Friday AM January 19th, 2007
by: Ed Mayberry, January 19, 2007 5:01:00 am
Here's a fresh sign of a firm job market. The Labor Department says new claims for unemployment benefits fell by 8,000 last week to 290,000. That's the lowest level in 11 months. Analysts have been saying that employment has held up in spite of the weakness seen in recent months in the housing and auto industries. The four-week average, which is viewed as less volatile, dropped by 6,500 to 308,000.
Microsoft has announced plans to build a $550 million data center in northwest San Antonio. The site will house Microsoft's growing online services. The 400,000-square-foot facility will be the software giant's first major data center in Texas. The complex will house tens of thousands of computers for delivery of products like Microsoft's Windows Live Services, which include everything from instant messaging to mail. Microsoft is based in Redmond, Washington.
Colorado-based Swift laid off 58 employees at its corporate offices and has taken other cost-cutting steps for competitive reasons. The layoffs represented about ten percent of the meat packer's corporate staff and took effect immediately. The cuts by Greeley, Colorado-based Swift involved nonunion employees who will receive severance, continued health benefits and help in finding new jobs. Swift also won't fill 12 vacant jobs at its headquarters and will cut costs for such items as contract services and professional fees. The announcement comes roughly five weeks after a federal anti-illegal immigration raid at the Greeley plant--and others, including one in Cactus, Texas. But Swift says its been working on a plan to cut overhead costs since September.
There's word that former Hewlett-Packard chairwoman Patricia Dunn and the four other defendants in the company's boardroom spying scandal have been offered a deal. A defense lawyer says state prosecutors have offered to drop felony charges against the five if they agree to plead guilty to a misdemeanor. The defendants each face four felony counts of identity theft, conspiracy, fraud and illegal use of computer data. The maker of computers and printers was trying to root out the source of boardroom leaks to the media. The scandal led to the departure of Dunn, former HP Ethics Chief Kevin Hunsaker and former General Counsel Ann Baskins and prompted investigations by state prosecutors and several federal agencies. The California Attorney General's Office has declined comment.
The Labor Department says the gauge of inflation at the retail level rose five-tenths of one percent. Excluding volatile food and energy costs, the index was up a modest two-tenths of one percent. Oil and gasoline prices have been retreating more recently. For all of 2006, consumer prices rose two and a-half percent. That's the best showing in three years.
Long-term mortgage rates are at their highest levels since back in November. Freddie Mac says the 30-year fixed-rate mortgage is averaging 6.23 percent this week--up two basis points from last week. A year ago the rate was 6.1 percent. Fifteen-year loans, often used for refinancing, came in at 5.98 percent, compared with 5.96 percent last week. Freddie Mac chief economist Frank Nothaft says the rates rose on the strength of recent economic reports, including better-than-expected retail sales during December and a turnaround in industrial production.
The Commerce Department says housing starts rose four and a-half percent in December. That may have been helped in part by warmer-than-usual weather in parts of the U.S. Analysts also caution that single family home starts dropped. Building permits, seen as a gauge of future activity, were also on an upswing, rising five and a-half percent. More on the December housing market picture should be clearer in the coming days. Reports on new and existing home sales are due to be released next week.
The Federal Trade Commission says court-approved deals between drug manufacturers and companies that make cheaper generics are costing consumers billions of dollars. A report by the agency coincides with congressional hearings and shows the settlements are becoming more common. In a tactic upheld by appeals courts, brand-name drug companies pay off generic competitors, which then agree to delay introduction of less-costly non-brand-name versions. Consumers Union says in a typical settlement, the generic drug company makes more money than it would from selling its cheaper version of the drug. FTC Commissioner John Leibowitz decries what he calls "pernicious pay-for-delay settlements.''
The Louisiana Public Service Commission has voted to split into two companies the utility that provides electricity for most of the Baton Rouge area. Entergy Gulf States serves customers in Texas and Louisiana. The company will be separated at the state line into two independent companies, perhaps as early as January 2008—provided federal agencies approve the plan. Entergy officials say customers will not notice much difference in their bills or service initially. Because the two states have different regulatory schemes, Entergy Vice President Michael Twomey says the move will allow each new company to better focus the management of buying and selling electricity more efficiently. The decision means that only Louisiana's regulators will have a say in any new nuclear plant built at Saint Francisville.
Entergy announced it expects a substantial boost in fourth-quarter profit as it continues to overcome Hurricanes Katrina and Rita. The company will record special items, including a loss at its bankrupt Entergy New Orleans unit, a loss at Entergy's competitive retail business, which has been sold, and a gain from its sales of Entergy-Koch and Gulf South Pipeline. Entergy says its power sales volume was hurt one year ago because of the 2005 hurricanes. Since then, rate increases and increased sales have boosted revenue.
The Texas Forest Service is offering Community Hurricane Fuels Reduction grants to help eliminate hurricane debris and reduce the wildfire threat to communities in southeast Texas. Dense timber and thick brush from hurricane debris have created hazardous wildfire situations for property in those communities. Eligible communities include local governments, non-profit organizations and other tax-exempt groups. Funds may be used to contract a professional tree removal service, professional pruning, equipment rental and to purchase materials.
Two office buildings in the Clear Lake area have traded hands, according to the Houston Business Journal, as part of the liquidation of a real estate investment fund in California. The eight-story Two Corporate Plaza, which leases to Lockheed Martin, the FAA and AKZO Nobel Catalysts, sold for $18 million. Gemini Plaza sold for $17 million. G REIT stockholders approved the sales as part of a in February 2006 liquidation plan.
Building Materials Corporation of America has again raised its bid for Elkcorp--boosting its offer for the roofer to $865 million. The bid tops the revised offer Dallas-based Elkcorp accepted from private-equity giant Carlyle Group. In November, an investor group including Wayne, New Jersey-based Building Materials and Heyman Investment Associates proposed acquiring Elkcorp. At the time, the group held a 10.4-percent stake in Elkcorp. The bid disclosure came shortly after Elkcorp said it was examining its options after several third parties showed an interest in the company.
As advocacy groups, they are very influential but also very different. Yet they are uniting behind a plan to make health insurance available to more Americans. The plan relies on tax breaks and expansion of existing government programs to reduce the ranks of the uninsured, numbering more than 46 million. Among the groups working together are the U.S. Chamber of Commerce, the American Medical Association and AARP. They call themselves the Health Coverage Coalition for the Uninsured. The coalition first seeks to insure children, who are less expensive to cover because they typically have fewer health problems. The coalition also seeks to expand Medicaid for adults whose incomes are below the poverty level, and create a new tax credit to help people pay for insurance.
A Midwest Air Group shareholder has filed a lawsuit to make it easier for Airtran Holdings to acquire the Milwaukee airline in a hostile takeover. Linda Garrett of Lufkin, Texas, wants class-action status for other shareholders to join the suit. She's asking a Milwaukee County judge to suspend the company's "poison pill" provision--which allows the airline to issue more shares if one stockholder acquires at least 15 percent of the company. That makes it more difficult to mount a hostile takeover. Last week, Airtran increased its offer for Midwest Air. Airtran took the offer directly to shareholders, bypassing the board of directors. Airtran Chairman Joe Leonard says a successful takeover will require Midwest to suspend the poison pill provision. Airtran hopes to get enough Midwest shareholders to support the takeover and pressure the Midwest board to negotiate.
The Bay Area Houston Economic Partnership presents its 2007 Quasar Award for Economic Development Excellence to NASA administrator Dr. Michael Griffin this evening at the South Shore Harbour Resort and Conference Center in League City.