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By Richard Willsher and David Nicholson January 8, 2002 7:15 am ET |
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Also, GM, Ford to cut more jobs; Enron receives bids
for trade business; FTC investigates drug patents; U.S. companies may be
hurt by Argentina currency; U.S. November factory orders expected to
fall; plus markets, today's earnings reports, and more.
Co-Chief Operating Officer Richard Parsons, who will succeed Chief Executive Gerald Levin in May, has told investors that the company is going to take a conservative stance so it can deliver rather than promise too much. The charge, in line with new goodwill accounting rules, reflects the difference between the acquisition price it paid for Time Warner last year and its market value. The company went on to say growth in cash flow for 2002 could drop into a range of 8% to 12%, from previous expectations of double-digit growth. It expects revenue growth of 5% to 8%. The company also confirmed it would buy Bertelsmann AG's 49% interest in money-losing AOL Europe for $6.75 billion in cash. The venture, which had about $800 million in revenues in 2001, is seen as a key vehicle for the company's global expansion.
GM, Ford to cut more job cutsThe world's two largest automakers, General Motors Corp. (GM) and Ford Motor Co. (F), will announce thousands more job cuts later this week at the industry's premier annual event, the Detroit auto show. Neither company will say exactly how many jobs will go, but thousands are expected, possibly tens of thousands in Ford's case. GM is expected to make its formal announcement on Thursday and Ford on Friday, both to Wall Street analysts at the auto show.
Enron receives bids for trade businessEnron Corp. (ENE) received bids for control of its energy-trading arm from Citigroup Inc. (C), BP Plc (BP), and UBS AG (UBS), according to The Wall Street Journal. J.P. Morgan Chase & Co. (JPM), one of Houston-based Enron's largest creditors, did not file a proposal as some had expected. The energy trading business is scheduled to be auctioned in a federal bankruptcy court on January 10. The bids were handed in on a confidential basis, and the company's advisors are expected to pressure bidders to raise their offers.
FTC investigates drug patentsU.S. antitrust regulators at the Federal Trade Commission (FTC) are investigating whether pharmaceutical giants Bristol-Myers Squibb (BMY), GlaxoSmithKline (GSK), Biovail (BVF), and others used patent listings to cushion competition from generic drugs, according to USA Today. The firms may have claimed that certain patents apply to their drugs when they did not, to keep lower-cost generic drugs off the market. USA Today said FTC antitrust chief Joe Simons confirmed the investigations but declined to discuss the details.
U.S. companies may be hurt by Argentina currencyU.S. companies such as AES Corp. (AES), Avon Products Inc. (AVP), and Eastman Chemical Co. (EMN) said Argentina's devaluation of the peso may reduce their earnings. Argentina has devalued its currency by 29%, so companies will receive fewer dollars for sales made in Argentine currency because the peso is now valued at 1.4 per dollar, not one-to-one. But some companies may benefit from devaluation because they will spend fewer dollars on their Argentina plants. U.S. companies exported $4.3 billion in products last year to Argentina. Also, J.P. Morgan Chase & Co., FleetBoston Financial Corp. (FBF), and other U.S. banks may have trouble collecting on $21 billion in loans to Argentina as the country has halted debt payments.
U.S. November factory orders expected to fallThe Commerce Department is scheduled to release its report on factory orders of U.S. manufacturers in November, today at 10 a.m. EST. A 2.7% decline in new orders, to $324.2 billion, is expected for the month, according to a Bloomberg News survey. Orders had increased 7.1% in October, the largest rise since June 2000.
Yesterday's U.S. marketsThe Dow lost 62 points Monday, ending at 10197. The S&P dropped 7 to 1164, and the Nasdaq fell 22, closing at 2037.Stocks dropped on concern that profits may not rebound soon enough to justify the rally of the past three and a half months. General Electric (GE) lost $1.59 to $39.36 and Coca-Cola (KO) shed $1.21 to $45.22 after analysts downgraded their shares. Chipmakers also fell, with Intel (INTC) down 52 cents to $35.27, Texas Instruments (TXN) down 99 cents to $29.41, and Xilinx (XLNX) down $1.09 to $44.62. AOL Time Warner (AOL) rose 73 cents to $32.68.
Today's earnings reports
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Richard Willsher and David Nicholson are partners in WordsOnTheWeb. |
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