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March 30, 2005
Economic Growth Brisk as Profits Surged
The U.S. economy ended 2004 with brisk momentum on the strongest
surge of corporate profits in three years, the government reported
today, though there were signs that price pressures might be picking up,
Reuters reported. Gross domestic product (GDP) expanded at a 3.8 percent
annual pace in the fourth quarter, the same as estimated a month ago,
the Commerce Department said in its third and final estimate of GDP
performance. That was slightly less than the 4 percent GDP pace that
Wall Street analysts had forecast but still reflected healthy growth,
only slightly less than the third quarter’s 4 percent rate, the
newswire reported.
MCI Accepts Verizon’s $7.6 Billion Offer
MCI Inc. accepted a takeover offer of $7.6 billion from Verizon
Communications Inc. yesterday, citing Verizon’s scale and growth
prospects in rejecting Qwest Communications International Inc.’s
$8.45 billion bid. Shares of MCI rose 4 percent, and traded higher than
Verizon’s offer price as investors speculated on the likelihood of
a hostile bid from Qwest.
Northwest Airlines Wants More Worker Concessions
Northwest Airlines said yesterday that it was increasing the amount
it wanted in labor concessions to $1.1 billion a year and that it would
seek to freeze employee pension plans, the New York Times
reported. The moves were the latest sign of the toll that record fuel
prices are taking on the airline industry.
WorldCom
JPMorgan Wins Dismissal of Claims Over Enron Role
One week after agreeing to pay out $2 billion to settle claims
arising from its role as an underwriter for WorldCom, JPMorgan Chase won
an important victory in a securities fraud case arising from its
dealings with Enron, the New York Law Journal reported. In
a 61-page opinion dated Monday, Southern District of New York Judge
Sidney Stein granted JPMorgan’s motion to dismiss a securities
class action brought by the bank’s shareholders.
WorldCom Auditor on Trial
Auditing firm Arthur Andersen failed investors by missing the
enormous fraud at WorldCom, a lawyer for investors said, the
Washington Post reported. Lawyer Sean Coffey, delivering
his opening statement on behalf of investors who lost billions of
dollars in the collapse of the telecommunications company, said Andersen
amounted to “see-no-evil, hear-no-evil, speak-no-evil
auditors,” the newspaper reported. Andersen lawyer Eliot Lauer
referred repeatedly to the “hardworking men and women” of
the firm as victims of a carefully hidden fraud carried out by corrupt
WorldCom executives.
Delta Announces Tech Operations Cuts
Delta Air Lines Inc. said yesterday it will restructure its technical
operations division in a move to save $240 million over five years, the
Associated Press reported.The airline, which has been trying to cut
costs, said in a filing with the Securities and Exchange Commission that
it plans to hire two suppliers for heavy maintenance work, resulting in
a 34 percent cost reduction.
School Operator Files for Bankruptcy
An Austin-based operator of schools for troubled youths that has been
targeted by state regulators and private lawsuits has filed for chapter
7 liquidation in Bankruptcy Court in Delaware, the Associated Press
reported. The filing on Friday from The Brown Schools Inc. lists at
least $425,000 in legal settlements among its unsecured claims. Brown
Schools operates 11 boarding schools and educational facilities for
troubled children in Texas, Idaho, California, Florida and Vermont, the
newswire reported.
Former Impath Execs Charged with Fraud
The former chief executive and president of Impath Inc. were charged
yesterday with taking part in an accounting fraud at the bankrupt
medical diagnostic company, U.S. Attorney David Kelley said, Reuters
reported. Anuradha Saad, Impath’s former chairman and CEO, and
Richard Adelson, the ex-president and COO, are accused of participating
in a scheme to artificially inflate the company’s profits and
sales revenue in order to prop up the company’s share price for
their own financial gain, according to the unsealed indictments, the
newswire reported.
GM in for Tough Fight over Union Health Benefits
GM officials said that they want to level the playing field by
getting United Auto Workers (UAW) hourly workers to accept the same
reduced health care benefits already provided to GM’s salaried or
white-collar workers, Reuters reported. But there are no guarantees that
GM will be able to convince UAW to sign off on such a deal, which the
company says it needs to shore up its finances and compete with
fast-growing foreign rivals like Toyota Motor Corp.
Judge Rejects Effort to Reduce Attorney Fees
A federal judge has refused to reconsider how much should be paid to
attorneys that arranged a settlement for those who lost money when
Carolina Investors went bankrupt, the Associated Press reported.
Investor Bob Pierce had called the attorneys’ fees excessive and
asked U.S. District Judge G. Ross Anderson Jr. for more time to make his
case to reduce them, but the judge refused at a hearing on Monday.