Wednesday AM January 16th, 2008
by: Ed Mayberry, January 16, 2008 5:01:00 am
A setback for investors seeking to sue businesses for scheming to manipulate stock prices of publicly traded companies. In a 5-3 ruling, the Supreme Court gave a measure of protection from securities suits to suppliers, banks, accountants and law firms that do business with corporations engaging in securities fraud. The court ruled against investors who claimed that two suppliers schemed with Charter Communications to deceive stockholders and inflate the price of the cable TV company's stock. The decision is likely to have an impact on a similar class-action lawsuit by shareholders who invested in Enron, which has returned more than $13 billion to creditors since the lawsuits against Wall Street investment banks began in 2005. The majority opinion by Justice Anthony Kennedy held that charter investors do not have the right to sue because they did not rely on the deceptive acts of charter's suppliers.
In its continuing effort to combat the effects of a serious credit crunch, the Federal Reserve has auctioned $30 billion in funds to commercial banks at an interest rate of 3.95 percent. This is the third in a series of innovative auctions the Fed began last month as a way to provide cash-hungry banks with the reserves they need. The central bank hopes the increase in resources will keep banks lending to consumers and businesses and prevent the credit turmoil from pushing the country into a recession. The 3.95 percent interest rate was the lowest of any of the three auctions it has held. The other auctions saw rates of 4.65 percent and 4.67 percent.
There are more recession worries as Commerce Department numbers show a drop in retail sales last month. Shoppers cut back on their spending by 0.4 percent in December, the largest decrease in six months, after sales saw a one percent gain in November. The report was much weaker than many economists expected. With the strains of high energy bills, a deteriorating job market, and a persistent housing slump, consumers held onto their money. That meant about a two percent decline in clothing and electronic and appliance sales, the biggest in about two years. Gasoline sales also dropped 1.7 percent. Still, there were a few bright spots, with furniture, food and health and beauty sales going up. In all, retail sales rose 4.2 percent in 2007. That was the smallest increase since 2002, when the economy was recovering from a recession the year before.
Wholesale prices rose by 6.3 percent in 2007, the biggest increase in 26 years. The Labor Department reports that the biggest one-month increase happened in November, with a jump of 3.2 percent. Still, the year ended on a more positive note, with wholesale prices falling by 0.1 percent in December. Meanwhile, the Commerce Department reports that retail sales fell by 0.4 percent in December. The decline was worse than expected and increased worries that the country could topple into a recession. Adding to those worries is an increase in unemployment, with the jobless rate jumping to five percent in December. That was up from 4.7 the month before, the largest one-month surge in unemployment since just after the September 11th attacks. The Federal Reserve is trying to decide whether to cut rates to boost the economy, at the risk of making inflation worse. But Fed Chairman Ben Bernanke has signaled that the Fed is less worried about inflation and more worried about weak growth.
The Bureau of Economic Geology at the University of Texas at Austin's Jackson School of Geosciences is announcing the Advanced Energy Consortium for the development of micro and nanotechnology applications to increase oil and gas production. The Richard E. Smalley Institute for Nanoscale Science and Technology at Rice University will be a collaborative partner. Geoscientists believe more hydrocarbons can be extracted as understanding of the chemical and physical characteristics of existing oil and gas reserves improves. Typically some 60 percent of oil remains in the ground after all recovery methods are exhausted.
The Hyatt Regency downtown on Louisiana is pumping $35 million into renovations that include new wood furnishings, flat-panel TVs, a new restaurant and more meeting space. Thirty rooms on the sixth floor will be rebuilt into nine meeting rooms and three boardrooms. The atrium-style hotel opened in 1972. Work is expected to be completed by October.
The Center for Entrepreneurship & Innovation at the C.T. Bauer College of Business has been renamed the Cyvia and Melvyn Wolff Center for Entrepreneurship. Wolff is chairman of Star Furniture, and the family has made numerous donations to the University of Houston. Wolfe received his bachelor of business administration degree from Bauer College in 1953.
The University of Houston is one of eight Texas universities receiving part of a $2 million grant from the Texas Workforce Commission for the Texas Youth in Technology Strategic Workforce Development initiative. The initiative prepares students for future careers in the technology industry.
Aberdeen, Scotland-based John Wood Group has acquired Houston-based Producers Assistance, according to the Houston Business Journal. The Wood Group has a presence here in Houston. Producers Assistance, which is a provider of technical operations and maintenance support for domestic oil and gas sites, has more than 300 employees in Texas, Louisiana and New Mexico.
Federal officials are questioning Comcast over complaints that the company actively interferes with its subscribers' internet traffic. Comcast denies it blocks file sharing. But it acknowledges milder interventions to improve the flow of traffic for the majority of its customers. A Comcast executive says the company believes its practices are in accordance with FCC policy. He says Comcast looks forward to responding to the FCC inquiries regarding its broadband network management. A coalition of consumer groups and legal scholars asked the FCC to stop Comcast from discriminating against subscribers sharing certain types of internet data. They want the commission to fine Comcast $195,000 for every affected subscriber.
Four major studios appear to be giving up on the idea of salvaging the current television season. They have canceled dozens of writers contracts. 20th Century Fox Television, CBS Paramount Network Television, NBC Universal and Warner Brothers Television each tell the Los Angeles Times they have terminated development and production agreements. And next season's crop of new shows also could be in jeopardy because of the two-month-old writers strike. January typically marks the start of pilot season, when networks order new comedies and dramas. But with the writers not working, networks do not have a pool of scripts from which to choose.
An audit's found that San Antonio was overcharged $255,000 for a project in a massive San Antonio International Airport program. The auditor recommends that the city tighten oversight of the $635 million project. The audit found that Jerdon Enterprises overcharged the city for utility work and finished two days late. That would subject the company to a $6,000 penalty. The alleged overcharges include work not completed and labor costs not supported by time sheets. Airport Director Mark Webb says the city will recover the money and change procedures for reviewing work and related documents. No comment yet from Jerdon Enterprises. The airport expansion is to cost $394 million. However, airfield projects, sound insulation for nearby homes, Stinson Airport additions and other work bring the total expected costs to $635 million.
American Airlines announced it will begin flights between Dallas-Fort Worth International Airport and San Salvador, El Salvador, on April 7th. Fort Worth-based American plans to operate four flights per week on the route with 148-seat Boeing 737s. The airline currently flies to San Salvador from Miami and Los Angeles.
A Michigan-based company has reportedly agreed to buy public service company of New Mexico's natural gas division for $620 million. The Albuquerque Journal reports in a copyright story that Continental Energy Systems is buying Albuquerque-based PNM Resources. It says the deal would have to be approved by state and federal regulators. As part of the deal, PNM would purchase a small electrical utility in Texas owned by Continental. PNM would pay $202 million for Midland-based Cap Rock Holding and it would have to pay taxes and retire debt. PNM Chairman Jeff Sterba says the purchase of Cap Rock and its Cap Rock Energy subsidiary would increase PNM's presence in Texas and is consistent with the utility's strategy of focusing on electric operations.