TOP STORIES -- Oct. 5-10
California Loses More Jobs in September
California’s job market swooned in September, posting its biggest monthly loss of the year as employers axed a net 16,600 positions, according to a government report.
In addition, the state Employment Development Department revised August’s job losses to a net 7,800 -- four times more than previously reported.
The state unemployment rate fell to 6.4% from 6.7% but only because there was a big drop in the labor force. Los Angeles County’s seasonally adjusted rate fell to 6.7% from 6.9%.
Analysts say seasonal factors may be partly to blame for California’s woes. The biggest losses last month were in health and educational services. Still, big drops in leisure and hospitality and information -- all key industries -- are a sign that the Golden State’s labor market is still struggling mightily.
There were bright spots. More sectors gained jobs than lost them last month. The biggest surprise may have been manufacturing, which added a net 3,500 jobs. That was the state’s first increase in factory payrolls since April 2002.
Shoppers Boost Sales by 5.9% in September
Shoppers made it clear that they are back and ready to buy, buoying Wall Street’s hopes for a strong holiday season. Overall retail sales in September rose 5.9% over the same period a year earlier in stores open at least a year, according to the Bank of Tokyo-Mitsubishi in New York.
Wal-Mart Stores Inc., the world’s biggest retailer, saw its September sales rise 6%, better than its forecast of a 3% to 5% increase. Sears, Roebuck & Co., Target Corp. and Gap Inc. also posted same-store sales last month that were at the high end of analyst estimates.
Apparel retailers said strong back-to-school sales mostly held steady through September. That was particularly good news for teen retailers, many of which are based in California.
Gap, the San Francisco parent company of Gap, Banana Republic and Old Navy stores, saw sales rise 13% in stores open at least a year.
Los Angeles-based Guess Inc. posted a gain of 13.5% and Anaheim-based Pacific Sunwear of California Inc., 18.5%. Hot Topic Inc., based in Industry, reported that September same-store sales rose 9%.
FTC Wins Court OK for ‘Do-Not-Call’ List
An appeals court allowed the Federal Trade Commission to enforce the national “do-not-call” list until the court resolves whether the popular registry violates the free-speech rights of telemarketers.
The ruling by a three-judge panel of the U.S. 10th Circuit Court of Appeals in Denver revives a government crackdown on the telemarketing industry.
The registry’s future was cast in doubt last month after two federal judges barred the FTC from enforcing it. A judge in Oklahoma held that the agency did not have the legal authority to enforce the list. That decision prompted Congress to pass legislation explicitly giving the FTC the power it lacked.
But less than an hour after the final vote, a judge in Denver ruled that the registry was unconstitutional because it violated the free-speech rights of telemarketers. The FTC appealed but did not begin enforcing the program.
Although the constitutionality of the list remains to be decided, the appeals court said it believed that the FTC stood a good chance of winning its appeal and scheduled oral arguments in the case for Nov. 10.
Workers’ Comp Insurer Fires Longtime Auditor
California’s nonprofit, state-owned workers’ compensation insurer has fired its longtime auditor after the accounting firm refused to certify the carrier’s financials and questioned the adequacy of its reserves.
The dismissal of Price- waterhouseCoopers comes two months after release of an audit in which the accounting firm said the State Compensation Insurance Fund of California needed to set aside an additional $1 billion to pay future claims.
Officials at State Fund, which provides workers’ comp coverage for about half of California’s employers, had disputed those results and defended its reserve levels as adequate.
A State Fund spokesman said the carrier’s move Oct. 1 to dump its auditor of 20 years was a “business decision.”
A Pricewaterhouse spokesman said, “We are proud of the work that we have performed and believe that our audit report speaks for itself.”
SEC Steps Up Access to Corporate Proxy Process
The Securities and Exchange Commission officially proposed rules that could allow investors to nominate their own candidates to corporate boards.
The plan, approved by a 5-0 vote, is an attempt to ensure that corporate board members perform their role as independent watchdogs rather than serve as passive tools of management.
