Tuesday AM December 11th, 2006
by: Ed Mayberry, December 12, 2006 5:12:00 am
Five years after Enron's collapse left thousands jobless and drained shareholder portfolios, former CEO Jeff Skilling is beginning his 24-year, four-month sentence in Waseca, Minnesota. Skilling was assigned to report by this afternoon at the low-security lockup. He was convicted last May on 19 counts of fraud, conspiracy, insider trading and lying to auditors. Skilling had been confined at home since his October sentencing, wearing an electronic monitor so federal officials could track his movements. Skilling has maintained his innocence and plans to appeal. He has been challenging U.S. District Judge Sim Lake's refusal to let him remain free on bail while appealing his convictions.
University of California attorneys have filed court papers asking U.S. District Judge Melinda Harmon to let Vinson & Elkins walk away from its fight for Enron shareholders. The university said the plaintiffs determined that dismissing V&E simplifies the case and puts more focus on banks and brokerages they allege are more culpable despite evidence that the firm was complicit in fraud. Previous filings by the university allege that Enron and Vinson & Elkins were "joined at the hip." Last June, the law firm agreed to pay $30 million to settle litigation in Enron's bankruptcy estate that alleged the firm aided in the company's downfall.
Some 33 percent of Houston area employers expect to hire more employees during the first quarter of 2007, according to the Manpower Employment Outlook. Seven percent expect to reduce their payrolls. Another 47 percent expect to maintain their current staff levels and 13 percent are not sure of their hiring plans. Employers are more optimistic about hiring than they were a year ago, when 29 percent of companies surveyed thought job gains were likely and 11 percent intended to cut back. Of the 14,000 employers surveyed nationwide, 23 percent expect to add to their payrolls between January and March, and 11 percent expect to reduce staff levels. Sixty percent expect no change in the hiring pace, while six percent are undecided.
Eight percent of chief financial officers in the Houston area expect to hire accounting and finance professionals in the first quarter, according to the Robert Half International Hiring Index. Eleven percent of surveyed executives plan to add staff during the quarter, while three percent expect reductions. The net eight percent increase is unchanged from the fourth quarter outlook, but is five points above the national average.
Women-owned business in Texas and here in Houston are highlighted in a new report compiled by theCenter for Women's Business Research and OPEN from American Express. The group says between 1997 and 2006, the performance of majority women-owned firms outpaced the economy. They generated 4.4 percent growth in sales, but surpassed that of all privately-held firms, which had negative growth with declines of one percent in sales. Texas is number three in the Top Ten states for majority women-owned firms. California tops the list. Houston ties with Boston as the number six metro area based on number of firms, sales and employees for majority women-owned firms.
Merchants are offering discounts and extended hours to get shoppers to spend in earnest this holiday season. It seems to be working for some. J.C. Penney says its efforts have lured some consumers back from a post-thanksgiving weekend lull. Toys ‘R' Us opened at 7 a.m. Sunday, offering half off selected toys. Macy's cut prices on all fine jewelry by up to 50 percent. And Sears plied shoppers with discounts on flat-panel TVs and some clothing. Analysts say most of the discounts had been planned, a sign that retailers aren't panicking. But many merchants are under more pressure to make their holiday sales goals after the industry reported mixed sales results for November. Meanwhile, online retailers are getting ready for their busiest days ahead this week.
A new kind of sticker shock will be in store for car buyers starting next year. The Environmental Protection Agency has issued new testing procedures that'll bring fuel economy estimates on the stickers of 2008 model vehicles down by an average of 12 percent for city and eight percent for highway driving. The changes grow out of consumer complaints that fuel economy estimates are frequently less than advertised. Vehicles that get the best mileage are expected to see the largest slide. EPA says ratings for city driving could drop by as much as 30 percent, while highway driving estimates may fall 25 percent from current levels. MPG estimates for gas-electric hybrids likely will be 20 percent to 30 percent lower for city driving and about 10 percent to 20 percent lower on the highway.
Strong demand for ethanol and feed are giving farmers the best prices for corn in more than a decade. The Agriculture Department's monthly crop report forecasts average corn prices for the year at $2.90 to $3.30 a bushel. That's a dime higher than last month's estimate. The last time prices were this good was 1995, when the average $3.24 a bushel. Last year's average was $2 a bushel. The production forecast held steady at 10.7 billion bushels, compared with 11.1 billion last year. The nation's ethanol fuel plants are expected to use about 20 percent of the corn crop, and exports should consume roughly the same share.
Congress has approved pipeline legislation that closes a loophole allowing BP to operate an oil pipeline in Alaska without having to adhere to federal safety requirements, according to Bloomberg News. Both houses approved the reauthorization of pipeline safety rules, including new rules for operators of "low-stress" lines. The legislation also funds state programs to prevent excavation damage to pipelines, with new penalties for those who don't "call before you dig."
A Dallas-based developer plans a 100-unit townhome complex on Galveston's West End in Campeche Cove, behind the seawall between FM 3005 and Stewart Road. The $23 million, three-story Cove View Townhomes is targeting families with children, single professionals and retirees.
Canada has joined the production and support phase of the F-35 stealth fighter jet--which is made in Fort Worth. Lockheed Martin says Canada is the second foreign country, after the Netherlands, to extend its cooperation in the program beyond the current development and demonstration. American and Canadian defense officials signed the agreement Monday. Canada spent $150 million on the development phase of the F-35. Other countries that took part in the first phase--the United Kingdom, Italy, Turkey, Australia, Denmark and Norway—are expected to join the production stage soon. The F-35 Lightning II, also called the Joint Strike Fighter, will be assembled at Lockheed Martin's plant in Fort Worth.
Southwest Airlines won't fly to new cities in 2007, but will boost its service in its current network. Southwest now flies to 63 U.S. cities. The Dallas-based air carrier will add 37 new 737s in 2007 and four more by the end of this year, increasing capacity by as much as eight percent. That brings the fleet at Southwest to 518 planes.
Shares climbed after a Calyon securities analyst boosted his rating on JetBlue, and raised his earnings estimates for this year and next. He says the airline has addressed its problems, among them an overheated growth strategy and surging costs. Last week, JetBlue announced plans to scale back its jet orders and reduced its capacity growth target for 2007. The analyst also raised earnings estimates for Continental Airlines due to growth at the carrier's New York and Houston hubs.
Sabre Holdings, whose system drives travel-reservations worldwide, has put itself up for sale. It could fetch more than its current stock market value of $3.75 billion, according to published reports. Private-equity firms are reported to be in advanced talks to buy the company, which started as the reservations arm of American Airlines but now serves all the major carriers. Sabre operates the Travelocity Web site. The possible sale was reported by the Wall Street Journal and the New York Times, citing sources familiar with the situation. Sabre has declined to comment.