TOP STORIES -- April 20-25
Stock Market Ends Week on Sour Note
Wall Street’s April rally fizzled at the end of last week as investors, worried about the strength of the U.S. economy and the quality of corporate earnings, decided to take profits from the market’s recent gains.
An ambiguous gross domestic product report Friday, coupled with a surprisingly weak employment report Thursday, put a halt to what had been developing as a strong week of gains. Worries about the spread of severe acute respiratory syndrome and further saber rattling by North Korea also unsettled investors.
The benchmark Standard & Poor’s 500 index and the tech-dominated Nasdaq composite index still managed to eke out gains for the week, both rising 0.6%. The blue-chip Dow Jones industrial average, however, ended the week 0.4% lower.
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Bush Says Fed Chief Deserves Another Term
President Bush surprised the financial world by signaling his willingness to appoint Federal Reserve Chairman Alan Greenspan to a fifth term as leader of the nation’s central bank.
Observers thought Greenspan had angered Bush this year by offering tepid support for the president’s latest tax cut proposal. Some assumed the White House would seek to install its own choice when Greenspan’s four-year term expires next year. But asked by reporters whether the central banker deserved reappointment, Bush answered, “Yes, I think Alan Greenspan should get another term.”
Greenspan, 77, wouldn’t be able to serve out another full term. The chairman must be a member of the Fed’s governing board, and Greenspan’s 14-year appointment as governor runs out in January 2006.
Analysts suggested that the president’s apparent decision was at least in part a political holding action, aimed at putting off a potentially sensitive appointment until after the 2004 presidential election.
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California Challenges Energy Refunds Ruling
California agencies and utilities urged federal regulators to reconsider a March 26 decision on how much energy companies should refund the state for overcharges during the electricity crisis, contending that the decision failed to take into account key evidence of misconduct.
In a formal request for a new hearing, the California coalition also accuses the Federal Energy Regulatory Commission of failing to follow guidelines set by the U.S. 9th Circuit Court of Appeals and of relying too heavily on “piecemeal” sanctions for misconduct in early 2000. The California parties contend that FERC ignored evidence they submitted earlier this year of market manipulation.
A FERC spokesman declined to comment on California’s request for a new hearing.
Energy firms have repeatedly asserted that they violated no laws and were made scapegoats for the failure of energy deregulation.
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AMR Chief Steps Down Amid Uproar Over Perks
The chairman and chief executive of American Airlines’ parent resigned after employees forced to swallow steep pay cuts rebelled against his failure to disclose bonuses and pensions for top executives.
Donald J. Carty, 56, said he hoped his resignation would restore “collaboration, cooperation and trust” between management and labor.
The airline struck a new deal with unions representing pilots, maintenance workers and flight attendants, apparently helping the AMR Corp.-owned carrier avert a Chapter 11 bankruptcy filing. Flight attendants had been badly split over sweetened labor concessions.
The AMR board named Gerard J. Arpey, the company’s president, as CEO. Director Edward A. Brennan will become nonexecutive chairman.
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Occidental Is Sued Over Bombing in Colombia
The list of companies sued in U.S. courts for alleged involvement in human rights violations in foreign countries grew when Occidental Petroleum Corp. was accused of aiding a military assault on a Colombian village.
The case was filed in U.S. District Court in Los Angeles by a man whose mother, sister and cousin were killed in a 1998 raid. The suit claims that Occidental and a contractor provided the Colombian military with logistical support, aerial surveillance and target coordinates.
In an effort to free government troops pinned by guerrillas, a Colombian air force helicopter dropped a cluster bomb on Santo Domingo on Dec. 13, 1998. The incident left 17 villagers dead. Occidental, which works closely with the military to protect an oil pipeline that runs through an embattled section of the country, denied sharing any liability for the attack.
EBay 1st-Quarter Profit
and Revenue Surge
Online auctioneer EBay Inc. saw first-quarter profit and revenue soar. Buoyed by the rising number of new Internet shoppers and triple-digit percentage growth of its international business, the auction house’s revenue was up 94% from a year earlier, to $476.5 million.
The bulk of EBay’s revenue comes from the fees it collects for facilitating online garage sales of everything from collectible lunch boxes to new cars.
Profit more than doubled to $104.2 million, or 32 cents a share, from $47.6 million, or 17 cents. Results matched estimates of analysts surveyed by Thomson First Call.
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Price of Gasoline Falls Sharply in California
Many California motorists are buying gasoline for less than $2 a gallon, but rising crude oil costs could slow or reverse the recent downward trend.
The average price fell 3.3% in California in the week ended Monday. It was the sharpest drop yet in five straight weeks of declines, according to federal figures, with the average for a gallon of self-serve regular at $2.009 statewide and $1.986 in Los Angeles.
California’s decline outpaced that nationwide, as the U.S. average fell 1.3% to $1.574, according to the Department of Energy.
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Ex-CSFB Star Facing Obstruction Charges
Federal prosecutors filed an obstruction-of-justice complaint against former Silicon Valley investment banking star Frank Quattrone. The complaint alleges that Quattrone, former Palo Alto-based head of tech- nology investment banking at Credit Suisse First Boston, sought to impede government probes into the firm’s handling of initial public stock offerings.
According to the complaint, Quattrone sent an e-mail to employees urging them to destroy IPO documents even though he knew that government probes were underway and that all records had to be preserved.
Quattrone’s attorney, John Keker of San Francisco, said his client is innocent. “These accusations are wrong and unfair.”
A CSFB spokeswoman declined to comment.
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AOL Posts Profit, Sells Comedy Central Stake
AOL Time Warner Inc. returned to profitability in the first quarter but continued to lose subscribers and revenue at its troubled Internet unit.
Net income was $396 million, or 9 cents a share, contrasted with a loss of $54.2 billion a year earlier, when a huge write-down reflected the falling value of the America Online Web unit and other holdings. Earnings before interest, taxes, depreciation and amortization rose 14% to $2 billion, slightly above expectations.
Revenue rose 6% to $10 billion, thanks to entertainment properties such as Warner Bros., WB network and HBO, as well as growth in its cable system. But advertising revenue fell 5% companywide even as rivals such as Viacom Inc. saw ad increases.
AOL raised $1.25 billion by selling its 50% stake in the Comedy Central cable network to Viacom last week.
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Sony Plans to Invest $1.67 Billion in New Chip
Riding the immense popularity of its PlayStation video game consoles, Sony Corp. said it would spend $1.67 billion to make a new semiconductor designed to handle not only games but also music and movies.
The so-called Cell chip is the heart of Sony’s strategy for serving up digital entertainment via an array of devices connected to one another and to the Internet, with the next-generation Play- Station 3 console as the hub. Sony seeks to use PlayStation 2’s popularity to win acceptance of PS3 as an all-purpose home entertainment platform.
The chip is meant to be adept at handling massive video, graphics and audio files. It is expected to be in mass production by 2005 for various electronics devices, including the PS3.
