TOP STORIES -- Oct. 19-24
Immigrant Workers Arrested at Wal-Mart
Federal agents investigating Wal-Mart Stores Inc. seized documents from an executive’s office and raided 61 stores across the country, arresting about 250 illegal immigrants working on cleaning crews, authorities said.
The investigation grew out of two earlier probes into the use of undocumented workers by cleaning contractors for Wal-Mart. Authorities said Wal-Mart and its executives were the focus of the latest investigation.
A Wal-Mart spokeswoman said the company believed that its subcontractors used only legal workers. Wal-Mart uses its own cleaning crews for most of its 3,412 U.S. stores but contracts with 110 companies to clean about 700 of its stores. None of the stores raided was in California.
Federal authorities declined to identify the Wal-Mart executive whose office at the company’s Bentonville, Ark., headquarters was searched.
Agents from the Federal Bureau of Immigration and Customs Enforcement in 21 states confronted the workers just before the night crews were due to finish their shifts, said a spokesman for the agency, known as ICE. Many of the Wal-Mart stores were in the Eastern U.S.
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Judge Declares Mistrial in Quattrone Case
One of the first criminal trials to stem from corporate America’s recent scandals ended in a mistrial after a jury deadlocked over whether former Silicon Valley financier Frank Quattrone tried to impede government probes of new-stock offerings.
The outcome of the closely watched case in U.S. District Court in New York represented a stinging defeat for federal prosecutors. The deeply divided jury seemed to indicate that ordinary Americans are less willing to convict corporate executives than previously assumed, potentially making prosecutors reluctant to press such cases while emboldening corporate defendants to fight charges rather than consent to plea bargains.
Quattrone was charged with two counts of obstruction of justice and one count of witness tampering. However, the jury appeared to lean in favor of acquittal throughout most of their deliberations.
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Union Sues Markets for Unpaid Wages
The United Food and Commercial Workers union sued three major supermarket chains for failing to pay striking and locked-out workers wages they say they are owed under California law.
The union launched a strike against Safeway Inc.’s Vons and Pavilions stores at midnight Oct. 11. Albertsons Inc. and Ralphs, a unit of Kroger Co., then locked out their union workers.
One of two suits filed in Los Angeles County Superior Court charges that the three chains should have included earned vacation and sick pay in workers’ last paychecks. The second suit alleges that those who showed up for work the weekend of Oct. 11 only to be locked out are entitled to “reporting time pay.”
The legal actions came as amendments to a lawsuit the union had filed the week before against Ralphs and Albertsons, claiming workers had been locked out without the warning that California law requires.
A Ralphs spokesman said the chains would not comment because they had not seen the suits.
Supermarket and union representatives said there had been no move by either side to restart negotiations.
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MPAA Agrees to Soften Its Ban on ‘Screeners’
The Motion Picture Assn. of America agreed to reverse part of its ban on the free DVDs and videos that have long gone to voters who decide the Oscars, but the compromise deal met with resistance from one of Hollywood’s big labor unions.
The MPAA, which represents the seven major studios, took the step after protests from filmmakers, independent studios, movie critics and others. For smaller films, in particular, the free movies, known as screeners, are a crucial part of their push for Oscars and other awards.
Under the MPAA’s tentative pact with the Academy of Motion Picture Arts and Sciences, movie studios would be allowed to send numbered, encoded videos to the approximately 6,000 Oscar voters.
But other awards voters from Hollywood guilds would be prohibited from receiving screeners.
The Directors Guild of America and the Writers Guild of America appeared willing to support the MPAA deal, but the Screen Actors Guild denounced the move, saying it wanted screeners for the members of its awards nominating committee.
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Putnam Investments Ousts Fund Managers
Putnam Investments said it would oust four international mutual fund managers for making improper, short-term trades of their own funds, as the scandal rocking the $6.9-trillion fund business took a new turn.
Two other managers who engaged in rapid trading were not being replaced, a spokeswoman said.
Although the trading took place in early 2000, the news that portfolio managers had personally profited at the expense of long-term shareholders appalled industry critics who have been following the scandal since New York Atty. Gen. Eliot Spitzer announced an industrywide probe of fund trading practices Sept. 3.
According to a Wall Street Journal report, the six Putnam managers netted a total profit of $700,000. Putnam, through its spokeswoman, would not confirm the amount but said the traders had been detected through the firm’s compliance procedures and their activity halted more than three years ago.
