Wednesday AM October 25th, 2006
by: Ed Mayberry, October 25, 2006 5:10:00 am
Former Enron CEO Jeff Skilling remains under home confinement with an ankle monitor until he receives word on when to report to prison. Skilling was sentenced to 24 years and four months in prison by U.S. District Judge Sim Lake on Monday. Skilling is appealing his May conviction on 19 counts of fraud, conspiracy, insider trading and lying to auditors. Sherron Watkins, who wrote the famous memo to Ken Lay warning of accounting irregularities, says the sentence feels like closure, but Skilling should take some responsibility for Enron's failures.
"I think people really want to see someone admitting their guilt. I mean, I did not see that many people angered when Andy Fastow's sentence was reduced to six years from ten because he was so remorseful and he had taken responsibility. But with Jeff Skilling there remains a pretty high level of anger because he still denies any culpability."
Skilling's prison sentence is the longest received by any Enron defendant. Co-defendant, Enron founder Ken Lay, died of heart disease in July. Former chief financial officer Andy Fastow was given a six-year term after cooperating with prosecutors and helping them secure Skilling's conviction.
"I think that it's a lesson that leaders need to take to account. All eyes are on them. And they need to really understand that if they have, if they allow any aggressive accounting or questionable accounting, if they do anything questionable, their troops are watching, and they take it for license to really do highly questionable activity. A leader needs to realize how much all eyes are on them. And just like a child looks at a parent, they're going to repeat and replicate what that parent does. And boards need to pay attention to any lapses in ethics, as well."
The Enron collapse led to the loss of thousands of jobs, more than $60 billion in Enron stock and more than $2 billion in employee pension plans. Skilling is forfeiting $45 million to shareholders, who now have over $7 billion in cash, primarily from investment bankers who have settled with plaintiffs attorneys.
Governor Rick Perry is getting Texas into robots. The governor's office announced that $2 million in grants from the Texas Emerging Technology Fund will be divided between two Texas companies. Of that, $1.5 million is going to Hanson Robotics of Dallas to help market a robot that Perry's office says offers a more lifelike appearance than existing robots. A statement issued by Perry's office says the robot would have speech recognition software to allow more realistic responses to human commands. Perry's staff says Hanson eyes an initial application of the robot for entertainment--but with a potential for prosthetic research and applications. The other half million dollars will go to Monebo Technologies of Austin to help market its new cardiobelt heart monitoring technology. Perry's office says the technology allows patients to have at-home electrocardiograms and transmit them wirelessly to their doctors.
The Department of the Interior has agreed to halt oil and natural gas lease sales off the Louisiana coast until environmental studies are complete. Governor Kathleen Blanco sued the agency in July, trying in vain to block it from selling leases to 381 tracts in the western Gulf of Mexico for oil and gas exploration. Sixty-two companies submitted $340 million in high bids, but companies planning to drill must prepare a new environmental assessment. The department will postpone a lease sale planned for March until the new environmental impact study is complete.
A higher education costs more this year--even though the rate of the increase isn't as steep as in the past five years. Tuition and fees at four-year public colleges are up more than six percent, to an average of just over $5,800 for the academic year. But accounting for inflation, the College Board says prices rose less than two and a-half percent. Tuition and fees at private four-year colleges were up nearly six percent, bringing that average to a little over $2,200. The best news is for students at public two-year colleges, which educate nearly half of American college students. Thanks mostly to a fee reduction in California, two-year tuition and fees overall climbed by only about four percent. The average going rate there is still under $2,300 a year.
BP reports a 3.6 percent drop in its third-quarter profits. The London-based oil giant reports a net income for the July-to-September quarter of $6.23 billion. Revenue climbed four percent to $70.7 billion. It blames the earnings drop largely on lost production in Alaska, higher taxes in Britain and a slump in refining margins. BP has experienced a run of trouble in the United States, where several of its fields experienced outages and delays. The company halved production at its Prudhoe Bay field in Alaska after severe pipeline corrosion and a small leak were uncovered. It also delayed the opening of its Thunder Horse platform in the Gulf of Mexico, which had been damaged by Hurricane Dennis last year. The platform is the largest in the gulf. It's also faced lawsuits and investigations from a 2005 Texas City refinery explosion that killed 15 workers. There also have been allegations it manipulated U.S. crude oil and gasoline markets. BP also faces higher taxes in Britain's North Sea and lower refining margins.
Burlington Northern Santa Fe posted a third-quarter profit 18 percent higher than last year's quarter. The Fort Worth-based railroad cited the strength of higher coal, agriculture and intermodal volumes, as well as a boost from fuel surcharges. The nation's second biggest railroad operator says quarterly earnings reached $488 million. Revenue grew 19 percent to $3.94 billion--beating analysts' expectations of $3.86 billion. Burlington Northern is second only to Union Pacific in the U.S. railroad business.
A plaintiff in one of thousands of Vioxx-related lawsuits against Merck and company has dropped her claim--two weeks before it was to go to trial in Houston. That's according to the New Jersey-based maker of the pain medication. Sharon Rigby claimed that Vioxx increased the risk of heart attacks and strokes. Merck says it's the fourth case set for trial in a statewide legal proceeding in Texas where the plaintiff has dropped out or the case has been dismissed before the trial. A trial around Rigby's claims was scheduled to begin November 8th. The company said Rigby claimed Vioxx caused her heart attack even though she was a smoker, had other heart-attack risk factors and was suing another pharmaceutical company. More than 23,800 lawsuits alleging injuries caused by Vioxx have been filed. Most are in New Jersey. Other trials are scheduled to begin next week in Louisiana and California.
Add computer maker Gateway to the list recalling Sony batteries. It is voluntarily recalling about 3,500 lithium ion batteries containing battery cells. There's a risk the batteries could overheat and create a fire hazard. Gateway says it hasn't identified any failures involving its batteries so far. But it says it is cooperating with the Consumer Product Safety Commission and Sony to act in the interest of customer safety. Gateway notebook PCs with the batteries began shipping in September 2005. About ten million batteries made by Sony for major computer makers have been involved with recalls worldwide.