Week in Review
Bush Win, More Jobs
Boost Stock Market
Wall Street capped a stellar week by extending its rally for a ninth straight session, as a better-than-expected U.S. employment report boosted stocks and gave investors hope that the economy was strengthening.
The stock market earlier in the week had greeted President Bush’s reelection with a broad rally, led by sectors thought to benefit from his policies -- and potentially threatened by a Kerry administration. Shares in defense, energy, healthcare and pharmaceutical companies were among those posting big gains.
Analysts attributed the uptick in stocks to relief at seeing the better-known quantity prevail. “In the short run this is a celebration for the status quo,” said Jeffrey Saut, strategist at brokerage firm Raymond James.
For the week, the Dow gained 3.59% -- its best week since March 25, 2003 -- while the S&P; rose 3.18% and the Nasdaq climbed 3.24%.
California Voters Give
a Boost to Business
Business, thanks to a boost from Gov. Arnold Schwarzenegger, got most of what it wanted from California voters on election day. The state’s corporate community prevailed on its two big-ticket items.
Proposition 64, an initiative limiting lawsuits by private individuals against businesses, was approved by voters after companies large and small helped finance a Yes on 64 campaign.
Proposition 72, a referendum on a law that would have forced medium-size and large employers to provide workers health insurance, was defeated.
Many businesses cheered the rejection of Proposition 67, a surcharge on phone bills to finance emergency medical care, and welcomed passage of Proposition 71, which directs the state to borrow $3 billion to sponsor stem cell medical research.
Consumer activists, however, were far from pleased with business’ success at the polls this week. In particular, the expensive campaign in favor of Proposition 64 raised concerns that industry could simply purchase the business climate it wants in California.
Employers Add More
Jobs Than Expected
Employers added to their payrolls in October at the fastest pace in seven months, the government reported, but so many workers began or resumed looking for jobs that the unemployment rate rose by 1 percentage point to 5.5%.
Payrolls grew by a surprisingly strong 337,000 jobs last month. That was twice the 175,000 net jobs that had been forecast and the strongest since March, when 353,000 jobs were created, the Labor Department said.
Economists generally said the robust job growth meant that the Federal Reserve Board would continue to bump up short-term interest rates by one-quarter of a percentage point at each of its November and December meetings.
Not only was October a strong month, but the number of jobs created in the two prior months also was revised upward -- to a net 139,000 in September instead of 96,000 and to 198,000 in August instead of 128,000.
Hollywood Icon Lansing
to Leave Paramount
Sherry Lansing, a Hollywood pioneer who for three decades has been one of the most powerful figures in the movie business, plans to step down as chairwoman of Paramount Pictures when her contract expires at the end of next year.
According to a source, Lansing will stay long enough to help choose her successor. But after 12 years in one of the most high-pressure jobs in the business, Lansing has made it known that she does not plan to seek another entertainment job. She said in a statement that the time had come to begin planning “the next chapter in my life.”
Lansing’s decision comes as she finds herself having to prove to her new boss, Viacom Inc. Co-President Tom Freston, that she can reverse the fortunes of the struggling studio.
A spokesman for Viacom, which owns Paramount, declined to comment.
Lansing has been involved with some of the most acclaimed movies of her generation -- “The China Syndrome,” “Forrest Gump” and “The Accused.” But during her last three years at Paramount, she has presided over a box-office slump.
ABC Veteran to Lead
Yahoo Media Efforts
Deepening its ties with Hollywood, Yahoo Inc. said it had hired the former top programmer for the ABC television network to oversee its growing media and entertainment division.
Lloyd Braun, the creative mind behind such shows as “The Sopranos” on HBO and “Lost” on ABC, is Yahoo’s highest- profile hire since the Internet pioneer tapped former Warner Bros. Chairman Terry Semel in 2001 as chief executive to steer it back to profitability after the dot-com crash.
The move signals Yahoo’s intent to become a full-fledged competitor to traditional Hollywood. It also underscores how the strategy of the Sunnyvale, Calif., company differs from those of rival search engines and Internet portals.
Braun will try to persuade movie, TV and music companies to distribute more content exclusively on Yahoo and to create original programming for the 90 million visitors to the company’s websites each month. The 46-year-old lawyer also will oversee Yahoo’s efforts in areas including movies, games, news, finance and sports.
