TOP STORIES -- March 7-12
Stocks End Losing Week With a Partial Rebound
Stocks roared back Friday in a broad rally as bargain hunters swooped in after four days of steep losses.
The Dow had tumbled a total of 468 points in the four sessions, including Thursday’s 168-point plunge fueled in part by the Madrid bombings. Friday the industrials soared 111 points.
On the week, the Dow lost 3.4% and the Nasdaq slid 3.1%. The benchmark S&P; 500 fell 3.1% for the week.
Some strategists said the week’s sell-off had gotten overdone, especially after Thursday’s late swoon, setting the stage for Friday’s snap-back.
The turnaround came despite mildly disappointing economic news. Consumer sentiment fell in early March, according to the University of Michigan’s monthly survey. The survey’s index fell to 94.1 from 94.4 in February.
As investors piled into stocks Friday, the bond market slumped, sending the yield on the benchmark 10-year Treasury note to 3.78% from 3.69%.
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California Job Growth Remains Sluggish
Employment growth in California remained sluggish in February, as the economy added a modest 8,800 jobs, many of them in the temporary-help industry.
The state did outperform the nation as whole, which added just 21,000 jobs last month.
Still, the latest report showed that California, like the nation, continued to be stuck in a recovery that is producing very few jobs. By economists’ estimates, California needs to add about 20,000 jobs a month just to keep pace with normal labor growth.
But since July, employers statewide have added on average only about 9,000 to payrolls. California’s unemployment rate held steady last month at 6.2%, but that was partly because people dropped out of the labor force and were no longer counted as officially unemployed.
The disappointing February report came after the state added an upwardly revised 26,000 jobs in January. But last month, there were more cuts in government payrolls because of budget problems, as well as continued losses in manufacturing.
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EchoStar, Viacom Settle Dispute After Blackout
EchoStar Communications Inc. and Viacom Inc. settled a contract dispute that left millions of Dish Network satellite TV customers without MTV, Nickelodeon and other channels and many without their local CBS affiliates.
Satellite TV provider EchoStar had pulled the Viacom signals when talks broke down over a distribution contract.
About 1.6 million Dish Network subscribers in 16 major cities, including Los Angeles, were unable to tune in to Viacom-owned CBS affiliates. Dish’s entire customer base of 10 million nationwide went without Viacom’s cable channels.
EchoStar, of Englewood, Colo., had filed an antitrust suit accusing Viacom of using CBS’ popularity to force EchoStar to carry less-popular channels. All litigation was settled as part of the latest pact, whose terms weren’t disclosed.
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U.S. Seeks to Indict Reliant Resources Unit
Federal prosecutors plan to indict a Reliant Resources Inc. unit on charges that it withheld much-needed electricity to boost prices during California’s energy crisis, the Houston-based power company said.
The U.S. attorney’s office in San Francisco notified Reliant that it would ask a grand jury for a criminal indictment against Reliant Energy Services and four of the energy trading unit’s current and former employees, a Reliant spokeswoman said.
Reliant said that it would contest the charges and that it didn’t expect the indictment to hurt its business.
In January 2003, Reliant agreed to pay $13.8 million to settle charges brought by the Federal Energy Regulatory Commission stemming from the same behavior involved in the criminal investigation, but the company did not admit to any wrongdoing.
The investigation of Reliant appears to be focusing on the actions of Reliant Energy Services traders, managers and plant operators in June 2000.
On June 21 and 22, employees worked together to shut several of Reliant’s California power plants to squeeze the supply of electricity and then profit from the resulting high prices for the remaining available energy, according to evidence released by FERC as part of its settlement with Reliant.
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Profits Drop at Kroger, Albertsons Over Strike
The just-ended California supermarket strike and lockout erased more than $235 million in combined fourth-quarter profits at Kroger Co. and Albertsons Inc., but they said the labor contract was worth the price.
Figures released by the two companies, which negotiated the pact with Vons and Pavilions owner Safeway Inc., confirmed that the three together suffered at least $1.5 billion in forgone sales during the 4 1/2-month dispute. Albertsons and Kroger, owner of Ralphs, warned that their 2004 results would suffer because costs were rising as they began spending heavily to return operations to normal.
