Monday AM February 5th, 2007
by: Ed Mayberry, February 5, 2007 5:02:00 am
Merrill Lynch and Credit Suisse Group plan to ask an appeals court to end an Enron investors class action after other defendants paid more than $7 billion to settle the securities fraud litigation. The 5th U.S. Circuit Court of Appeals in New Orleans will hear arguments today on whether Enron investors can continue pressing claims as a group. The banks say shareholders cannot prove the firms directly participated in the accounting fraud at Enron. A ruling for the securities firm and bank could clear them from having to pay any of the $40 billion that investors claim they lost with Enron's collapse. Investors have recovered $7.3 billion from other Enron defendants, including Citigroup, JPMorgan Chase and Canada-based Imperial Bank of Commerce.
A second Enron prosecutor is joining the Latham & Watkins law firm. Kathryn Ruemmler will join Latham's 222-lawyer Washington, D.C. office as a litigation partner. She joins former Enron chief prosecutor Sean Berkowitz, who joined the firm three months ago at its Chicago office. Ruemmler was a deputy director of the U.S. Department of Justice Enron Task Force. She and Berkowitz delivered final arguments in the trial of Ken Lay and Jeff skilling. Other Enron prosecutors have joined private practice, including Leslie Caldwell and Andrew Weissman.
A decision this week could help determine the size of the Cyberonics work force, following the new chairman's warning that the company may need to quickly cut jobs. Hugh Morrison, who became chairman last Monday, said Cyberonics will be reviewing the size of its sales force. The firm employs 650 workers, with about 300 in sales and marketing. The Centers for Medicare and Medicaid Services will then decide whether to authorize payment for treatments of severe depression using a Cyberonics device that sends electrical impulses to the brain. Big health plans have been unwilling to pay for the device, which is also used to treat epilepsy. Morrison says when the FDA approved the therapy in 2005, the company began trimming staff to bring things in line with sales expectations.
Growth in the job market slowed last month, according to the Labor Department. The January unemployment rate rose one-tenth to 4.6 percent. Payrolls expanded by 111,000 jobs, coming in below expectations and below the pace seen late last year. However, there are large upward revisions to the previous months' payrolls reports. December's gain is put at 206,000, and October and November were also revised higher.
Orders to U.S. factories rebounded by 2.4 percent in December. The number reported by the Commerce Department is the most in nine months. The improvement reflects stronger demand for a variety of manufactured goods including airplanes, machinery and primary metals, including steel. For all of 2006, factory orders rose by 5.3 percent.
There's word that consumers were feeling a little better about the economy last month. Sources say the University of Michigan's Consumer Sentiment Index rose in January to 96.9 from 91.7 at the end of December. The preliminary reading in January was 98 and that's where economists surveyed by Dow Jones Newswires had expected it to be at month's end. The report is released to subscribers only.
San Antonio's municipally-owned natural gas and electric company CPS Energy and Austin Energy have selected Matagorda, the site of the South Texas Project nuclear plant, to build a 3,000-megawatt power generating plant. The San Antonio Express-News says the facility would start operating in 2017 and would supply power to about a million homes. CPS Energy is also studying the possibility of doubling the size of the nuclear plant from two to four units beginning in 2015.
A delegation of Houstonians is in Ethiopia through February 12th to finalize details for the arrival of the Lucy archeological exhibit. While in Ethiopia, members of the delegation will also explore business development opportunities and ways to promote trade relations and tourism between Houston and Ethiopia. The delegation includes Greater Houston Partnership President and CEO Jeff Moseley, officials with the HMNS, Houston City Council member Ada Edwards and Texas State Senator Rodney Ellis. Trade between Houston and Ethiopia reached $101.9 million in 2005. There are more than 7,000 residents of the Houston area who were born in Ethiopia or have Ethiopian heritage. Some 447 Houston-area companies trade goods and services with eastern Africa--52 trading specifically with Ethiopia. Lucy is thought to be one of mankind's earliest ancestors, dating back 3.2 million years, and the exhibit will make its first-ever trip out of Africa when it comes to the Houston Museum of Natural Science.