Braun will succeed Jim Moloshok. Although his day-to-day management responsibilities were dropped in July, Moloshok continues to act as a liaison to Hollywood. He will report to Braun.
Oracle Increases Its
Offer for PeopleSoft
Three weeks after Oracle Corp. Chief Executive Larry Ellison testified that he might lower a hostile bid for PeopleSoft Inc., Oracle raised it 14% and set a Nov. 19 deadline for its smaller rival to accept.
The bid made is for $8.8 billion, or $24 a share, up from $7.7 billion, or $21 a share.
Executives at the Redwood City, Calif., software maker described it as their “best and final” offer. They said they would abandon the 17-month quest for Pleasanton, Calif.-based PeopleSoft if a majority of shares weren’t tendered by deadline.
However, if a majority are tendered and PeopleSoft maintains its anti-takeover defenses, Oracle said, it will keep fighting the provisions in the Delaware courts.
PeopleSoft’s board said it would consider the latest offer but gave no timetable.
Mondavi Accepts
Constellation’s Offer
Robert Mondavi Corp. accepted a sweetened $1.03-billion takeover offer from Constellation Brands Inc., the world’s largest wine company.
The offer of $56.50 for each of Mondavi’s Class A shares represents a 46% premium over the share price Oct. 11, the day before Constellation made its first proposal to Mondavi’s board. The deal also would include assumption of $325 million of debt.
The Mondavi family, which has voting control of the company through a special Class B issue of stock, supports the buyout, the vintner said. Family members would get $65.82 a share for their Class B holdings.
In accepting the Constellation bid, Mondavi shelved a restructuring plan to reinvent itself as a purveyor of inexpensive wine; to do so, it would have sold its landmark Robert Mondavi Winery in Oakville, Calif., and other luxury brands.
Founder Robert Mondavi would continue as an ambassador for the company.
Mondavi executives didn’t return calls.
The transaction requires shareholder and regulatory approval but could close as early as December.
Chalone Wine Group
Agrees to Be Acquired
In another wine deal, Napa Valley vintner Chalone Wine Group Ltd. has agreed to be acquired by the owner of the Chateau Lafite-Rothschild label in a complex deal that would create a new high-end California wine company.
Chalone and Domaines Barons de Rothschild said they signed an accord last weekend calling for the legendary French vintner to pay $11.75 a share for the 51% of Chalone that it didn’t already own and to assume $65 million in debt.
Rothschild would set up a joint venture with wine giant Constellation Brands Inc. and the Huneeus family, which owns the Quintessa winery in Napa Valley, to sell Chalone and Quintessa wines and to develop an ultra-premium California Cabernet Sauvignon under the Rothschild label.
The proposed acquisition, which must be approved by Chalone shareholders, values the vintner at $158 million.
Data Security Breached
at Wells Fargo Again
Four computers containing the Social Security numbers and other personal information of some Wells Fargo & Co. borrowers were stolen last month in the third such security breach in a year, the bank said.
San Francisco-based Wells Fargo said the thefts occurred in early October from the Atlanta office of Napa, Calif.-based Regulus Integrated Solutions, which handles billing for banks.
The computer files included names, addresses, loan numbers and Social Security numbers of some Wells Fargo customers with student loans and mortgage escrow accounts, a bank spokeswoman said. She said there was no indication that stolen information had been misused.
She said a “relatively small percentage” of Wells Fargo’s 4.9 million mortgage customers and 890,000 student loan borrowers were affected but declined to be more specific about the number of victims or about the circumstances surrounding the theft.
Executives at Regulus declined to comment.
Studios Plan to Sue
Online Movie Pirates
Hollywood studios plan to start filing lawsuits within two weeks against movie pirates illegally offering films on file- sharing networks, officials said.
Motion Picture Assn. of America President Dan Glickman unveiled the industry’s hardball strategy, saying studios had no choice in their battle to stem the growing number of people swapping movies online.
Simon Barsky, the MPAA’s chief counsel, would not specify targets, saying that any copyright violator could be sued.
The MPAA also revealed an advertising campaign that stressed that the “trafficking” of movies could result in fines as high as $150,000 per film.
The MPAA’s move follows the efforts of major record companies, which have sued more than 6,000 people since September 2003 for alleged illegal file sharing. More than 1,200 of the defendants have agreed to pay about $3,000 apiece to settle the claims out of court.
For a preview of this week’s business news, please see Monday’s Business section.