Cincinnati-based Kroger said the California dispute contributed to a $337.4-million net loss, which also included write-downs in the value of some assets and other charges. A year earlier, profit was $381 million, or 50 cents. Fourth-quarter sales rose to $13 billion from $12.5 billion.
Albertsons, based in Boise, Idaho, said the $90-million cut in its earnings from the strike reduced its fourth-quarter earnings to $130 million, or 35 cents a share, from $205 million, or 54 cents, a year earlier.
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Wall Street Assails Shares of LeapFrog
The management of Leading educational toy maker LeapFrog Enterprises Inc. came under fire after disclosing again that its business would trail expectations -- an announcement that sparked a plunge in its stock.
The stock ended Thursday’s session at $19.60, down $6.40 on the New York Stock Exchange. On Friday, the shares rose 42 cents to $20.02.
Emeryville, Calif.-based LeapFrog expects first-quarter sales of $66 million to $72 million and a loss for the quarter of 18 cents to 22 cents a share. Analysts had expected a loss of about 6 cents a share on sales of about $87 million.
Investors and analysts were especially stunned by LeapFrog’s gloomy forecast because it came only a few weeks after the company provided its most recent guidance about its 2004 outlook. And that raised questions about the company’s leadership.
A LeapFrog spokeswoman said the company wasn’t commenting beyond its latest statement.
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Web Providers Use New Law to Sue Spammers
Four big Internet service providers invoked a 10-week-old federal law to go after spammers who have been clogging their networks with hundreds of millions of dubious e-mail offers.
Lawsuits filed by the ISPs, however, rely as much on state laws as the federal Can Spam Act of 2003, which took effect Jan. 1. Critics of that law have derided it as toothless because, among other things, it doesn’t offer much in the way of additional powers to fight distributors of unsolicited commercial e-mail.
The six suits were filed by Yahoo Inc., Microsoft Corp., Time Warner Inc.’s America Online and EarthLink Inc. in Northern California, Washington state, Virginia and Georgia against hundreds of bulk e-mailers. They were described by AOL general counsel Randall Boe as “the most notorious spammers on the Internet.”
The Can Spam Act regulates what businesses must do if they send commercial e-mail. Among other things, it requires companies to include a physical mailing address and a link that allows recipients to remove themselves from the e-mail list.
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Quiksilver to Acquire Skate Shoe Maker
Huntington Beach-based Quiksilver Inc. said it would buy skate shoe maker DC Shoes for $87 million in cash and stock.
Quiksilver, the world’s largest surf wear maker, would assume $10 million in debt and pay an additional $57 million through 2007 if DC Shoes reached certain performance targets.
The deal is expected to close by Quiksilver’s fiscal third quarter.
Analysts said the acquisition would give Quiksilver a foothold in all areas of skateboard fashion. The two firms sell products in many of the same stores, often to the same customers, and both are expanding internationally.
Vista, Calif.-based DC Shoes, a closely held company with sales of more than $100 million last year, also makes snowboard boots and clothes and accessories for men and juniors. Apparel accounts for about 25% of sales.
Quiksilver had sales of $975 million in the year ended Oct. 31.
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Kodak Sues Sony Over Digital Photo Patents
Eastman Kodak Co., the photography giant that has been struggling to get an edge in the booming market for digital cameras and camcorders, has sued Sony Corp. for allegedly using technology covered by 10 of Kodak’s patents.
The suit, filed in federal court in Kodak’s hometown of Rochester, N.Y., claims that Sony’s cameras infringe Kodak patents for compressing, viewing and printing digital images.
Sony, the top seller of digital cameras, said it would fight the suit. “Sony has not violated any Kodak patent relating to digital imaging,” said a spokesman for the Tokyo-based company.
The patents involved in the suit were issued between 1987 and 2003. Kodak is seeking compensation for patent infringement and wants Sony to pay royalties, change its cameras or stop selling them.
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For a preview of this week’s business news, please see Monday’s Business section.
