Friday PM May 4th, 2007
by: Ed Mayberry, May 4, 2007 5:05:00 am
The retail gasoline price spike resumed in earnest this week in Texas after a marginal increase last week. The weekly AAA Texas Gas Price Survey finds retail prices of regular-grade gasoline rose an average of nine cents to $2.87 per gallon. Nationally, regular grade rose 11 cents to an average of $2.99 per gallon. Auto club spokeswoman Rose Rougeau blames the increase on strong consumer demand, reduced domestic output because of refinery problems and lower imports. Of the 11 cities in the survey, Amarillo had the highest average price of regular grade at $3 per gallon. That's up 15 cents from last week. The cheapest gas is still in Corpus Christi at $2.79 per gallon. That's a dime more than last week.
Slower jobs creation last month allowed the unemployment rate to rise to 4.5 percent. The Labor Department says employers added 88,000 jobs, fewer than expected. That's the lowest number since fall 2004. Job losses spread beyond manufacturing and construction and into retailing and financial services. Workers' paycheck also grew more slowly. Hourly earnings rose two-tenths of one percent. Having risen 3.7 percent from a year earlier, the report suggests that wage inflation is less of a worry as growth has cooled.
The southwest regional office of the Bureau of Labor Statistics says employment in the Houston area rose 3.4 percent—the fastest rate of job gain in the 12 largest U.S. metropolitan areas. That compares to the U.S. average of 1.5 percent. Total employment in the Houston area is at 2,499,900 for March. That's an increase of 81,100 jobs over the year.
The penalty phase continues in Houston for Texas Southern University's former chief financial officer. Quintin Wiggins was convicted of misspending nearly $300,000 in public funds. Prosecutors say it was part of a scheme to help the school's now-ex-president lavishly furnish and landscape her home. A jury convicted Wiggins of one count of misapplication of fiduciary property with a value over $200,000. He faces a punishment range of five years probation to life in prison. Ousted school president Priscilla Slade faces trial in August on two charges of criminally misusing university money for private benefit. Governor Rick Perry has called for a state takeover of the historically black university. The embattled TSU board of regents--resigned this week.
Former Halliburton subsidiary KBR said its net income rose 7.7 percent in the first quarter. KBR, which split from Halliburton last month, said earnings for the January-March period were $28 million. The Houston-based military contractor and engineering/construction outfit says its profit was lifted in part by business in Iraq. The most recent results included a loss from discontinued operations of $2. That's related to the sale in last year's second quarter of Production Services Group. Revenue in the first three months of 2007 rose 4.5 percent to $2.3 billion. Wall Street analysts polled by Thomson Financial had predicted revenue of $2.25 billion. KBR and Halliburton have been lightning rods for criticism. That's partly because of KBR's $19 billion-plus in Pentagon contracts to be the sole provider of food and shelter services to the military in Iraq and Afghanistan. Also, Democrats in Congress have argued that KBR benefited from ties to Vice President Dick Cheney, who once led Halliburton.
Dell plans to move jobs from an Austin computer refurbishing plant to Lebanon, Tennessee. Round Rock-based Dell spokesman Venancio Figueroa says some Texas employees might even make the move with their jobs. But he says Dell will also hire from the surrounding middle Tennessee area. Figueroa said he didn't know how many jobs would be created at the Lebanon plant. But he says Dell employs fewer than 360 people in the Austin plant, which refurbishes returned computers and equipment. Dell employs 1,000 people at a Lebanon computer assembly plant and 3,000 people at a distribution center and call center 26 miles to the west in Nashville. Figueroa said the company was moving the jobs to Lebanon to reduce delivery times because the town is closer to most of Dell's customers.
United Airlines has raised most of its U.S. business-oriented fares by $25--to $50 one way. United also increased other fares by $5 to $10 each way--citing the high cost of fuel. Officials with Fort Worth-based American Airlines and Northwest Airlines say United's fare hike is under evaluation. Dallas-based Southwest Airlines says it has no plans to match the price increase. The fare boost comes at a time when reduced domestic passenger demand is slowing results for U.S. carriers--putting pressure on their revenues. United is in the process of relocating its headquarters to Chicago from suburban Elk Grove Village, Illinois.
American Airlines pilots want pay raises topping 30 percent--plus 15 percent signing bonuses. The Allied Pilots Association says the salary bump would make up for cuts the pilots accepted in 2003. The union put the cost of the raises at $450 million a year, while the bonuses would be a one-time expense of $400 million. A spokeswoman for American Airlines says the proposal has to be balanced against its labor costs. She says American has a considerable labor cost disadvantage--compared to other carriers. American's parent--AMR--earned $231 million in 2006--its first profitable year since 2000.