Shareholders already are allowed to field their own candidates for boards. But doing so without support of management can entail prohibitive costs related to publishing election materials and delivering them to shareholders. Such efforts often have little chance of success.
“This year, for the first time in history, the commission has proposed rules that would provide shareholders a procedure that promotes access to the proxy process,” SEC Chairman William H. Donaldson said.
The proposed rules face a 60-day public comment period, and they could be substantially modified before the commission votes on a final version. But the proposal lays out important details of how the SEC hopes to find a middle ground between the demands of management and shareholders.
Quattrone Admits Role in IPO Allocations
Frank Quattrone admitted under cross-examination that he played a role in the allocation of hot stock offerings that are at the heart of the obstruction-of-justice charges against the former Credit Suisse First Boston star banker.
The concession came during questioning from Assistant U.S. Atty. Steven Peikin, whose office has charged that Quattrone knew that subpoenas had been issued for records kept by CSFB’s investment banking unit when he sent an e-mail in late 2000 telling employees to destroy documents.
At the time, the securities regulators and a federal grand jury were investigating whether CSFB unfairly allocated shares of hot stock offerings.
Contradicting earlier testimony, Quattrone conceded that “it is possible I looked at partial lists of allocations before final decisions were made.” He went on to testify: “I might have taken part in some discussions. I did not make any decisions.”
In one e-mail Peikin displayed for jurors, Quattrone told another CSFB executive that he wanted to meet “and discuss IPO allocations past and future.”
Peikin’s cross-examination is scheduled to resume Tuesday in U.S. District Court in New York.
Another Law Firm Dismissed in Pooh Case
The family suing Walt Disney Co. over Winnie the Pooh royalties has dismissed another law firm, saying they can’t afford to pay mounting legal bills that top $500,000 a month.
In July, entertainment lawyer Bert Fields and his partners withdrew for undisclosed reasons. At the time, sources said contentiousness over legal fees contributed to Fields’ departure.
Last month, the Los Angeles Superior Court judge who handled the case for nearly a decade stepped down, without providing a reason. A new judge in the county’s complex-litigation branch has since taken over the matter and had planned a hearing for later this month.
But last week, an attorney with the firm hired by Patricia Slesinger and her mother, Shirley Slesinger Lasswell, to replace Fields told the judge that hearing would have to be postponed. The reason: The firm also would be exiting the case. Alan E. Friedman, an attorney with Jones Day, did not return calls.
Gas Bills This Winter May Top Last Year’s
California natural gas utilities warned that winter probably would bring another round of big bills, with estimates running 5% to 30% larger than last year.
Swelling bills reflect higher wholesale prices, which will be felt across the country, the U.S. Energy Department said.
The outlook for this winter is significantly less gloomy than projections made earlier in the year, when natural gas storage levels, depleted by high demand during cold weather in the East and Midwest, were approaching record lows.
In Southern California, gas reservoirs are nearly full, and “we fully expect to be able to meet our customers’ needs,” said Denise King, spokeswoman for Sempra Energy unit Southern California Gas Co.
The typical Southern California Gas residential customer could see bills rise 5% to about 12%, King said.
In PG&E; Corp. territory in Central and Northern California, average winter bills will rise 20% to 30%, spokesman Jason Alderman said. The utility has not forecast average projected bills by customer type, he said.
Vivendi and GE Ink NBC Universal Deal
Vivendi Universal and General Electric Co. completed an agreement to marry their entertainment assets in a deal that could spur far-reaching changes in Hollywood.
As was widely anticipated, the two companies agreed to create an entity that combines the Universal movie studio, theme parks and TV businesses with GE’s television operations.
The agreement is expected to close in the second quarter of next year, subject to regulatory approvals.
The new venture, which the companies valued at $43 billion and dubbed NBC Universal, would be managed by NBC. With a projected $13 billion in annual revenue, it would be the country’s seventh-largest publicly traded media company.
Also, the Federal Trade Commission has indicated that it, rather than the Justice Department, will review the proposed merger, sources close to the agency say.
For a preview of this week’s business news, please see Monday’s Business section.