December 222004

December 22, 2004

Economic Growth Revised Up in 3rd Quarter

The U.S. economy grew at a slightly stronger rate than thought in the
third quarter because imports were not as hefty as first estimated, the
Commerce Department said today, though corporate profits weakened,
Reuters reported. Gross domestic product (GDP) expanded at a 4 percent
annual rate in the July–September quarter instead of 3.9 percent
as previously reported. It beat Wall Street economists’ forecasts
that third-quarter GDP growth would be unrevised at 3.9 percent and was
a step up from the second quarter’s 3.3 percent rate of GDP
growth.

Holiday Haul Goes to High-End Retailers

The top 20 percent of households, ranked by income from all sources
and earning $127,000 or more as of 2003, accounts for more than 40
percent of all consumer spending, according to Labor Department figures,
the Washington Post reported. This could explain why
upscale retailers such as Neiman Marcus and Saks Fifth Avenue have seen
their sales soar this holiday season while discounters like Wal-Mart and
many mid-price department store chains have struggled, the newspaper
reported.

U.S. Judge Approves Southwest’s Bid for ATA Assets

A federal bankruptcy court judge yesterday approved a $117 million
bid from Southwest Airlines for assets of ATA Holdings Corp., clearing
the way for a deal that allows the airlines to sell tickets on some of
each other’s flights, Reuters reported. The bid, which still
requires approval by the city of Chicago, would give Dallas-based
Southwest the lease rights to a maintenance hangar and six of
ATA’s 14 gates at Chicago’s Midway Airport. Southwest, the
No. 6 U.S. carrier, will pay $40 million for those assets.

Bankrupt UAL Posts $87 Million Net Loss

UAL Corp., parent of bankrupt United Airlines, yesterday reported a
November net loss of $87 million, including a $158 million gain from the
sale of Orbitz Inc. shares and $20 million of reorganization expenses,
Reuters reported. The airline, which is required to file a monthly
operating report with the bankruptcy court, said its operating loss for
the month was $188 million.

Algoma Could Make Bid for Insolvent Stelco

Algoma Steel said on Tuesday it could make a takeover bid for Stelco
Inc., Canada’s biggest steelmaker, which is currently operating
under bankruptcy protection, Reuters reported. Sault Ste. Marie,
Ontario–based Algoma did not provide details of how much it might
offer for Stelco, or when a bid may surface. “There are a number
of significant issues that need to be addressed with Stelco stakeholders
for an acquisition to be successful,” Denis Turcotte,
Algoma’s chief executive, said in a release.

Chief Is Ousted at Fannie Mae Under Pressure

Under heavy pressure from regulators, Fannie Mae, the mortgage
finance giant, forced out its chairman and CEO, Franklin D. Raines,
yesterday, days after the company was found to have violated accounting
rules, the New York Times reported. Read the full article
at www.nytimes.com.

Enron Bankruptcy Advisers
Seek $780 Million in Fees

Enron Corp. advisers led
by New York law firm
Weil Gotshal & Manges asked a judge to approve more than $780
million in fees, the most ever in a bankruptcy case, Bloomberg News
reported. Weil Gotshal requested almost $164 million, filings with the
U.S. Bankruptcy Court in New
York show. About $7.6 million was billed for
work by the firm's co-lead lawyers on the case, Brian Rosen and Martin
Bienenstock.

The fees sought in the Enron
bankruptcy surpass the pending requests in MCI Inc.'s reorganization.
MCI recommended that its lawyers, financial advisers and other
consultants be paid $622 million of the $657 million they requested,
court papers show, the newswire reported.

Putin Sheds Some Light on Buyer of a Yukos Unit

President Vladimir V. Putin offered the first official insight on
Tuesday into purchasers of the largest subsidiary of the oil giant
Yukos, and suggested that these secretive buyers, as had been suspected,
might transfer the assets to other owners, New York Times
reported.