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IN BRIEF

March 11, 2003

THE ECONOMY

Discount Rates Fall in

Treasury Bill Auction

The Treasury Department sold $17 billion in three-month bills at a discount rate of 1.055%, down from 1.175% last week. An additional $17 billion was sold in six-month bills at a rate of 1.030%, down from 1.170%.

The new discount rates understate the actual return to investors -- 1.077% for three-month bills, with a $10,000 bill selling for $9,973.30, and 1.053% for a six-month bill selling for $9,947.90.

In a separate report, the Federal Reserve said the average yield for one-year constant-maturity Treasury bills, the most popular index for making changes in adjustable-rate mortgages, fell to 1.22% last week from 1.27%.

From Associated Press

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2003 Growth Forecast

Scaled Back to 2.6%

Economists scaled back forecasts of 2003 U.S. economic growth for a second straight month as expectations waned for a rebound in consumer spending and inventory building, the latest Blue Chip Economic Indicators survey found.

The economy probably will expand 2.6% this year, down from the forecast of 2.7% that the survey found last month.

From Bloomberg News

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TECHNOLOGY

Qualcomm Lifts

Phone-Chip Forecast

Qualcomm Inc. said it would sell 1 million more phone chips in its second quarter than the company had forecast, as demand in Asia rises.

Qualcomm plans to ship about 28 million phone chips in the three months ending March 30. Qualcomm shipped 14 million chips in the year-earlier period. Qualcomm shares fell 94 cents to $34.24 on Nasdaq.

From Bloomberg News

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Oracle Slips in Database Software

Oracle Corp.'s lead in the database software market shrank last year, as IBM Corp. and Microsoft Corp. boosted sales, market researcher IDC said. Oracle's share of the $13-billion market declined to 39.4% last year from 41.7% in 2001, IDC said. IBM's portion increased to 33.6% from 31%, and Microsoft's rose to 11.1% from 9.7%.

Oracle shares fell 30 cents to $10.76, and Microsoft fell 61 cents to $22.95 on Nasdaq. IBM fell $2.20 to $75.70 on the New York Stock Exchange.

From Bloomberg News

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ACCOUNTING

KPMG Settles Suit by Rite Aid Shareholders

KPMG agreed to pay $125 million to settle a suit filed by shareholders of Rite Aid Corp., which restated $1.6 billion in profit.

KPMG, the former auditors for Rite Aid, said it was settling to avoid protracted litigation. Three former top Rite Aid officers face a trial in June on charges of accounting fraud, and a fourth has pleaded guilty. KPMG resigned as the company's auditor in November 1999.

KPMG also agreed to pay $75 million to settle a suit that alleged it helped Oxford Health Plans Inc. misstate finances. KPMG also denied wrongdoing in that case.

From Bloomberg News

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CONSUMER GOODS

American Tissue

Charged With Fraud

American Tissue Inc. and four former executives were accused of fraud by federal authorities, who said banks and investors lost almost $300 million in the company's collapse.

Brendon McDonald, a former auditor for Arthur Andersen, also was charged with obstruction of justice for his alleged role in shredding documents.

Hauppauge, N.Y.-based American Tissue defaulted in August 2001 on more than $144 million in loans and more than $160 million in senior secured notes.

From Bloomberg News

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ENERGY

Nicor-Dynegy Venture May Face SEC Suit

Nicor Inc., the third-biggest U.S. distributor of natural gas, said the Securities and Exchange Commission may sue its venture with Dynegy Inc. for fraud.

The SEC's staff plans to recommend that the agency pursue a securities fraud case, Nicor said in a filing, without providing details.

The U.S. attorney for the Northern District of Illinois and a federal grand jury are investigating the matter, a spokesman said.

Shares of Naperville, Ill.-based Nicor fell $3.47 to $23.85, and Dynegy shares fell 4 cents to $2.26, both on the NYSE.

From Bloomberg News

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MEDIA

Fox Sells Video Game

Division to Vivendi

Fox Entertainment Group, a unit of News Corp., said it sold its video game publishing and development studio to French-owned Vivendi Universal Games for a sum that wasn't disclosed.

Rather than develop its own games, Fox will license its entertainment franchises, such as "Buffy the Vampire Slayer," to other game companies. Vivendi said it would assume development of 10 game projects underway at the Fox Interactive studio in Century City.

The deal also gives Vivendi rights to publish sequels to those games.

Fox's retreat from game publishing comes amid fierce competition and consolidation in the global $25-billion industry.

-- Alex Pham

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FINANCE

Capital One Warned

Some of Investigation

Capital One Financial Corp. gave advance notice to some of its lenders and advisors that its finance chief planned to resign amid an insider trading probe.

The McLean, Va., consumer credit company said that it had discussions with some of its "lenders under its corporate credit facility, advisors, rating agencies and regulators shortly before the public announcement" last week of the probe and the resignation of Chief Financial Officer David Willey.

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