California Loses More Than 21,000 Jobs in...

California Loses More Than 21,000 Jobs in July

California employers axed 21,800 jobs in July, sending payroll employment plunging to its lowest level since the state’s job market began its long slide more than two years ago, according to government data.

July’s losses marked the largest one-month loss since December. The nation lost 44,000 jobs last month, meaning California accounted for half of them.

Analysts cautioned that the figures could be overstated because of seasonal factors. The government sector took the heaviest pounding, largely because of declines in education.

But even accounting for seasonal noise, there was little to cheer about in July’s numbers as California struggles along with the rest of the nation amid a “jobless recovery.” Nearly every sector of the California labor market posted losses.

Worse yet, the losses are accelerating at a time when many economists had expected to see some stirrings of growth in the second half. California has shed jobs in five of the last six months.

The state’s unemployment rate dropped to 6.6% in July, from a revised 6.8% in June. But analysts said that was only because many people quit looking for work.

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U.S. Indicts Porn Sellers,

Vows Wide Crackdown

The Justice Department charged a North Hollywood wholesaler of adult films with violating federal obscenity laws, launching the first of what it promised would be a wave of criminal cases against purveyors of pornography.

The 10-count federal grand jury indictment against Extreme Associates and its executives sent anxiety through adult entertainment firms in the San Fernando Valley, considered the capital of the porn industry.

Executives at Extreme Associates did not return calls, but one leading industry official said adult entertainment businesses were preparing for a fight.

The indictment came after investigators with the U.S. Postal Inspection Service set up a sting operation in Pennsylvania. From September 2002 to July 2003, the indictment says, the defendants sold obscene material over the Internet and distributed videotapes and DVDs across state lines via the postal system, a violation of federal law.

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Immunity for Iraqi Oil

Dealings Raises Alarm

An executive order signed by President Bush in May is raising concerns that U.S. oil companies may have been handed blanket immunity from lawsuits and criminal prosecution in connection with the sale of Iraqi oil.

The Bush administration said last week that the immunity wouldn’t be nearly so broad.

But lawyers for various advocacy organizations said the two-page executive order seemed to completely shield oil companies from liability -- even if it could be proved that they had committed human rights violations, bribed officials or caused great environmental damage in the course of their Iraqi-related business.

“As written, the executive order appears to cancel the rule of law for the oil industry,” said Tom Devine, legal director for the Washington-based Government Accountability Project.

Administration officials said the intent of the executive order would become clear once regulations, now being drafted by the Treasury Department, were issued. “Rules are forthcoming ... that will deal with some of these issues in greater specificity,” said Taylor Griffin, a Treasury Department spokesman.

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Tenet Settles Charges

Tied to Heart Surgeries

Tenet Healthcare Corp., California’s largest hospital chain, agreed to pay $54 million to settle government allegations that two doctors at its hospital in Northern California performed unnecessary heart surgeries.

As part of its settlement with the Justice Department, Tenet said it would put in place new procedures for doctors and staff at Redding Medical Center. Trevor Fetter, Tenet’s chief executive, said the company “made a strategic business decision ... in a spirit of cooperation in order to put this matter behind us.”

Santa Barbara-based Tenet is facing a federal probe into its practice of boosting profit with special Medicare payments.

Tenet made the deal with the government without admitting any wrongdoing.

The company also reported a second-quarter loss of $195 million, or 42 cents a share, contrasted with profit of $242 million, or 48 cents, a year earlier. Revenue fell 1.5% to $3.38 billion.

Also, Tenet revealed that Florida is investigating allegations of Medicaid fraud at the hospital chain.

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European Union

Takes Aim at Microsoft

The European Union said it would fine Microsoft Corp. billions of dollars and demand that the software giant make modifications to its Windows operating system if the company can’t refute “strong evidence” that it has monopolized European markets for computer server and audiovisual software.

If imposed, the penalties would be the most far-reaching ever levied against the world’s largest software developer.

