Monday PM January 26th, 2009
by: Ed Mayberry, January 26, 2009 10:01:09 pm
The Texas Attorney General's Office has settled an antitrust suit with Memorial Hermann Healthcare System, in connection with the failure of Town & Country Hospital. Memorial Hermann will pay $700,000 in costs and will be enjoined for five years from entering into agreements that boycott competing hospitals. The state's lawsuit alleged strong-arm tactics by Memorial Hermann to prevent insurers from offering contracts to Town & Country. That physician-owned hospital closed after failing to obtain contracts with insurers, who were told that Memorial Hermann would terminate their contract or raise rates if they did business with Town & Country.
A real estate group says sales of existing homes rose 6.5 per cent from November to December, closing out the worst year for the U.S. real estate market in more than a decade. The National Association of Realtors said Monday that sales of existing homes rose to an annual rate of 4.74 million in December, from a downwardly revised pace of 4.45 million in November. December's sales had been expected to fall to a pace of 4.4 million units, according to Thomson Reuters. The median sales price plunged to $175,400, down 15.3 per cent from $207,000 a year ago. That was the lowest price since May 2003 and the biggest year-over-year drop on records going back to 1968.
A private research group says its monthly forecast of economic activity rose unexpectedly in December, mostly because the flood of federal bailouts increased the money supply. The New York-based Conference Board's monthly forecast of economic activity increased 0.3 per cent in December. Economists surveyed by Thomson Reuters had expected a 0.3 per cent decline. The group's index of leading economic indicators had fallen 0.4 per cent in November and a revised one per cent in October. With nearly every component but the money supply in decline, the Conference Board said unemployment could rise to nine per cent from 7.2 per cent as the country remains in an intense recession through spring.
Even as the current economy creates challenges for most retail establishments, the resale industry is booming, according to the National Association of Resale & Thrift Shops. The group says during the third quarter, 74 per cent of resale shops surveyed had experienced a sales increase of an average 35 per cent. Some 89 per cent report an increase in new customers.
Offshore Europe is set for September in Scotland. It's like the European version of Houston's Offshore Technology Conference, held in May. Thomas Thune Andersen is the 2009 chairman.
" 'Energy at a Crossroad: Making Choices' is the theme which we have given to the conference. We will be looking at four main themes throughout. It will be climate and energy, it will be the operating model, it would be break-through technology and it would be the people side of things. If I was asked what is the main thing that we would hope to achieve from this conference, it will be when the conference is over, that we have been able to address to the young people — those who are either right now joining the industry or those who have an interest in the industry — who can come and get inspired and learn about what the opportunities in the industry are for them, should they choose to join the industry."
The Offshore Europe 2009 Exhibition & Conference, produced by the Society of Professional Engineers, is set for September 8th through the 11th in Aberdeen, Scotland.
Analysts don't see any benefit for consumers in the acquisition of one big drug manufacturer by another. But they're split on how good the deal is for the companies involved. Pfizer, the world's biggest drug maker, says it's buying Wyeth for $68 billion. The deal will result in a loss of nearly 20,000 jobs. But for Pfizer, it means a quick boost in revenue--and a product line that will now include vaccines, biotech drugs, traditional pills and non-prescription products. Pfizer's CEO says the deal advances "every single one" of his company's strategies. One analyst is predicting a "massive" boost to Pfizer's earnings. But another says it still doesn't solve Pfizer's problem of not having enough promising drugs in its development pipeline. The cash-and-stock deal is expected to close late in the third quarter or in the fourth quarter. It comes as Pfizer's profits take a hit from a $2.3 billion legal settlement over allegations it marketed pain reliever Bextra and possibly other products for indications that had not been approved.
Caterpillar plans to cut 20,000 jobs. The Peoria, Illinois-based firm has 135 manufacturing facilities across America, including two in Channelview, one in Houston and a marketing office in Pearland. Caterpillar is building a new one in Seguin, Texas. The company has not announced where the job cuts will be.