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Strong TV, Film Results Lift Time Warner Profit
Media giant Time Warner Inc. posted a bigger-than- expected third-quarter profit, though results were overshadowed by the continuing probe into its accounting practices.
The company, which dropped “AOL” from its corporate moniker, has been trying to remake itself for more than a year.
Time Warner said earnings rose to $541 million, or 12 cents a share, from $57 million, or 1 cent, a year earlier. Revenue rose 4% to $10.3 billion.
Analysts had expected Time Warner to report a profit of 9 cents a share, according to a survey by Thomson First Call.
Although the key America Online division continued to struggle, companywide results were driven by gains in its cable systems, television networks and Warner Bros. film studio. The studio’s operating income jumped 21% on improved theatrical and home video sales, led by “The Matrix Reloaded” and the “Lord of the Rings” franchise.
Results were released on the same day reports surfaced that the Securities and Exchange Commission had subpoenaed former Chairman Stephen M. Case and current Chairman and Chief Executive Richard D. Parsons as part of its investigation into the company’s accounting of an advertising deal.
Neither the SEC nor the company would comment.
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Recovery May Be on the Horizon for Airlines
The airline business, flat on its back a year ago amid staggering losses, is slowly starting to recover.
The latest evidence came when American Airlines parent AMR Corp. said it eked out a $1-million profit in the third quarter. Reflecting heavy summer flying and massive cost cutting by the carrier, the results broke a string of 10 losing quarters for the world’s largest airline. A year earlier, AMR had lost nearly $1 billion.
The industry as a whole lost $18 billion over the last two years. US Airways Group Inc. went through a bankruptcy reorganization, and UAL Corp.’s United Airlines is operating under Chapter 11. But in this year’s third quarter, several airlines finished in the black. They included big network carriers such as AMR, Northwest Airlines Corp. and Continental Airlines Inc. and several low-cost carriers that already had been profitable, such as Southwest Airlines Inc. and AirTran. JetBlue Airways Corp. also posted a profit.
AMR profit amounted to break-even on a per-share basis. Revenue edged up 2% to $4.6 billion. The airline said the results included one-time gains and charges that, if excluded, left AMR with a pretax operating loss of $23 million, or 15 cents a share. On that basis, analysts surveyed by Thomson First Call had expected a loss of 41 cents a share.
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Microsoft Sales Growth Slowed in Its 1st Quarter
Microsoft Corp. said its fiscal first-quarter sales rose at the slowest pace in more than three years while new contract signings slipped more than expected because of concerns about the security of Windows products.
Revenue in the quarter ended Sept. 30 grew 6.1% to $8.22 billion from $7.75 billion a year earlier, the smallest percentage increase since the last quarter of fiscal 2000. Profit was $2.61 billion, or 24 cents a share, down from $2.73 billion, or 25 cents, because the company started counting stock option grants as an expense. Adjusted year-earlier net income, to reflect the accounting change for option grants, would be $2.04 billion, or 19 cents a share.
Analysts were more concerned that new multiyear licensing agreements -- a key indicator of future revenue -- weren’t being signed as quickly as Microsoft had anticipated.
But Microsoft expects PC sales to consumers to continue improving and raised its forecasts for the remainder of fiscal 2004. The company expects revenue of $34.8 billion to $35.3 billion and profit of 86 cents to 88 cents a share.
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Home Sales and Prices Surge in Southland
The number of homes sold in Southern California surged 25% last month from a year earlier to the highest September level in 15 years.
Sales and prices did generally take a seasonal dip in September from August. The median sales price for homes sold in a six-county region -- from San Diego to Ventura -- was $335,000, down 1% from $338,000 in August, DataQuick Information Systems said. That was up 20% from a year earlier. Median means half the houses sold for more than that price and half sold for less.
Prices reached highs in Ventura County ($415,000) and Riverside County ($261,000), and the median in San Diego County ($390,000) tied a high set in June.
The median price in Los Angeles County was $336,000 -- down from $338,000 in August but up 25% from $269,000 in September 2002. The number of homes sold totaled 11,395, down from 11,874 in August but a 22% jump from 9,362 a year earlier.
In Orange County, the median price was $431,000. That compared with $435,000 in August and was up 17% from $368,000 a year earlier. Sales totaled 4,956, a drop from 5,511 in August but a 29% surge from 3,848 a year earlier.
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For a preview of this week’s business news, please see Monday’s Business section.
