Week in Review
Dow Is Below 10,000, but Oil Worries Ease
Wall Street got a break from oil price worries Friday, with stocks rising modestly as Saudi Arabia pushed for OPEC to boost production. Even so, the Dow Jones industrial average finished the week below 10,000 for the first time this year.
The prospect of lower oil prices pressured U.S. bonds. The yield on the 10-year Treasury note rose to 4.76% on Friday.
Saudi Arabia proposed raising the Organization of the Petroleum Exporting Countries’ production ceiling by more than 2 million barrels a day. In New York, near-term oil futures fell 87 cents to $39.93 a barrel.
For the week, however, the Dow finished 0.5% lower and the Standard & Poor’s 500 was down 0.2%. Nasdaq gained 0.4%. It was the third straight week of losses for the Dow and S&P; 500.
The yen was up 1.8% for the week, the euro by 0.9%.
Ink Expert in Stewart Trial Accused of Perjury
A government ink expert who testified against Martha Stewart in her criminal trial this year was charged by federal prosecutors with lying on the witness stand.
The two-count perjury complaint against Larry F. Stewart, a U.S. Secret Service lab director who is no relation to Martha, raised the possibility that Martha Stewart’s obstruction-of- justice conviction could be thrown out. Prosecutors maintained that the forensic evidence against Martha Stewart and her codefendant, former stock broker Peter E. Bacanovic, had not been compromised.
Prosecutors alleged that Larry Stewart lied about his role in an ink analysis of a brokerage document, but they insisted that the results of that test were accurate. But some experts predicted that it would prompt a reversal of the conviction and a second trial.
SBC Workers Begin Four-Day Strike
Nearly 100,000 union members started a four-day strike against SBC Communications Inc. over wages, medical benefits and job security, but most Californians didn’t notice anything different in their phone service.
Directory assistance was slow to respond early Friday, but all systems appeared to perform reliably in the 13-state SBC region, the company said. Were it not for pickets at SBC facilities, the strike could well be invisible.
The Communications Workers of America represents about 60% of SBC’s 170,000 workers.
Both sides returned to the negotiating tables later Friday at four regional centers. Corporate leaders were having informal discussions with CWA’s national leaders, both sides said.
Investors Lose Bid to Oust Safeway Chief
A bid by Safeway Inc. investors to unseat Chief Executive Steven Burd and two other directors fell short, but dissidents delivered a reprimand by withholding 17% of their votes for Burd’s reelection as chairman.
The campaign against Burd was led by the California Public Employees’ Retirement System and several other public pension funds unhappy with Safeway’s financial performance. They contend that board members have conflicts of interest.
The vote “sends a clear and unequivocal message to Steve Burd and the leadership at Safeway” that reforms “are desperately needed,” several pension funds said in a statement.
But Safeway’s chief financial officer, Robert Edwards, said the votes showed “the shareholders overwhelming support Steve Burd” as chairman and CEO.
Governor Removes Criticized Appointee
In the face of Democratic opposition, Gov. Arnold Schwarzenegger withdrew a political appointment that was strongly backed by California businesses.
The Republican governor removed Edward Heidig as director of the Office of Administrative Law at Heidig’s request, a spokesman for Schwarzenegger said. In doing so, the governor avoided a confirmation fight in the Democratic-controlled Senate.
The administrative law office wields far-reaching influence as it oversees how broadly worded laws are turned into nuts-and-bolts government regulations. Schwarzenegger had sought to make the rule-making process more palatable to business.
The governor reappointed Heidig as deputy director at the Business, Transportation and Housing Agency, a position that does not need Senate confirmation. Heidig did not respond to requests for comment.
Southland Home Sales Continue at Torrid Pace
Southern California home sales rose at their fastest pace in at least 16 years in April as buyers faced rising interest rates and still-red-hot prices, which set records in six counties.
Sales of homes and condos rose 7.3% to 32,916 last month as the median price -- the point at which half the homes sold for more and half for less -- climbed more than 20% from a year earlier in each of the region’s six major counties, DataQuick Information Systems Inc. reported.
In Orange County, the median sales price surpassed the half-million-dollar mark for the first time, to $523,000, up 30.1% from 2003. In Riverside County, the median price closed above $300,000 for the first time, at $308,000, up 28.3%.
In Los Angeles County, which accounts for a third of Southland sales, the median price jumped 27.7% to $387,000. That came on a 5.8% drop in sales to 10,749.
State to Investigate Gasoline Price Hikes
As gasoline prices surged, California legislators launched an investigation into the market practices of oil companies, which are posting big profits in the state as gasoline prices soar.
The probe by the new Senate Select Committee on Gasoline and Diesel Pricing will be patterned after an aggressive investigation by lawmakers into price manipulation during California’s electricity crisis, said Senate President Pro Tem John Burton (D-San Francisco).
Much of the discontent from politicians has focused on Shell Oil Co.’s plans to close its Bakersfield refinery this year. The facility makes 2% of California’s gasoline and 6% of its diesel. Shell has said the closure is necessary because of declining crude supplies. But Dunn, U.S. Sen. Barbara Boxer (D-Calif.) and others have said they suspect Shell of intentionally crimping supplies.
Joe Sparano, president of the trade group Western States Petroleum Assn., said gas prices were set by market forces and by the price of oil.
Auto Painter Earl Scheib to Be Sold for $17 Million
Earl Scheib Inc., the auto-painting chain whose low-priced specials turned the company into a Southern California cultural icon, agreed to be sold to an investment group for $17 million.
Sherman Oaks-based Scheib has struggled for years to be profitable in part because the paint on new cars typically lasts a decade or more, reducing the market for car repainting.
Elden Holding Group, a real estate investment company also located in Sherman Oaks, said it would pay shareholders $15 million and have $2 million in acquisition-related costs.
Elden Holding said it planned to continue operating Scheib as an auto paint chain and keep the name. Scheib has about 800 employees; Elden said there were no plans for widespread layoffs.
Greenspan Nominated to 5th Term as Fed Chief
President Bush nominated Alan Greenspan to a fifth term as Federal Reserve chairman, making short work of speculation that the White House was holding up the renomination in hopes of persuading the Fed to keep interest rates low during the presidential campaign.
Bush said in a statement that he had “great confidence” in the 78-year-old central banker, who had done a “superb job.” Greenspan replied in kind, saying he was honored and would be happy to continue in office.
The renomination attracted bipartisan political support. The president’s likely Democratic rival, John F. Kerry, said Greenspan’s “overall record as chairman ... has been one of distinction.”
However, some suggested that the renomination was coming awfully late. Greenspan’s term as chairman ends June 20. The president had declared more than a year ago that he intended to tap Greenspan for another term.
Napa’s Chalone Wine Group Receives Offer
In the latest sign of consolidation sweeping through California’s $14-billion wine industry, two of the biggest names in the business said they wanted to acquire Napa-based Chalone Wine Group, maker of the Chalone, Acacia and Echelon labels.
Constellation Brands Inc., the world’s largest wine company, and Domaines Barons de Rothschild, owner of France’s Chateau Lafite-Rothschild of Bordeaux, would use Chalone as a platform to create a vintner that would specialize in higher-priced California wines.
The offer values Chalone at about $112 million.
Rothschild, which already owns a major stake in Chalone, offered $9.25 a share for the 54% of Chalone it does not own. New York-based Constellation would put up $54 million of the purchase price and Rothschild an additional $10 million.