Home Depot says it's cutting 7,000 jobs and closing its smaller Expo chain as the recession continues to batter the nation's housing market. The nation's largest home improvement retailer says the cuts will affect about two per cent of its work force. Under the plan, the Atlanta-based retailer will close its 34 Expo design centers, five Yardbirds stores, two Design Center stores and a bath remodeling business that has seven locations. Those stores will close in the next two months. Its core Home Depot stores won't be affected. The company also plans to shed 2,000 non-store jobs and freeze the pay of its officers. Home Depot will record a $532 million pretax charge in the fourth quarter related to the closures and layoffs.
Overland Park, Kansas-based Sprint Nextel is slashing 8,000 jobs by March 31st, affecting all levels of the company. Sprint says the impact of the cuts will vary by geography. The Houston office employs 800 and there are more than 60 Sprint stores in the Houston area.
BBVA Compass plans to cut ten per cent of its workforce, or about 1,200 positions in the six states in which it operates. Two-hundred cuts will be at the bank's headquarters in Birmingham, Alabama. The number of business units has been reduced from four to three. It recently merged State National Bank, Texas State Bank and the former Laredo National Bank into Compass. The bank is owned by the Spanish Banco Bilbao Vizcaya Argenitaria.
The U.S. Census Bureau will hire about 75,000 workers in Mississippi, Louisiana and Texas this year as it prepares for the 2010 census. The agency is opening a jobs line and an office in Jackson Wednesday for recruiting hundreds of temporary workers in the state. The office will recruit workers for office staff and to update address lists, conduct interviews with area residents and other tasks. Pay will range between $8 and $19.25 an hour, based on location, position and training. The office will be in charge of operations for 28 Mississippi counties.
Total passenger volume through the Houston Airport System was down 2.6 per cent in 2008, totaling 50.8 million passengers compared with 51.8 million in 2007. Domestic traffic slipped 3.6 per cent to 42.5 million. International traffic rose 3.1 per cent to 7.96 million. Landings and takeoffs declined 5.2 per cent in 2008. Air freight volume was off 3.2 per cent for the year.
As President Barack Obama starts his first full week in office, the focus is on Capitol Hill, where lawmakers are set to act on legislation aimed at spurring the economy. Obama plans to meet with more GOP lawmakers this week, though the top House Republican says there's little support among his GOP colleagues for the package in its current form. Obama's cabinet is set to get another member today. The Senate is poised to confirm Timothy Geithner as Treasury Secretary despite his tax questions. Some Republicans say his confirmation will create an unusual situation: a cabinet member heading the agency that oversees the IRS who had to cut a check to pay back taxes and penalties. Geithner failed to pay $34,000 in back taxes earlier in the decade but now has paid it all.
President Obama says the nation can't afford "distractions" or "delays" when it comes to the economic stimulus plan working its way through Obama pointed to job cuts taking place at companies including Microsoft, Intel, United Airlines and Home Depot. And he said it means more working men and women "whose families have been disrupted and whose dreams have been put on hold." Obama told reporters the government owes it to "every American" to act with a "sense of urgency" and "common purpose." Senate committees are scheduled to take up the massive economic stimulus package Tuesday and the full House is expected to vote on its version of the $825 billion plan Wednesday. Republicans want the recovery package tilted more toward tax cuts. Obama said these "extraordinary times" call for "swift and extraordinary action."
The Supreme Court has ruled that workers who cooperate with internal investigations of retaliation by their employers are sheltered by federal laws prohibiting job discrimination. In an opinion, the justices held that a longtime school system employee in Tennessee can pursue a civil rights lawsuit over her firing. The court voted unanimously to reverse the 6th U.S. Circuit Court of Appeals' ruling that the anti-retaliation provision of Title VII of the 1964 Civil Rights Act does not apply to employees who merely cooperate with an internal probe rather than complain on their own or take part in a formal investigation.
