as well as $95 million in business losses. The SEC wanted the PinnFund and related funding entities shut down, but the judge’s order allows it to continue operating pending the special master’s findings. (Ralph Frammolino)
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8 Gemstar Signs With Comcast: Gemstar-TV Guide International Inc. took a giant step toward its goal of controlling the way millions of people watch television by inking a 20-year deal to supply interactive program guides to Comcast Cable Communications Inc. The Comcast agreement gives Pasadena-based Gemstar pacts with three of the nation’s top five cable operators, which serve half of all U.S. cable households. Analysts expect deals with the remaining cable heavyweights to follow in a matter of months. News of the Comcast contract sent Gemstar shares surging $6.25, or nearly 22%, on Friday to $35.19 on Nasdaq. (Karen Kaplan)
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9 Mexico Unveils Pemex Plan: Mexican officials unveiled the broad outline of a long-awaited restructuring of national oil company Petroleos Mexicanos, the first major test of new President Vicente Fox’s ambitious plans to modernize Mexican society by making state-owned enterprises and government agencies more efficient and businesslike. The plan, which calls for $3 billion in cost cuts and possibly massive job reductions at Pemex, faces huge political obstacles and potential union resistance. (Chris Kraul)
* 10 Exec Changes at Southwest: Herb Kelleher, the chain-smoking, whiskey- drinking chief executive of Southwest Airlines Co., plans to give up his post in June but will remain chairman of the profitable airline. Southwest said James Parker, the airline’s general counsel, will replace Kelleher. Colleen Barrett, a longtime Southwest executive with an industry reputation as a customer service guru, will become president and chief operating officer. Barrett will be the only female president of a major U.S. airline. (Jerry Hirsch)
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* These and additional stories from last week are available at https://www.latimes.com/business.
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* Please see Monday’s Business section for a preview of the week’s events.
