TOP STORIES -- March 28-April 2
Job Growth Surges; Market Reaction Mixed
The economy finally showed significant job growth, racking up a net 308,000 additions to nonfarm payrolls in March.
It was the biggest monthly gain since April 2000. In addition, January and February job growth data were revised higher. Overall, the report boosted optimism that the economy is losing the “jobless recovery” label that has dogged it for two years.
“It really was a blowout report,” said Ned Riley, investment strategist at State Street Global Advisors in Boston.
Wall Street’s reaction was split: The stock market zoomed after the report was released Friday, reflecting investors’ confidence that the economic rebound would be prolonged if more Americans were working and spending. The Dow Jones industrial average surged 97.26 points to 10,470.59 and was up 2.5% for the week.
But long-term interest rates soared on fears that a stronger economy could hasten the day the Federal Reserve begins to tighten credit. The 10-year Treasury note yield, a benchmark for mortgage rates, leaped to a two-month high of 4.14% on Friday from 3.88% on Thursday.
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Judge Declares Mistrial in Tyco Case
The judge in the marathon corruption case against two former Tyco International Ltd. executives reluctantly declared a mistrial, citing “outside pressure” that was placed on a juror after her identity was revealed by the media.
State Supreme Court Judge Michael Obus said he had no choice but to grant a defense request to end the six-month-long trial of L. Dennis Kozlowski, Tyco’s former chief executive, and Mark Swartz, his onetime head of finance, who were accused of looting $600 million from the company and its investors.
In announcing his ruling, the normally temperate Obus chastised the swarm of reporters in the Manhattan courtroom for publishing the name of Ruth Bennett Jordan, the 79-year-old retired teacher whose unexplained gestures in open court last week stirred widespread speculation that she was a lone juror holding out for an acquittal of the two men.
It was not illegal to reveal her identity, Obus said, but it broke with precedent and could discourage citizens from serving on juries.
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Microsoft to Pay Sun $2-Billion Settlement
The technology industry’s fiercest blood feud ended as Sun Microsystems Inc. settled its antitrust claims against Microsoft Corp. in a $2-billion deal that clears the way for a new era of computing based more on pragmatic cooperation than ruthless competition.
The surprise agreement, which capped 10 months of covert talks, includes a pledge to share enough trade secrets so that the two companies’ products can work together more easily. It also wipes away a decade of animosity that divided much of the industry and spawned landmark antitrust actions against Microsoft by regulators in the U.S. and Europe.
“The industry is growing up, and companies need to do a better job of cooperating,” said Microsoft General Counsel Brad Smith.
The treaty cements Microsoft’s position as the most powerful software company on the planet and underscores the fading fortunes of Sun, which has lost more than $3.8 billion in the last year and a half building computer systems for businesses. The cash infusion will help Sun as it embarks on a makeover that includes slashing 3,300 jobs.
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Disney Wins Lawsuit Over Pooh Royalties
A Los Angeles County Superior Court judge abruptly ended more than a decade of legal wrangling over merchandising royalties for Winnie the Pooh, handing Walt Disney Co. a major victory and taking a powerful swipe at the family that claimed it had been cheated out of hundreds of millions of dollars.
Judge Charles W. McCoy accused the Slesinger family -- which holds the lucrative merchandising rights -- of trying to gain an edge by stealing confidential Disney documents and then lying and altering court papers to cover up the thefts.
Disney’s victory comes at a crucial time for Chief Executive Michael Eisner, who has been fending off a campaign to oust him after 20 years at the helm of the Burbank entertainment giant. Losing the case could have cost the company several hundred million dollars and provided more fodder for critics.
The Slesinger family vowed to appeal the ruling.
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OPEC Sticks to Plan to Cut Output of Crude
Rebuffing pleas from the U.S., OPEC said it would press ahead with its plan to cut crude oil production by 4%.
But instead of rising, oil prices fell amid doubts that the cutback would materialize and reports of larger-than-expected U.S. oil inventories. The benchmark grade closed at $35.76 a barrel Wednesday, down 49 cents on the New York Mercantile Exchange. It ended the week at $34.39.
Ministers of the Organization of the Petroleum Exporting Countries agreed to reduce members’ production quotas starting Thursday by about 1 million barrels, to 23.5 million barrels of crude a day. Plans for the output reduction were announced in February, but with oil prices hovering around 13-year highs and intense pressure from the U.S., some had hoped OPEC would abandon the move.
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Workers’ Comp Reform Misses 2nd Deadline
Another of Gov. Arnold Schwarzenegger’s deadlines slipped away without an agreement for reforming California’s costly workers’ compensation insurance system.
Leaders of both houses of the Legislature sent members home to their districts on spring recess Thursday, telling them to be prepared to be back at the Capitol on 24 hours’ notice if negotiations produced a package of bills.
The governor, who had set a deadline of March 1 and then March 26, had hoped to have legislation ready for a vote before the break.
Senate President Pro Tem John Burton (D-San Francisco) cautioned that, even with a pact, bills dealing with the workers’ comp system wouldn’t be ready for debate and a vote until the spring recess ended April 12.
The governor, nevertheless, remains optimistic. “He believes that all sides are close to an agreement on the principles,” said Vince Sollitto, a Schwarzenegger spokesman.
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Tech Firms Campaign to Block Options Plan
Accounting rule makers proposed requiring corporations to deduct the cost of employee stock options from earnings -- drawing the expected heat from the technology sector.
About 70 technology executives, in a so-called fly-in staged by the American Electronics Assn. trade group, descended on Washington to lobby Congress to block the long-awaited proposal by the Financial Accounting Standards Board.
The executives, including more than a dozen from Silicon Valley, claim the rule could hurt the economy by making it tougher for firms to attract and retain employees.
The FASB said it would accept public comment until June 30, then put the proposal to a final vote of its seven-member board in the fall.
Under the proposal, publicly traded firms would have to record stock option awards as an expense on their income statements, reducing reported profits. Currently, options need to be disclosed only in the footnotes to financial statements.
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EMI Cuts 1,500 Jobs, Plans to Drop Artists
Music giant EMI Group slashed about 1,500 employees from its global workforce, began exiting the CD manufacturing business in the U.S. and Europe and laid plans to drop a slew of acts in the face of an industrywide sales slump.
The restructuring, in which about 20% of EMI’s recorded-music employees will be let go, is expected to deliver annual savings of about $92 million, the company said.
EMI said about $46 million of the cuts would be reflected in the results for its just-ended fiscal year, to be reported May 24.
The restructuring is expected to result in a one-time charge of about $138 million. EMI also said it expected to take a write-down of about $55 million tied to its departure from manufacturing in the U.S. and Europe. The shrinkage of the artist roster is expected to result in an additional charge of $92 million.
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Ruling Gives ISPs Access to Cable Lines
Inviting more competition in high-speed Internet access, a federal appeals court refused to reconsider an order requiring cable operators to share their networks with rivals.
The 9th Circuit Court of Appeals in San Francisco dismissed arguments from the Federal Communications Commission and the cable industry that cable-based Internet access should be exempt from the rules that require telephone companies to lease their lines to competitors.
Instead, the court upheld, without comment, its October ruling that cable and phone networks should be treated similarly. Barring a stay, the order takes effect this week.
Experts said the decision could trigger the same kind of rivalry for customers of cable high-speed Internet access that exists with slower dial-up service.
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From Times Staff
