Archive for Thursday, July 21, 2005

Briefcase

July 21, 2005

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EBay profits climb

EBay Inc.'s second-quarter profit eclipsed analyst expectations as the online auction leader brushed aside worries that it may be losing its competitive edge.

The San Jose, Calif.-based company said Wednesday that it earned $291.6 million, or 21 cents per share, for the three months ended in June, a 53 percent increase from $190.4 million, or 14 cents per share at the same time last year.

If not for accounting charges unrelated to ongoing operations, eBay said, the company would have earned 22 cents per share. That topped the mean analyst estimate of 18 cents per share, according to Thomson Financial.

Revenue for the period totaled $1.09 billion, a 40 percent increase from last year's $773.4 million.

EBay released the results after the stock market closed Wednesday. The company's shares declined 50 cents to finish at $34.87 on the Nasdaq Stock Market, then soared $4.28, or 12.3 percent, in extended trading.

Courts

Enron broadband case yields no convictions

A federal court jury Wednesday acquitted three former Enron Corp. broadband executives of some charges and could not reach a verdict on any of the remaining charges involving them and two other executives.

The five were on trial in Houston for their alleged roles in making Enron's washout broadband venture appear strong to investors and Wall Street to pump up the company's stock price.

Former broadband CEO Joseph Hirko was acquitted on insider trading and money laundering counts, and former strategist Scott Yeager was acquitted of conspiracy and security and wire fraud counts. Software engineer Rex Shelby was acquitted of insider trading charges.

The jury was unable to reach a verdict on all remaining counts. It was considering 164 counts. U.S. District Judge Vanessa Gilmore said the case would have to be retried.

The jury also was unable to reach a verdict on any counts involving former finance chief Kevin Howard and in-house accountant Michael Krautz.

Videogames

'Grand Theft Auto' now for 'adults only'

The video game industry on Wednesday changed to adults-only the rating of "Grand Theft Auto: San Andreas," a best-selling game in which explicit sexual content can be unlocked with an Internet download.

The decision followed intense pressure from politicians and media watch groups, and retailers reacted swiftly - Wal-Mart Stores Inc., Target Corp. and Best Buy Co. said they would immediately pull all copies from their store shelves nationwide.

The game's producer, Rockstar Games, said it stopped making the current version and would provide new labels to any retailer willing to keep selling the games, which had been rated "M" for mature.

GM skids to loss

General Motors Corp. reported another huge quarterly loss Wednesday, intensifying pressure on CEO Rick Wagoner to speed up the overhaul of North American operations that produced a $1.2 billion torrent of red ink in the second quarter.

A surge of U.S. vehicle sales in June - when GM extended its employee discount plan to all customers - helped the company reduce bloated inventories, but the move added little to the bottom line.

The world's largest automaker is trying to come up with new hit models while cutting costs in a way that doesn't trigger open warfare with unions.

GM shares fell 25 cents to $36.58 Wednesday on the New York Stock Exchange.

Education

Business leaders fight data theft

After a string of high-profile data thefts and losses, business leaders on Wednesday announced an education campaign to better protect sensitive client information from hackers and other thieves.

Visa and the U.S. Chamber of Commerce plan a nine-city tour with seminars for businesses to discuss current requirements for handling customer data, such as credit card numbers, names and addresses.

Last month, Visa was involved in one of the biggest breaches of consumer data security when the computer system at CardSystems Solutions Inc. was hacked, exposing 40 million credit card accounts to possible fraud.

The education seminars begin next month and will be held in Springfield, Mo.; Charlotte, N.C.; Vancouver, Wash.; Sacramento, Calif.; Los Angeles; Columbus, Ohio; Arlington, Texas; Albany, N.Y.; and Wilmington, Del.

International

Bidding continues for Calif.-based Unocal

The Chinese oil and gas company seeking to buy Unocal Corp. said Wednesday it would stick by its current bid - even after Unocal's board endorsed a sweetened offer from rival bidder Chevron Corp.

Chevron boosted its cash and stock offer by about $2.50 per share to $63 per share - or $17 billion overall - shortly before the Unocal board met Tuesday night.

CNOOC, an affiliate of China National Offshore Oil Corp., has an $18.5 billion offer on the table for the El Segundo, Calif.-based company.

The deal has met stiff opposition in Congress because CNOOC is 70 percent owned by the Chinese government.

Analysts say CNOOC likely will have to increase its offer and add a substantial financial guarantee if it wants to persuade Unocal shareholders to reject the Chevron bid in a vote scheduled for Aug. 10.

Earnings

Airlines report quarterly profits

American Airlines and Continental Airlines turned profits in the second quarter in spite of sky-high fuel prices, benefiting from increased passenger demand, higher fares and reduced labor expenses.

AMR Corp., the parent of American Airlines, earned $58 million in the April-June period, while Continental Airlines Inc. posted a $100 million profit. Both Texas-based carriers' results exceeded analysts' expectations.

The positive news does not mean the long-suffering sector is on the verge of an upswing, however. Analysts expect domestic airlines to collectively lose some $5 billion in 2005, in large part because the price of jet fuel is double what it was two years ago.

Executives at American and Continental stressed that more cost-cutting will be needed to stay competitive with low-cost rivals such as Southwest Airlines Co., which last week recorded its 57th consecutive quarter of profitability, with earnings of $159 million.

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