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Europe nears recession { May 16 2003 } Original Source Link: (May no longer be active)
http://www.washingtonpost.com/wp-dyn/articles/A62045-2003May15.htmlhttp://www.washingtonpost.com/wp-dyn/articles/A62045-2003May15.html
Europe Nears Recession
Friday, May 16, 2003; Page E02
The German, Italian and Dutch economies contracted in the first quarter, increasing pressure on the European Central Bank to reduce interest rates. The economy of the 12-nation euro region stagnated in the first quarter, the European Union said. Gross domestic product shrank 0.2 percent in Germany, 0.1 percent in Italy and 0.3 percent in the Netherlands. The EU pared its growth forecast, saying the economy may fail to expand for the next two quarters.
Smartphone Introduction Postponed
T-Mobile International, the wireless unit of Deutsche Telekom, has delayed indefinitely the launch of a Microsoft-powered wireless telephone so it can work out problems with the new device, a setback for Microsoft's push into the wireless industry. T-Mobile initially planned to roll out the "Smartphone" this summer for the European market. The setback comes as Microsoft has set its sights on the emerging market of "smart" devices that can handle e-mail, Web-browsing, instant messaging and other tasks in addition to functioning as a regular mobile phone.
MORE NEWS
Federal prosecutors expanded their fraud investigation of HealthSouth's fired chief executive, Richard M. Scrushy, to include possible money laundering and racketeering, the FBI said. The Securities and Exchange Commission has already sued Scrushy and HealthSouth, an operator of rehabilitation hospitals, alleging that they inflated earnings by $1.4 billion. Separately, HealthSouth said it was cutting 80 more office jobs and paring its aircraft fleet to save money.
The Financial Accounting Standards Board ruled that certain financial instruments that require companies to repurchase their own shares must be treated as liabilities rather than equity. The board sets U.S. accounting standards. The rules are a response, in part, to situations where companies, including Dell Computer, have incurred big liabilities by selling put options on their shares as part of complex hedging strategies.
Kristin Forbes, a Massachusetts Institute of Technology economist and an expert on economic declines that spread to other countries, was nominated by President Bush to his Council of Economic Advisers. Forbes is a former deputy assistant Treasury secretary who advised Paul H. O'Neill on Latin America when O'Neill was the Treasury chief.
Federal and state regulators filed 45 law enforcement actions against people and companies accused of scamming consumers over the Internet, in many cases using unsolicited commercial e-mail, or "spam." Allegations include pitching bogus business opportunities, engaging in auction fraud and identity theft and selling controlled drugs illegally, the Federal Trade Commission said.
AOL Time Warner, Sony and other entertainment companies suing the operator of Kazaa will be able to learn who has invested in the online file-sharing system, a U.S. judge ruled. U.S. Magistrate Judge Patrick Walsh ordered Sharman Networks to produce a list of names of investors, as well as lenders that declined invitations to invest. The closely held company based in the South Pacific island of Vanuatu also has to give the names of all its managers and directors, the judge said. More than 200 million people in 150 countries have used Sharman's Kazaa Web site, a higher volume than Napster enjoyed at its peak.
The record-setting pace of new personal bankruptcies continued this year, with their number rising 7.4 percent in the 12 months ended March 31, according to data compiled by the Administrative Office of the U.S. Courts. But the number of new business bankruptcies fell by 5.8 percent. Total bankruptcy filings during the period rose 7.1 percent, to more than 1.6 million.
Berkshire Hathaway, the investment firm of previously tech-averse billionaire Warren Buffett, has purchased $20 million of the stock of fiber-optics company WilTel Communications, at least the second such company he has invested in. The deal was disclosed in a Securities and Exchange Commission filing. Berkshire also reported holding 879,000 shares in fiber-optic-network company Level 3 Communications, worth $4.5 million as of March 31.
Former Westar Energy executives placed their personal gain above the company's interests, forced out officials who opposed them and falsified flight records for corporate aircraft, according to an internal investigation. The report also suggested that, when David Wittig was chief executive, employees' phone calls were tracked and voting in stockholder elections was monitored. Wittig resigned in November to defend himself against federal fraud charges unrelated to the business of Westar, Kansas's largest electric utility.
INTERNATIONAL
The World Trade Organization backed a certification program designed to stop international traffic in "blood diamonds," letting governments breach trade rules and ban the import and export of uncut gems. Governments at the 146-member trade body agreed to allow countries that have signed the Kimberley Process bypass normal international trading rules in an effort to control the movement of illegal diamonds, which are used to fund violence in Africa.
LOCAL BUSINESS
Host Marriott said it renegotiated its credit line with banks, as the travel industry continues to suffer because of sagging corporate profits and the war in Iraq. Executives said they have not drawn on the $250 million credit line, led by Deutsche Bank and Bank of America, but needed to renegotiate because they were concerned they would not meet certain financial requirements of the credit facility in the second half of this year.
Lockheed Martin of Bethesda said it bought privately owned Orincon to acquire its signal- and image-processing software, which is used by military and intelligence agencies. Terms were not disclosed. Orincon is based in San Diego and has 250 employees. It had sales of $52 million last year.
EARNINGS
CareFirst Blue Cross Blue Shield, the Washington area's largest health insurer, said it earned $25.4 million on revenue of $1.8 billion in the first quarter, compared with $24.7 million on revenue of $1.63 billion for the first quarter of 2002. Also, the D.C. insurance commissioner, Lawrence H. Mirel, announced that, beginning July 1, CareFirst will cover domestic partners of policyholders in its small group plans in the District. CareFirst currently covers domestic partners in its large-employer group plans.
Dell Computer said its fiscal first-quarter profit rose 31 percent, to $598 million. Sales at the world's second-largest personal computer maker rose 18 percent, to $9.53 billion, in the quarter, which ended May 2.
Target reported its smallest quarterly profit gain in 11/2 years and said earnings in the current quarter may rise less than forecast. Net income rose 1.2 percent, to $349 million, in the discount retailer's fiscal first quarter, which ended May 3. Sales rose 7.6 percent, to $10.3 billion.
Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers
© 2003 The Washington Post Company
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