The Supreme Court has reinstated antidumping tariffs on imported enriched uranium used at U.S. nuclear power plants. The justices, in a unanimous decision, agreed with the government and the sole American company that enriches uranium that a 20 per cent tariff is justified on enriched uranium from abroad. Protective tariffs are imposed when there is evidence that goods are being exported at prices below levels charged in the producer's home market. A French uranium enrichment company, Eurodif, and a group of U.S. utilities challenged the tariff imposed by the Commerce Department in 2002. A federal appeals court in Washington overruled the government in 2005. The Bush administration and Bethesda, Maryland-based USEC, the only American enricher of uranium, challenged the ruling by the U.S. Court of Appeals for the federal circuit. The dispute consists of two cases, U.S. v. Eurodif, 07-1059, and USEC v. Eurodif and the ad hoc utilities group, 07-1078.
A union representing 12,000 mechanics at American Airlines has asked the U.S. government on to appoint a mediator on talks over a new contract. The Transport Workers Union request means all major unions at Fort Worth-based American, including those for pilots and flight attendants, will be using a federal mediator. The airline, which is the nation's second largest, said the extra guidance from a mediator might help. The Transport Workers made the request Friday. The union and the unit of AMR have been negotiating over a new contract for 14 months. Meanwhile, the flight attendants union today said it's determined to restore "middle-class standards" for its workers and recoup pay and benefit cuts of 25 per cent in 2003.
Armando Cornejo learned on his 38th birthday that a three-month layoff from his job as an electrician was over. His reaction to Thursday's news mirrored the outlook of the Texas economy: he was pleased to be afloat, but unsure how long it'll last. The Euless man remarks that "there's no more job security" and "you've got to keep your options open." Texas learned that lesson in the 1980s, when an oil bust shocked the state into the realization that its economy wasn't diverse enough. Analysts say similar lessons from the savings and loan scandal a decade later are playing a role in Texas remaining somewhat insulated from the national economic downturn. The state has managed to maintain job growth over the past year while 2.6 million jobs have been lost nationally. With foreclosures skyrocketing and home prices plunging in parts of the country, analysts say Texas homes are hanging on to their value. Still, there are signs that Texas is getting caught up in the churn of the sputtering national engine. The state announced Friday that December was the third month in the past four to suffer job losses, and unemployment hit six per cent for the first time since 2004. State legislators were greeted on the eve of their session's start this month with Comptroller Susan Combs' estimate that tighter consumer spending will lead to a $9 billion budget shortfall. Texas is projecting a $447 million shortfall in its unemployment fund by the fall after a temporary suspension last year of a tax that replenishes the fund.
Oilfield services provider Halliburton says its fourth-quarter profit fell 32 per cent from a year ago, as a potential government settlement cut into earnings. Halliburton said its net income in the October-December period fell to $468 million, compared with $690 million during the same period a year ago. The company says it incurred a one-time charge of $303 million, related to an investigation of its former subsidiary KBR. Halliburton has agreed to pay the Justice Department $382 million on KBR's behalf over the next two years, with an additional $177 million to the SEC. The charge aside, income from continuing operations was $776 million, versus $674 million a year ago. Halliburton's quarterly revenue rose 17 per cent to $4.91 billion from $4.18 billion in the previous year, topping analyst estimates.
Texas Instruments, which makes chips for cell phones and other gadgets, says it will cut 3,400 jobs because demand has slackened amid a slowing economy. The Dallas-based company said that it will cut 12 per cent of its work force--1,800 jobs through layoffs and another 1,600 jobs through voluntary retirements and departures. The announcement came as the chip maker reported sharp declines in fourth-quarter profit and revenue.
Kimberly-Clark says a stronger dollar and higher spending on marketing caused fourth-quarter profit to slip eight per cent as consumers also scaled back on spending in a tough economy. The Dallas-based maker of Huggies diapers and Kleenex tissues said earnings declined to $419 million, from $456 million last year. Sales slipped three per cent to $4.6 billion from $4.76 billion. Analysts surveyed by Thomson Financial expected sales of $4.66 billion. These estimates typically exclude one-time items. Organic sales growth in 2009 is expected in the low single digits with adjusted earnings per share of $4 to $4.20.