Friday PM February 2nd, 2007
by: Ed Mayberry, February 2, 2007 5:02:00 am
Ten passengers on a bus that was hit by a train earlier this week at Shell Oil's Deer Park plant are suing in 165th State District Court. About 40 employees of AltairStrickland were riding in a school bus from a satellite parking lot to Shell's facility when the mishap occurred at an unguarded railroad crossing. The train struck the left rear side of the bus. Also named in the suit are the Port of Houston Authority International Corporation, the engine operators and bus operator Brand Scaffold Builders.
Investors have filed suit against Dell--accusing the Round Rock-based computer maker of making legally questionable kickbacks to chip giant Intel. The law firm Lerach, Coughlin, Stoia, Geller, Rudman and Robbins is seeking class-action status for the lawsuit filed in an Austin federal court. It accuses Dell of concealing problems, ranging from faulty batteries to improper accounting. The Wall Street Journal reports the lawsuit alleges Dell got about $1 billion a year from Intel in a type of payment known as "exception to corporate average pricing.'' That means Intel paid Dell for not using other companies' chips. The lawsuit also alleges that Dell failed to properly disclose the payments. It seeks class-action status for investors who bought Dell stock between February 2003 and September 2006. No comment yet from Dell. Last week, lawyers for a Maryland investor sued in the same Austin court on behalf of Dell. The derivative lawsuit accuses Chairman Michael Dell, former CEO Kevin Rollins, board members and other current and former executives with unjust enrichment and gross mismanagement.
Michael Dell's return as chief executive officer of the company he founded may have appeased analyst demands--for now. But some say the Texan faces an enormous, long-term challenge in fixing nagging problems that have plagued the Round Rock-based computer maker. Dell in recent years has lost market share to rivals, posted earnings below analyst expectations and been the subject of an ongoing federal accounting probe. The company also dealt with a voluntary recall of 4.2 million faulty laptop batteries made by Sony. Kevin Rollins, who resigned as CEO for unspecified reasons, wasn't able to right the ship. Analysts say that if anyone can fix Dell's problems--it's the 41-year-old founder, who as CEO would be taking a more hands-on role than he did as chairman. Michael Dell has said he'll focus his efforts on improving customer service--and that he's excited to be CEO again. Bank of America equity research analyst Keith Bachman wrote in a research note that he doesn't see the Rollins departure as a quick fix. Bachman says it's a sign that "new consideration'' will be given to fix a model that is not well aligned to today's markets.
Houston-based Spectra Energy LNG Sales will pay $100 million to settle a lawsuit in U.S. District Court by the Citrus Trading subsidiary of Southern Union. The suit and settlement are related to Spectra's 2003 termination of a natural gas purchase and sale arrangements. Spectra was formerly known as Duke Energy LNG Sales. Southern Union owns a 50 percent stake in Citrus, and must share a portion of its proceeds with Enron's bankruptcy estate.
Dallas-based home builder Centex announced it's agreed to sell its commercial-construction business to a United Kingdom company. Balfour Beatty is paying $362 million for the Centex unit. Centex expects the sale to be completed by March 31st--if it wins regulatory approval. Chairman Timothy Eller says the sale is part of Centex's strategy to focus on its home-building operations. Centex last July sold its sub-prime home-equity lending group, Centex home equity. The company in 2005 sold its UK home-building business, Fairclough Homes. Centex builds homes in 25 states under brands including Centex Homes, Fox & Jacobs Homes, CityHomes and Centex Destination Properties. Like other home builders, Centex has been paring land and options to handle a slowdown in the U.S. housing market.
Retail gasoline prices continued to fall over most of Texas this week. The weekly AAA Texas Gas Price Survey says regular self-serve was averaging $2.04 per gallon statewide. That's down a penny from last week. The national price average is $2.16 per gallon--down a penny from last week. Houston's average is down almost a penny to $2.01 per gallon. However, auto club spokeswoman Rose Rougeau says prices may have bottomed out. She says a new round of OPEC production cuts and cold weather in the northeastern Untied States have added pressure to the energy markets. Crude oil prices have started to climb, and Rougeau says that could mean higher prices at the nation's gas pumps. But for now, the highest average price in the Texas survey this week is in Amarillo, where regular averages $2.11 per gallon--that's up eight cents. The cheapest gas remains in Corpus Christi at $1.93 per gallon--but that's a two-cent increase.
Congress has taken another step toward raising the minimum wage but people who stand to get a raise shouldn't count on spending that extra money just yet. The Senate has voted overwhelmingly to boost the minimum wage from $5.15 an hour to $7.25 over two years. The vote was 94-to-3 on the bill, which includes $8 billion in tax breaks to ease the impact on small businesses, coupled with limits on corporate pay. Those provisions are not included in the version passed by the House. The bill must now be reconciled with the House version. The wage hike is a top priority of the new Democratic-controlled Congress. Senator Edward Kennedy called the increase "a small but necessary step'' to helping the working poor escape poverty. Republicans stressed the importance of the business tax breaks in the bill, though smaller than they previously had sought. Wyoming Senator Mike Enzi says those breaks help show ''that small businesses have been the steady engine of our growing economy.'' House Democrats say they want a minimum wage bill with no strings attached. A spokesman for Senate majority leader Harry Reid says the tax breaks are needed to head off a GOP filibuster, and some of those breaks could be stripped from the final bill. President Bush has issued a statement backing the Senate version, including the business incentives.
Governor Rick Perry's State of the State address will include a proposal to fully privatize the Texas lottery. The Austin American-Statesman reports Perry will propose selling the lottery to private interests. According to the newspaper, Perry will say the sale could generate a substantial amount of money that could be used for health care and research. Other states, including Indiana and Illinois, are considering similar proposals. They would let a state collect a large lump sum to replace future lottery revenue. The proposal could generate controversy akin to what followed the state's decision to turn over such state services as welfare programs and toll roads to national and international corporations. Those deals have been criticized as either not working or a poor bargain. Perry spokesman Robert Black declined to elaborate on the plan or explain how the sale would work.
Baker Hughes in Houston reports the number of rigs actively exploring for oil and natural gas in the U.S. increased by 15 this week--to hit 1,714. One year ago the rig count stood at 1,513. Texas added seven.