Week in Review

Stock Market Posts Another Positive Week

Stocks racked up their second straight winning week as Wall Street cheered better-than-expected corporate profits.

The Standard & Poor’s 500 index jumped 5.9% for the week, and the Dow climbed 6%, the biggest weekly gains for both indexes since September 2001. The tech-laden Nasdaq composite index rose 6.4%, its biggest one-week increase since May.

Upbeat earnings or forecasts from bellwether companies such as IBM and Microsoft helped power the market, while investors looked beyond weak results from Sears and Intel. Concern about a possible war with Iraq continued to weigh on the market, however.

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Former Top Executive of Enron Pleads Guilty

A former top Enron Corp. executive pleaded guilty to a federal conspiracy charge for rigging California’s electricity markets during the power crisis, giving the state powerful ammunition in its claim for $9 billion in refunds from energy companies.

Timothy Belden, 35, Enron’s chief energy trader in the West and a corporate vice president, became the first person convicted of a crime in connection with California’s 2000-01 energy crisis. He also agreed to cooperate with investigators in a widening probe that could lead to charges against executives at Enron and other companies.

The guilty plea, which also requires Belden to forfeit $2.1 million in “criminally derived” compensation from Enron, was vindication for California Gov. Gray Davis and other state officials who have alleged that criminality was at the root of the crisis. Last year, Vice President Dick Cheney suggested California was to blame.

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Global Crossing Probe Targets Period in 2001

Federal investigators looking into possible wrongdoing at Global Crossing Ltd. are sharpening their focus on the first half of 2001, a period when employees took questionable steps to fend off financial collapse and top executives cashed out shares.

Internal documents and e-mails obtained by The Times show that by May 2001, the telecommunications company was dangerously close to violating a key bank requirement. Had such a violation occurred, Global Crossing’s banks could have demanded repayment of more than $2 billion in loans, triggering a default on $3.8 billion in notes.

In turn, Global Crossing could have been forced into Bankruptcy Court months before its Chapter 11 filing Jan. 28. To avert the potential crisis, Global Crossing employees used suspect accounting to boost the company’s adjusted EBITDA, or adjusted earnings before interest, taxes, depreciation and amortization, according to e-mails and interviews with former employees. Raising that figure helped keep the firm in compliance with a bank formula that measured its adjusted EBITDA against its total debt.

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Sun Microsystems Posts Loss, Plans Job Cuts

Sun Microsystems Inc. posted a $111-million loss for its fiscal first quarter and said it would cut 11% of its worldwide staff, the most aggressive move yet by a Silicon Valley bellwether to compensate for lackluster sales by slashing costs.

The layoffs, which will begin in November and reduce full-time staff by 4,400, will be supplemented by widespread cuts among the Santa Clara, Calif.-based computer maker’s temporary and contract workers.

Such cuts will hit California hard: 16,000 of the 39,400 employees work in the state.

The news marks the second major round of cuts at Sun, which shed 10% of its staff, or about 3,900 jobs, a year ago.

For the three months ended Sept. 29, Sun’s per-share loss was 4 cents. A year earlier, the company posted a loss of $180 million, or 6 cents a share.

Sun’s first-period revenue fell 7% to $2.7 billion.

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Boeing Profit Falls 43% Amid Continued Slump

Battered by a slump in the commercial aircraft business, aerospace giant Boeing Co. reported sharply lower third-quarter earnings and acknowledged that a downturn in the airline industry could last through 2004.

Boeing Chairman Philip Condit also predicted that the Chicago-based company’s commercial satellite and rocket launch business would remain sluggish for the foreseeable future. Much of Boeing’s satellite and rocket work is handled in Southern California, where its space and communications unit is the largest private employer.

Net income fell nearly 43% to $372 million, or 46 cents a share, from $650 million, or 80 cents, a year earlier. Revenue fell 7% to $12.7 billion.

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World Series to Be a Windfall for Two Cities

With two California teams -- the Anaheim Angels and San Francisco Giants -- playing in the World Series, state and local officials are counting on an economic lift from the Fall Classic, which began Saturday in Orange County.

In terms of an immediate windfall, economic development experts say San Francisco and Anaheim each can expect to take in about $10 million a day from the surge of visitors. That’s nothing compared with what the Super Bowl -- which is played on neutral turf and thus is guaranteed to fill hotel rooms -- brings in: about $250 million. Nor does it compare with the Rose Bowl on New Year’s Day, which showers the local economy with $200 million annually.

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Sides Blame Each Other in Ports’ Ship Backup

Despite a crush of activity at major West Coast ports from Long Beach to Seattle, shipping lines said there has been little progress in breaking the logjam of ships that built up during a 10-day employer lockout.

Shipping companies and unionized dockworkers continued to blame each other as the number of vessels outside the ports of Los Angeles and Long Beach held steady.

In San Francisco, a federal judge officially extended the injunction that forced ports to reopen Oct. 9 for 80 days under the rarely used Taft-Hartley Act. U.S. District Judge William Alsup noted that the injunction not only prohibits employers from closing the ports, it also bans workers from staging slowdowns.

The Pacific Maritime Assn., which represents shipping lines and terminal operators, claims the union has been deliberately slowing the work pace by failing to dispatch sufficient numbers of skilled workers to job sites.

But the International Longshore and Warehouse Union claims shipping companies and terminal operators have been sabotaging efforts to clear the ports by ordering insufficient labor. They also said logistical problems, such as a shortage of truck chassis to carry containers, make the dig-out difficult.

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Glitch Blocks Access to CalFed Accounts

California Federal Bank left more than 9,000 customers stranded without access to their cash last weekend after their ATM/Visa check cards were mistakenly canceled.

In anticipation of its pending takeover by Citigroup Inc., CalFed officials decided to change account numbers and issue new cards for about 13,000 CalFed customers whose account numbers overlapped with accounts at Citigroup, the nation’s largest bank.

But because of a “programming glitch,” cards were deactivated Oct. 11 for about 9,000 customers, said a spokeswoman for San Francisco-based Golden State Bancorp, parent of California Federal Bank. The company apologized and accounts were reactivated.

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AOL, MSN Face Off With Web Software

AOL Time Warner Inc.’s America Online launched software package AOL 8.0 with a concert by Alanis Morissette, but it might as well have started with a battle call as Microsoft Corp. gears up for another push against the online giant.

Through a combination of user-friendly technology and clever marketing, America Online has created a virtual community that rivals have found tough to dent. AOL boasts more than 26 million U.S. subscribers, compared with about 8 million for Microsoft’s MSN service.

Microsoft plans to spend $300 million to support its launch Thursday of its Internet service software, MSN 8. Much of Microsoft’s push will be aimed at getting AOL customers to switch.

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For a preview of this week’s business and economic news, please see Monday’s Business section.