TOP STORIES--Jan. 6-Jan. 11
The Enron
Story Continues
Enron Corp.’s post-bankruptcy plot thickens.
The energy company is now under investigation by the Justice Department, its auditor, Andersen, acknowledged that some of its employees disposed of or deleted “a significant but undetermined number” of documents relating to Enron, and the White House says Enron sought government help to keep the company from collapsing.
The latest revelation in the largest bankruptcy case in U.S. history followed word from the White House that Enron Chairman Kenneth Lay, a major Bush campaign contributor, called Treasury Secretary Paul O’Neill and Commerce Secretary Don Evans, Bush’s 2000 campaign manager, last fall to warn them of Enron’s mounting financial problems.
Meanwhile, lawyers for Enron said it had chosen Swiss bank UBS to take control of its main energy trading business after a hotly contested auction.
Ford Making
Big Change in Course
Ford Motor Co. said it is cutting 35,000 jobs around the world, closing five North American factories over the next several years and taking a $4.1-billion fourth-quarter charge in a massive restructuring the company called a “painful, but necessary” effort to return the world’s second-biggest automaker to profitability.
Ford also said it was discontinuing the low-margin Ford Escort, Lincoln Continental and Mercury Cougar coupe and Villager minivan as part of a plan to realize $9 billion in profit improvement by the middle of the decade.
The plan comes after a wrenching year for Ford, which has been dogged by red ink, shrinking market share, the Firestone tire recall and the ouster of its CEO.
Highflying Scheme
Makes Crash Landing
Federal regulators accused a Mission Viejo teenager of concocting an elaborate Internet-based scheme that defrauded investors of more than $1 million.
In the second such securities fraud case ever filed against a youth, the Securities and Exchange Commission accused Cole A. Bartiromo, 17, of operating a Web site and message board that promised “risk-free” returns of up to 2,500% within a few days or weeks of initial investments.
In a settlement with the SEC, Bartiromo agreed to turn over about $900,000 that had been transferred to an account at a Costa Rica casino.
The youth settled the charges without admitting or denying guilt. Bartiromo declined to comment.
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Market Rally
Stumbles
Stocks suffered their first losing week in the last three as investors worried that the U.S. economy may not rebound as strongly as hoped.
The Dow Jones industrial average fell every day and finished the week off 2.7%, closing below 10,000 for the first time since Dec. 20 and wiping out all of its gains for the new year. The benchmark Standard & Poor’s 500 index lost 2.3% and is also now down 0.2% year to date. The Nasdaq composite index fell 1.8% for the week, but is holding on to a 3.7% gain for 2002.
The worries about the economy crystalized Friday, when Federal Reserve Chairman Alan Greenspan said there are still “significant risks” that the economic recovery will falter. Bonds, meanwhile, rallied on hopes Greenspan’s remarks may signal another rate cut by the Fed.
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Employment Picture
Looks Brighter
California’s unemployment rate inched down to 6.0% last month and job losses slowed to a trickle, signs that the state’s hiring picture, while still weak, may be stabilizing after several months of heavy losses.
The decline in the jobless rate, from a revised 6.1% in November, partially reflected the fact that thousands of state residents have stopped looking for work. California actually lost 600 jobs in December, capping the worst year for the state’s job market since 1992.
Still, economists said December’s modest declines were an encouraging sign after several months of heavy job losses. In November alone, the state lost 51,200 nonfarm payroll jobs and has shed nearly 88,000 since September.
New President
for ABC
Walt Disney Co. moved to reinvigorate its ABC network programming by naming a new president of entertainment.
Susan Lyne, the network’s well-regarded executive for movies and miniseries, was named head of entertainment programming. Lyne will assume many of the programming responsibilities of Stu Bloomberg, a 22-year ABC veteran who is stepping down.
Two seasons ago, ABC was the No. 1 network, due in large part to the hit game show “Who Wants to Be a Millionaire.” But the show ran out of gas and the ratings for the network have plummeted.
Meanwhile, Burbank-based Disney plans to cut about half the staff at its recently acquired ABC Family channel, according to sources at the company.
About 300 employees at the cable channel’s headquarters in Westwood will be laid off in the next several weeks, according to an executive at ABC Family who asked not to be identified.
Apple Has a New
Idea for iMac
Apple Computer Inc. unveiled a stylish new version of its iMac desktop computer, betting that flat-panel displays and a complete redesign will shore up its sagging position in a market dominated by PCs using Windows software from Microsoft Corp.
Apple Chief Executive Steve Jobs plans to target new computer users and iMac owners ready to upgrade to a faster, better-looking system.
Apple followers said Jobs should have little problem with those audiences with its new model priced at $1,299 to $1,799.
But the new design might not be enough to lure many Windows users, analysts predict.
Lucent Taps
Kodak President
Troubled Lucent Technologies Inc. named telecommunications veteran and current Eastman Kodak Co. President Patricia Russo as its chief executive, ending a management search that dragged on for more than a year.
Russo, 49, spent nearly 20 years at AT&T; Corp. and its Lucent spinoff before leaving in August 2000.
In April, she became president and chief operating officer of Kodak, where she has led a campaign to revive sales and refocus the Rochester, N.Y.-based film maker.
Wendy’s Faces
Image Challenge
Dave Thomas had been the public face of Wendy’s International Inc. for years. But after Thomas’ death from liver cancer at age 69, Wendy’s said it no longer will use the founder in its advertising.
The Dublin, Ohio-based company years ago had started reducing his ad presence. Now, experts say, the No. 3 burger chain faces the difficult challenge of transferring goodwill generated by the affable burger baron into enhancing the company’s overall brand image without him.
Few of the corporate world’s public faces are as well known as Thomas, who founded the Wendy’s chain in 1969 and retired from active management in the early 1980s. He agreed to return as product pitchman in 1989 and subsequently filmed 800 commercials.
Life Insurance
Boom Slows
Post-Sept. 11 jitters still are sending more Americans in search of life insurance, but applications appear to be trailing off.
Life insurance applications nationwide were up 10.7% in December compared with the same period a year ago, according to MIB Group Inc., a Westwood, Mass., research and database firm.
But the number of applications continued to fall from its October peak, with a 9.9% drop between October and November and another further 4.6% drop from November to December, the MIB figures show.
Experts said the decline in applications could be a brief, holiday-driven interruption. Some analysts expect life insurance sales to increase this year, while others said the flurry of interest in life insurance may be a short-term phenomenon that may have only temporarily reversed a long-term trend of fewer policies sold each year.
From Times Staff
For a preview of this week’s business and news events, please see Monday’s Business section.
