Tuesday AM March 27th, 2007
by: Ed Mayberry, March 27, 2007 5:03:00 am
Texas executives surveyed in the Texas Manufacturing Outlook from the Federal Reserve Bank of Dallas are less optimistic about the future, according to the Houston Business Journal. The index for sentiment on general business activity fell to 12.7 in March from 26 in February. The survey shows manufacturing activity continuing to expand in Texas, and the production index increased to 27.2, compared with 18.1 in February. Indexes for order volume and order growth, however, were slightly lower in March than in February.
The nation's largest bank may be cutting about 15,000 jobs, or nearly five percent of its work force. The Wall Street Journal reports the moves are part of a restructuring plan being developed by Citigroup to improve its financial performance. The financial services company announced a cost-cutting review of operations last year. The Houston area has more than 35 branches of Citibank and 20 branches of Citifinancial, as well as five offices of its Smith Barney investment advisory and wealth management subsidiary. Citigroup has come under heavy criticism from investors because its expenses grew faster than its revenue last year, reducing profits. According to the newspaper report, the review is being led by CEO Roger Druskin, who is set to report his recommendations internally by the end of the week. And it says Citigroup expects to disclose the cost-cutting plan by the time it reports first-quarter results on April 16th, the day before its annual meeting.
The U.S. Supreme Court will consider whether shareholders of companies should be able to sue investment banks and attorneys who allegedly participated in securities fraud. The case will be argued in the court's next term beginning in October. Last week, the 5th U.S. Circuit Court of Appeals ruled against a class action lawsuit by former Enron shareholders against several investment banks over their alleged role in Enron's collapse. The appeals court found that the banks aided and abetted Enron's fraud. But under a 1994 Supreme Court ruling, companies are generally protected from shareholder lawsuits, although the Securities and Exchange Commission can pursue civil actions. The 9th Circuit Court of Appeals, in a separate case, found that secondary actors can be held liable in some circumstances, such as when its conduct had a principal purpose and effect of creating a false appearance of fact in support of a scheme to defraud.
Suez Energy North America subsidiary Neptune LNG has received a deepwater port license from the U.S. Maritime Administration. That allows the Houston-based company to build, own and operate the Neptune offshore LNG delivery system in Massachusetts Bay near Boston. Suez Energy says the project will be operational by 2009.
The 2007 Rice Business Plan Competition awarded more than $345,000 at its weekend awards banquet, representing a 33 percent increase in prizes compared to last year's competition. The Grand Prize of $205,000 went to ResuRx Pharmaceuticals from Johns Hopkins University. The company reduces the cost and time for drug discovery by determining new uses for existing drugs and re-introducing them to the market. The team from Johns Hopkins was also given marketing and design services from BrandExtract and The Padgett Group, office space from the Houston Technology Center and 1-Service, data storage by FileBank, software from Microsoft and business mentoring from the Silver Fox Advisors.
North Texas TV viewers are being bombarded with commercials for "the new TXU.'' That's as the 62-year-old, Dallas-based electric utility may soon be changing hands. And it's a good time for a makeover for the state's largest electric provider. TXU has angered customers with high rates, annoyed politicians who find it secretive and aloof, and alienated environmentalists by pushing to build more coal-fired power plants. By financial yardsticks, TXU has done very well since a brush with disaster in late 2002. After losing more than $4 billion that year, it sold off troubled foreign investments and returned to profitability. Last year, it earned more than $2.5 billion. But electric utilities in Texas have been free to set their own rates since deregulation began in 2002. In late 2005, TXU hiked its rates 24 percent to offset rising natural gas prices but didn't lower them when gas prices fell. That angered customers and lawmakers. Last month, a group of private investors agreed to buy TXU for $32 billion in the largest leveraged buyout ever. The would-be new owners have noticed TXU's bruised image, noting that it's lost 700,000 customers largely because of rates. But the buyers are trying to reassure lawmakers that the new TXU would be more responsive to consumers--even though it would be privately owned. The buyers said they'd drop eight of the 11 new coal-fired plants TXU had proposed. Environmentalists were initially pleased, but are now divided. Some want to fight the remaining three plants. TXU's buyers suggest that if their deal fails, the company could revive plans for all 11 plants, but environmentalists consider that unlikely.
A new state report finds that obese workers cost Texas employers an estimated $3.3 billion in 2005. The report by Texas Comptroller Susan Combs says the figure is derived from health care costs, absenteeism and other expenses because of their weight. Combs says the financial burden for businesses could reach nearly $16 billion by 2025 if the nearly two-thirds of Texans currently overweight or obese don't get into the shape. The report is based on a survey of 30 companies that responded to questions like average health care costs and what medical conditions cause the most absenteeism. Statistics in the report taken from the U.S. Centers for Disease Control and Prevention show that Texas had a nearly 120 percent increase in obese adults from 1999 to 2005. That same period saw a 37.1 percent decline in people with normal weight. A report by the Texas Department of State Health Services in 2002 found that the cost of obesity for all Texans is $10 billion.
Construction of a $1.8 million new building to expand IbnSina Clinical Services is complete. IbnSina Foundation will celebrate the opening of its new community medical center on South Wilcrest on Thursday. The new center houses a number of specialty medical clinics in cardiology, pediatrics, gynecology, diagnostic imaging, oncology and ophthalmology.
California-based EquityOption Properties has acquired five buildings in the Houston area, according to the Houston Business Journal. The West Houston properties were sold by Houston-based BMS Management. They include PBS&J Plaza on Woodbranch Park, One Woodbranch Centre on Wickchester, 10200 Richmond Avenue and Woodchase Buildings I and II on South Gessner. EquityOption plans to purchase a million square feet of office space in Houston by the end of the year, followed by expansion into Dallas, San Antonio and Austin.
League City-based Eagle Broadband has acquired the commercial satellite division of Houston-based Alliance Maintenance and Services, according to the Houston Business Journal. Eagle is acquiring Alliance's telecom services business, which provides installation of services such as earthbound stations used in satellite communications of data, voice and video signals and broadband satellite systems.
The Rio Grande Valley region that's home to more than half of the state's quarter horses is getting its own horse racing track. State and local officials in McAllen are detailing plans for the $23 million facility. It's planned to be part of an entertainment complex that will offer simulcast racing, restaurants, a nightclub and boarding for 1,500 horses. Organizers say the track will provide hundreds of jobs and lure tourists from Texas and Mexico. The Texas Racing Commission approved the track this week after years of planning and lobbying. The track, which is not yet named, will specialize in quarter horse racing, meaning mostly sprints between 220 and 440 yards. Texas is the top state in terms of quarter horse population, with more than 480,000 quarter horses.
Eighteen months after Hurricane Rita destroyed his bookstore, Adekunle Odusanwo says the lessons of rebuilding have given new life to his business. An expanded Nu World of Books is set to reopen in Beaumont with the help of a small business loan and the lessons Odusanwo picked up from the odd jobs he's worked in the meantime. The business's insurance had lapsed when the September 2005 hurricane ruined the store and its contents. The U.S. Small Business Administration says Odusanwo is one of 356 business owners in Hardin, Jefferson and Orange Counties to receive loans totaling more than $97 million. Odusanwo says the federal loan enabled him to improve the store with new features such as free wireless internet.