TOP STORIES -- Dec. 22-27
Retailers Take Their Lumps for Holidays
Retailers staggered to the finish line after a brutal holiday selling race, with even Wal-Mart Stores Inc. conceding that improved business in the days before Christmas was “too late and too little” to allow it to make its sales target.
By one estimate, U.S. retail sales between Thanksgiving and Christmas fell 11% from year-earlier levels, though some experts cautioned that comparisons were made difficult by this year’s shorter sales season.
Retailers reporting disappointing sales included Target Corp., Federated Department Stores Inc. and FAO Inc., the parent of toy retailers FAO Schwarz and Zany Brainy, which said it would close as many as 70 stores, in part because of poor holiday sales.
Sharper Image Corp., San Francisco-based purveyor of unusual gifts and gadgets, managed to buck the trend, reporting that December same-store sales were up 7% through Christmas Eve.
The sluggish holiday shopping portends trouble for the broader economy, which has been held up by hearty consumer spending even in the face of a jobless recovery and declining growth in personal incomes.
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Judge Orders Microsoft to Bundle Java, Windows
A federal judge ruled that Microsoft Corp. must distribute Sun Microsystems Inc.’s Java programming language with the Windows computer operating system, giving Sun a big victory in its long-running antitrust lawsuit against the world’s largest software maker.
U.S. District Judge J. Frederick Motz in Baltimore said his decision to grant a preliminary injunction was needed to roll back “market conditions in which [Microsoft] is unfairly advantaged” over Sun, a Palo Alto-based maker of computer servers and workstations.
His ruling could cost Microsoft tens of millions of dollars in repackaging and distribution costs. The decision means Motz believes that Sun is likely to prevail in its $1-billion suit against Microsoft, scheduled to go to trial late next year.
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State Egg Industry Faces Outbreak of Newcastle
California’s commercial egg industry worked to contain a potentially ruinous outbreak of a deadly farm disease.
State officials ordered the destruction of 100,000 infected hens and quarantined poultry in three Southern California counties because of exotic Newcastle disease, which is deadly to poultry but cannot be contracted by humans.
Officials said it had been discovered at a poultry farm near Riverside, the first occurrence in a commercial flock since 1974. They prohibited the movement of poultry, poultry products and nesting materials from Los Angeles County and portions of Riverside and San Bernardino counties.
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U.S. Declines to File Charges Against Global
Federal prosecutors in Los Angeles decided against filing criminal charges against Global Crossing Ltd., Chairman Gary Winnick or any of its other executives over the company’s aggressive accounting practices or alleged document destruction.
The U.S. attorney’s office lacked the evidence to show that executives at the telecommunications company had misallocated costs or had obstructed justice by shredding sensitive documents, a source said.
The decision closed the books on the U.S. attorney’s investigation of Global, which filed for bankruptcy protection in January under $12.4 billion in debt and soft demand for its 100,000 miles of cable worldwide.
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Enron Says It Underpaid State Power Grid Agency
Enron Corp. disclosed that it underpaid the operator of California’s electricity grid by as much as $50 million because of errors by Computer Sciences Corp., which Enron had hired to read its customers’ meters.
Houston-based Enron said it could take weeks to determine how the errors occurred. A Computer Sciences spokeswoman confirmed the errors but said the underpayment probably was closer to $9 million.
Under the state’s energy deregulation law, Enron began selling power to major companies and institutions in 1998. Company representatives said last week that they could not say whether its customers, which for the period in question included the University of California and the California State University, would be liable for the underpayments.
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Charter Replaces Two of Its Top Executives
Cable television operator Charter Communications Inc. fired two top executives in a bid to regain investor confidence amid a federal investigation of its accounting practices.
Charter, which serves about 500,000 customers in Southern California, announced that Chief Operating Officer David Barford and Chief Financial Officer Kent Kalkwarf would be replaced immediately.
St. Louis-based Charter, the No. 3 U.S. cable operator, would not specify why the executives were fired but acknowledged that the action followed its review of matters “including those relating to the previously disclosed grand jury investigation.”
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Amgen Factory Means New Hope for Patients
With tens of thousands of patients on the waiting list for its rheumatoid arthritis drug Enbrel, Amgen Inc. had to find a way to get more of it to market.
Last week, the company declared its mission accomplished when the Food and Drug Administration approved a refurbished Rhode Island factory that would enable Amgen to double shipments.
The Thousand Oaks company acquired a potential blockbuster in Enbrel when it bought Immunex Corp. for $9.6 billion in July. But the underperforming factory proved to be an obstacle.
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Irvine Firm Wins OK for Dry-Eye Medication
Allergan Inc. received long-awaited regulatory approval to market the first prescription treatment for dry-eye disease, a condition that affects an estimated 1 million Americans.
The eyedrops, known as Restasis, are not viewed as a blockbuster drug for the Irvine-based pharmaceutical company, best known for selling the wrinkle-banishing agent Botox.
But Restasis eventually could generate $500 million in sales annually, the company said in announcing its intent to put the drops on sale by mid-2003.
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Piggy Spurns Mickey for Media Entrepreneur
The parent of Jim Henson Co. agreed to sell a 49.9% stake to a group headed by media entrepreneur Dean Valentine, thus ending Walt Disney Co.’s flirtation with the struggling creator of the Muppets.
EM.TV of Germany, Henson’s owner since March 2000, would retain controlling interest in the creator of Miss Piggy, Kermit and other popular characters. Terms were not disclosed.
Valentine is a former chief executive of United Paramount Network. He and partners hope to revive a franchise that was hugely popular in the late 1970s and early ‘80s but has seen recent movies flop at the box office.
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Now Playing and Playing and Playing...
And for those who found the news of the week, and the year, something to forget, the movies proved to be a popular escape.
Industry sources estimate that Americans will have flocked to theaters 1.5 billion times by year’s end, the most since 1959. That helped generate $9 billion in studio revenues and renewed hope for struggling exhibitors.
One psychologist credited the news as much as Hollywood marketing muscle, noting that after 9/11, “the real world is probably more terrifying than Americans have ever known.”
Pass the popcorn.
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or a preview of this week’s business news, please see Monday’s Business section.