Shareholders rejected a $9 billion bid to buy Qantas Airways. That word comes from the bidders--meaning one of Australia's biggest corporate takeover attempts has been scuttled. Airline Partners Australia says it appears it's fallen short of the minimum number of shares it needed by this morning's deadline to keep the deal alive. The partnership was led by Australia's Macquarie Bank and Fort Worth-based TPG Incorporated, as the former Texas Pacific Group is now called. The partnership had needed 50 percent shareholder acceptance by the deadline to get a two-week extension on its offer of for the company known as the Flying Kangaroo. It needed 70 percent acceptance for its financial package of loans to kick in and the deal to proceed. The group didn't disclose the level of acceptances reached. But Dow Jones Newswires cites an unnamed source close to the deal as saying it was 46 percent.
The Roswell, New Mexico, City Council has approved an air service agreement with American Eagle airline for flights from the eastern New Mexico city to Texas. American Eagle will start flying jet aircraft between Roswell and the Dallas-Fort Worth airport on September 5th. The airline will offer two flights on weekdays and one on Saturdays. Roswell was last served by jet aircraft in the 1970s. Currently, the Roswell airport has nonstop flights to and from Albuquerque on Mesa Air propeller planes.
Yahoo! shares have risen more than 17 percent after reports pointing to discussions about a possible combination. The Wall Street Journal tells of what appear to be early-stage discussions. It says executives at Microsoft and Yahoo! are taking a fresh look at a possible merger of the two companies or some other kind of potential tie-up. The discussions were first reported in the New York Post. The Post says Microsoft has asked Yahoo! to take part in formal negotiations for a possible deal. Microsoft is facing tough competition from Yahoo! and Google in the Internet search business. It has no comment on the reports.
Clear Channel Communications says its board of directors has rejected a private equity group's modified buyout offer for the radio and billboard company. And it says there already are enough shareholder votes against the existing $19.3 billion bid to defeat it. The new offer from the group led by Thomas H. Lee Partners and Bain Capital Partners contemplated an increase in the payment to unaffiliated shareholders from $39 to $39.20 per share. Under the new proposal, shareholders could have chosen to receive cash or shares in the newly private company. But Clear Channel's board notes the increase was only 0.5 percent more than already offered and that there had been opposition to the previously suggested equity-stake offering. Clear Channel is the nation's largest radio station operator.
The London-based news service Reuters says it has received a preliminary takeover approach. That has sent shares of the company rising about 25 percent, making its market capitalization more than $15 billion. The Globe and Mail newspaper of Canada reports on its Web site that the bidder is Thomson Corporation. It cites people close to both companies. Thomson is a financial data and information provider based in Stamford, Connecticut. In a note to his staff, Reuters' CEO says he and the board would ''be guided by what is in the best interest of Reuters and its stakeholders, including employees.'' In its notification to the London Stock Exchange, Reuters said it had received "a preliminary approach from a third party which may or may not lead to an offer being made for Reuters.'' Earlier this week, Rupert Murdoch's News Corporation offered to buy Dow Jones for $5 billion.
More than 43,000 youngsters this month left the rolls of the state's low-cost insurance program for children--known as CHIP. The decline came as lawmakers continued to bicker over changes to the Children's Health Insurance Program aimed at making it easier for families to get and keep coverage. The Texas Health and Human Services Commission says a larger number of children left the rolls because an unusually high number of families were up for renewal in May. The agency also recently ended an amnesty program for families with incomplete applications. And about 11,000 children were shifted to Medicaid or were dropped from CHIP because they were inadvertently getting coverage through both programs. An estimated 26,500 children signed up for CHIP this month, bringing total enrollment to about 306,000. That's the lowest it's been in about six months.
The executive who oversaw AT&T's mergers and acquisitions team as it grew the Baby Bell into a telecommunications behemoth announced that he will retire. Jim Kahan, Executive Vice President of Corporate Development, will retire June 30th, just weeks after Chairman and Chief Executive Edward Whitacre, Jr., retires. The company says Kahan will be replaced by Rick Moore, the managing director of corporate development. Kahan helped arrange more than $200 billion in deals that transformed Southwestern Bell into SBC Communications and then AT&T, absorbing the old AT&T long-distance business and BellSouth along the way.