Monday PM September 25th, 2006
by: Ed Mayberry, September 25, 2006 5:09:00 am
Computer giant Dell plans to hire another 500 engineers to work in its Central Texas product development operations. The plan was outlined today in Austin by chairman and founder Michael Dell. Dell joined Governor Rick Perry at the Texas Capitol to announce the company would immediately begin hiring new electrical, software and mechanical engineers and program managers. Dell already has 18,000 employees at its Round Rock headquarters and other Austin-area locations. The company has been battered in the last month by a recall of 4.1 million potentially flammable notebook batteries made by Sony. Dell also has had disappointing earnings.
Nearly 1,000 janitors who clean Houston's downtown office buildings voted this weekend to authorize their bargaining committee to call a strike if necessary, as they bargain for wage increases. Janitors employed by the five largest cleaning contractors in Houston--ABM, OneSource, GCA, Sanitors and Pritchard--want $8.50 an hour, more work hours and access to health care. Houston janitors have the lowest wages and benefits of any major city in the U.S., although they work for the same large, national cleaning companies and clean buildings owned by many of the same large, national real estate companies whose janitors are members of the same union.
Enron's former chief financial officer will be sentenced tomorrow morning at 11 by U.S. District Judge Kenneth Hoyt, after victims of Enron's collapse speak about how the company's downfall hurt them. In his plea agreement that resulted in testimony against former Enron executives Ken Lay and Jeff Skilling, Andy Fastow agreed to a ten-year prison sentence, and Judge Hoyt cannot increase that sentence. Fastow pleaded guilty to two counts of conspiracy. His attorneys have asked the judge for leniency, pointing to his assistance to the government, his remorse and the torment he and his family have already faced. Although Fastow's complex schemes helped lead to the company's 2001 downfall, Rod Jordan, chairman of the Severed Enron Employee Coalition, says he hasn't heard from anybody who planned to speak at the sentencing. Under a two-year-old federal law that enhances the rights of victims of federal crimes, Judge Hoyt will allow Enron victims to speak at Fastow's sentencing. People will be able to sign up to speak in the morning before the sentencing. Enron crumbled into bankruptcy proceedings in December 2001. That came after years of accounting tricks could no longer hide billions in debt or make failing ventures appear profitable. The collapse wiped out thousands of jobs and more than $2 billion in pension plans.
The University of California has reached two settlements with Enron's accounting firm and legal team. Arthur Andersen will pay $72.5 million because it served as Enron's auditor and approved misleading financial reports. The law firm Kirkland and Ellis will pay a $13.5 million settlement for its role in representing third-party entities that Enron used to hid money and debt in its manipulation of financial statements. The settlement will be distributed amongst the university and tens of thousands of other plaintiffs involved in a class action lawsuit. UC lost about $144.9 million from its retirement and equity funds as a result of investments in Enron. The university and other plaintiffs have recovered more than $7.3 billion from Enron lawsuits. Several big investment banks remain as defendants.
The Baker Institute at Rice University is hosting the "Biomass to chemicals and Fuels: Science, Technology and Public Policy" conference to investigate the potential for biofuels. The Assistant Secretary for Renewable Energy at the U.S. Department of Energy, Alexander Karsner, says this conference is timed well, coming as it does after a recent speech by President Bush warning of America's dependence on imported oil.
"The president went so far as to say things that made headlines across the world when he said—and I take it as my charge—‘America is addicted to oil.' It really is the defining statement for the job that I have to do. In many ways, it makes my job very prescriptive day-to-day because there are few agencies within the federal government that get this kind of attention from the White House on almost a daily basis."
The two-day conference is looking at energy security and research and development of new technologies and scientific breakthroughs needed to make biofuels a viable alternative to oil-based fuels.
A state with a reputation for all things big is hosting a conference this week about nanotechnology--the science of the very small. The "Nanotx '06'' Conference runs Tuesday through Thursday at the Dallas Convention Center. The meeting will bring together thousands of researchers, business leaders and politicians from around the world to discuss the latest nanotech developments. Headlining the event are Governor Rick Perry, Dallas billionaire and presidential candidate Ross Perot and Britain's Prince Andrew. The science involves the manufacture and manipulation of materials at the molecular or atomic level. Nanotx '06 arrives in Dallas as Texas tries to compete with other states for business investment and research dollars.
Shares in Chicago-based United Airlines' parent company, UAL Corporation, rose today. That follows a published report that it has retained Goldman Sachs Group to explore strategic options, including possible mergers with other carriers. That's what Crain's Chicago Business reports, citing unidentified people close to United. Continental Airlines--the Houston-based parent of the fifth-largest U.S. carrier--has long been considered a good potential partner for United because of a network that would be a complementary strategic fit. Delta Air Lines also has been speculated about, for similar reasons. Either merger would create the largest U.S. airline. United declined comment. A spokeswoman for the New York investment bank did not immediately return a phone message seeking comment.
Banco Santander Central Hispano today bought a majority stake in Dallas-based Drive Financial in a $651 million deal. Drive Financial is an auto financing company for customers who have difficulty getting credit. Authorities say the Texas-based company has a four percent share of the market. Santander says its control of 90 percent of the company will probably boost its earnings per share by 1.5 percent in the fiscal year through 2007. Santander Consumer Finance is acquiring a 64.5 percent stake in Drive from HBOS and the majority of the company's management stake.
The nation's largest jewelry store chain says a Securities and Exchange Commission probe of its accounting practices ended with no recommended enforcement. Zale President Betsy Burton says she's relieved and ready to move forward. Zale in April disclosed the SEC inquiry into its accounting practices, then in May put Chief Financial Officer Mark Lenz on administrative leave. Outside auditors discovered Lenz had not made a timely disclosure about some delayed vendor payments. Zale began the year with some near front office changes. In January, Mary Forte resigned as chief executive. Paul Leonard then left the company's largest division, Zales, in February. Sue Gove stepped down as chief operating officer in March. In July, Zale named Burton as CEO. The company operates as Zale Jewelers, Bailey Banks & Biddle and Piercing Pagoda.