In a final statement of objections from the European Commission, the EU’s executive branch, antitrust regulators said that Microsoft should either remove its Media Player software for playing music and video from Windows or offer competing products in its flagship operating system.

Microsoft, which has been under investigation by EU antitrust regulators for four years, has two months to respond to the proposed penalties.

Microsoft spokesman Jim Desler said, “We take this investigation very seriously and will work hard ... to maintain a dialogue that will allow for a positive resolution of these issues.”

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Sony Studio Chief to

Retire, Associates Say

John Calley, a Hollywood legend, plans to retire as chairman of Sony Corp.’s film studio this fall, according to associates.

The move would close the books on a storied executive career during which Calley, 73, ran three studios and championed pictures ranging from “Clockwork Orange” to “Spider-Man.”

People close to Calley said he had told his immediate boss, Sony Corp. of America Chairman Howard Stringer, that he wanted to relinquish his duties and focus on producing movies for the company’s Sony Pictures Entertainment unit.

Calley has headed the Culver City-based studio, which owns Columbia Pictures, for almost seven years.

Stringer intends to put day-to-day control of Sony Pictures in the hands of its three vice chairpersons: Amy Pascal, who is head of Columbia; Jeff Blake, who oversees worldwide marketing and distribution; and Yair Landau, who runs Sony’s digital and television operations.

Neither Stringer nor Calley was available for comment.

But sources indicate talks are underway to settle Calley’s contract.

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Genzyme Agrees to Buy

Biotech Firm SangStat

Consolidation in the biotech industry continued as Genzyme Corp. agreed to pay $600 million in cash to buy Bay Area company SangStat Medical Corp. and its lucrative drug to treat organ-transplant patients.

Genzyme, based in Cambridge, Mass., offered $22.50 a share, a 45% premium over SangStat’s closing price Aug. 1.

With SangStat, Genzyme would get its flagship drug, Thymoglobulin, which is used to help transplant patients fend off the body’s impulse to reject a donor kidney. The drug accounted for most of SangStat’s $120 million in revenue last year.

Genzyme already markets a drug, Renagel, to combat kidney disease, and analysts said it would be able to market a variety of kidney-related medicines.

Genzyme doesn’t expect major layoffs or a restructuring, a spokesman said.

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Liberty’s Interest in

Vivendi Assets Fading

Another suitor for Vivendi Universal’s U.S. entertainment empire -- Liberty Media Corp. -- won’t offer the minimum $14 billion the French conglomerate wants, sources familiar with the auction said.

The decision by Liberty Chairman John C. Malone came less than two weeks after Metro-Goldwyn-Mayer Inc. withdrew from the contest, leaving Vivendi with an even weaker hand in trying to stir up a bidding war.

Malone isn’t expected to officially back out of the race for Universal’s movie studio, theme parks and television assets. Liberty and Vivendi executives declined to comment, but both sides are said to be negotiating.

General Electric Co.-owned NBC now may have the best shot at Vivendi Universal Entertainment. Other bidders include a consortium led by Vivendi Vice Chairman Edgar Bronfman Jr.

Liberty and others have been asked to submit a new, higher round of bids by Aug. 18.

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Sempra Profit Falls but

May Meet Year’s Target

Sempra Energy reported that its second-quarter net income fell 21% because of higher rebates to utility ratepayers and lower earnings from wholesale electricity sales.

But the San Diego company, which owns Southern California Gas and San Diego Gas & Electric, said profit for the year should reach the target of $2.60 to $2.80 a share.

For the quarter, net income fell to $116 million, or 55 cents a share, from $147 million, or 71 cents, a year earlier. Last year’s results included a $25-million benefit from the settlement of tax issues and a $2-million gain from the purchase of a metals trading business. Revenue rose 20% to $1.8 billion.

Sempra has fared better than most in an industry buffeted by the energy crisis, Enron Corp.’s fall, the near-collapse of energy trading and a profit crunch from low electricity prices and high natural gas costs.

From Times Staff

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