Anadarko Petroleum said it's agreed to sell natural gas properties in Oklahoma and Texas to EXCO Resources for $860 million. The deal is part of the independent oil and gas producer's ongoing strategy to reduce debt. That began last year after Anadarko bought rivals Kerr-McGee and Western Gas Resources for $22.5 billion. Anadarko immediately began to cut debt by selling non-core assets. The latest sale is expected to close in the second quarter. At the end of 2006, the 155 fields included in the deal were producing about 103 million cubic feet equivalent of natural gas per day from more than 1,300 wells. The company is based in the Houston suburb of The Woodlands. It says its asset sales in the six months since closing the Kerr-McGee and Western Gas acquisitions have generated $9 billion in after-tax proceeds. The company has said it hopes to reduce debt from about $26 billion at the start of the year to roughly $12 billion by the end of this year. It's announced several asset sales in recent months.
ExpressJet Airlines this spring will begin service from Austin to nine destinations. ExpressJet is a regional provider for Houston-based Continental Airlines. ExpressJet will start flying between Austin and: Ontario, California; Kansas City; Tucson, Arizona; Albuquerque, New Mexico; Tulsa and Oklahoma City; Corpus Christi; New Orleans; and Jacksonville, Florida. ExpressJet will be Austin's third new carrier in about one year. JetBlue Airlines started service from Austin in January of 2006. Aeromexico started Austin-Mexico City flights in December.
An investor group trying to buy Qantas Airways made its formal pitch to shareholders of the Australian airline. The group led by Australia's Macquarie Bank is urging the shareholders to accept their offer of $8.6 billion. It warns them that the offer won't be increased unless a rival emerges. The investor group includes Fort Worth-based Texas Pacific Group, Onex Corporation of Canada and others. The bidders also repeated their view that their offer doesn't need to be examined by the Foreign Investment Review Board, as suggested by the Australian government. They contend the bid already complies with laws that ban the airline from being majority owned by foreigners because of Qantas' iconic status in Australia. And Moody's Investors Service said it expects that Qantas' long-term credit rating, which is now three rungs above junk status, would fall "several notches'' if the deal goes ahead. That's because of the debt level involved. The group first announced its bid in mid-December. It would be one of Australia's biggest-ever corporate takeovers.
The Bush administration has filed a trade case against China in a dispute involving government subsidies. The complaint filed with the World Trade Organization in Geneva alleges that China is using government support and tax policies to bolster Chinese firms in competition against U.S. and other foreign firms. The action will trigger a consultation during which trade negotiators will try to resolve the dispute. If that fails, a WTO hearing panel will be convened to handle the dispute. The case against China on subsidies is the second WTO case the administration has filed in the past year.
A new study says the value of those incentives the auto industry gives you to buy their cars is going down. Edmunds.com, an online provider of automotive information, says the manufacturer incentive for cars sold last month was $2,276 per vehicle. That's a drop of $96 from December, and down $149 from January of last year. General Motors led the decline, with a drop of 17 percent, while Chrysler's incentive was down eight percent. Both more than offset Ford's 20 percent increase in incentives spending. Edmunds bases its calculations on sales volume, including the mix of vehicle makes and models for each month, as well as on the proportion of vehicles for which each type of incentive was used.
The head of the meatpacker Swift says federal officials chose to make an example of the company with a high-profile example of an immigration crackdown. Federal immigration and customs enforcement staged a massive December 12th raid on Swift's flagship plant in Greeley, Colorado--as well as Swift plants in Cactus, texas, and in four other states--in Grand Island, Nebraska; Hyrum, Utah; Marshalltown, Iowa; and Worthington, Minnesota. Swift President and CEO Sam Rovit tells the Greeley Tribune that the government turned down its offer to help investigate alleged identity theft. He says immigration and customs enforcement officials were simply looking for a "marquee to show the administration it was tough on immigration.'' ICE arrested 1,282 workers in the raids December 12th. Of those, 246 people are facing state or federal identity theft charges. The rest face immigration charges.
J.C. Penney announced it will begin exclusive sales of a clothing and home accessories brand made by Polo Ralph Lauren. Plano-based Penney is calling it the biggest launch in the department-store chain's history. Penney says the line, called American Living, will go on sale in the spring of 2008. Lauren's new Global Brand Concepts Group will design, produce and advertise the brand. It will include products for women, men, children and home.