The U.S. services industry expanded more than expected in November, the 10th straight month of growth in the largest part of the economy. The Institute for Supply Management's index for non-manufacturing businesses such as banking, health care and construction rose to 57.4, the highest since May, from 53.1 in October. Readings above 50 signal expansion. Health services, mining and wholesale trade reported the strongest growth rates. Meanwhile, productivity, the measure of how much an employee produces for every hour of work, rose at a revised 5.1 percent annual rate from a previously reported 4 percent pace, the Labor Department said. Productivity was 5.6 percent higher for July through September than it was in the same three months last year, the biggest year-over-year rise since the first quarter of 1973.
Online Travel Site Adds Fees
Expedia, the online travel agency, said it will charge booking fees of $5 per airline ticket in an attempt to make up for lost revenue from reduced commissions. Other such companies, including Orbitz, also charge $5 per ticket. Competitor Travelocity is "examining what Expedia has announced," a spokesman said.
General Motors sedans from 1996 through 2000 are being examined more closely for possible causes of engine fires, the National Highway Traffic Safety Administration said. NHTSA said it has received 44 reports of fires and more than 500 related complaints. The agency is expanding a probe, started in June, to include about 2.3 million cars with 3.8-liter V-6 engines. The affected models are Chevrolet's Monte Carlo; Pontiac's Bonneville and Grand Prix; Oldsmobile's 88, 98 and Cutlass; and Buick's Le Sabre, Park Avenue, Regal and Riviera. GM spokesman James Schell said the company will cooperate.
A former vice president of El Paso Corp., the largest U.S. pipeline owner, was indicted on charges of falsely reporting 48 natural gas trades last year, federal prosecutors said. Todd Geiger is alleged to have falsely reported the trades to an industry newsletter for use in calculating a December 2001 index price, the U.S. attorney's office said.
American Airlines plans to lay off about 1,100 flight attendants as it prepares to operate fewer flights in the spring. The company will offer options such as job sharing and leaves of absence to reduce the flight-attendant numbers, American spokesman Todd Burke said. American, which has about 21,000 active attendants, will begin the layoffs Feb. 1, with the newest employees going first.
R.J. Reynolds Tobacco Holdings will cut some 635 jobs, or 8 percent of its workforce, and sell two non-tobacco businesses as it attempts to reduce costs and compete more effectively with lower-priced cigarette brands. The maker of Winston, Salem and Camel cigarettes also said its earnings for 2002 earnings will be at the lower end of its most recent projection for the year and below Wall Street's consensus projection.
Gateway, the third-largest U.S. maker of personal computers, needs a "strong couple of weeks" to reach the low end of its forecasts for the fourth quarter and the full year, chief executive Theodore W. Waitt said. Sales of desktop PCs are "not doing so well," Waitt said at a Credit Suisse First Boston technology conference in Scottsdale, Ariz.
Gilead Sciences, looking to become a major force in treating AIDS, said it will acquire competitor Triangle Pharmaceuticals for $464 million in cash. Both companies specialize in fighting AIDS and other infectious diseases, and analysts see the cross-country merger of Foster City, Calif.-based Gilead and Durham, N.C.-based Triangle as a good fit. The acquisition also could herald a new wave of mergers in the biotechnology industry, a research-driven sector especially hard pressed for operating capital in tight financial markets.
Citigroup Chairman Sanford I. Weill's plan to eliminate the Salomon name has been deferred until next year. Weill said in May 2001 that the company would use "Citigroup Corporate & Investment Bank" as a brand for the Salomon Smith Barney brokerage and investment bank and the corporate lending unit. The brokerage that deals with individual investors will retain the Smith Barney name, Weill said last year. The change was supposed to have taken place by March 31.
Fidelity Investments was the target of protesters in 20 U.S. cities who called for the mutual fund company to disclose its votes in corporate shareholder elections. Organized by the AFL-CIO, the protesters handed out leaflets in front of Fidelity offices. It was the second time in four months that such demonstrations were staged by the AFL-CIO, whose pension funds lost $3.3 billion in the bankruptcies of Enron and WorldCom.
Ford was the only auto manufacturer to rise in the Union of Concerned Scientists' annual ranking of carmakers' environmental friendliness, from fifth to fourth. Honda, Toyota and Nissan remained the top three, with Honda the clear front-runner, and DaimlerChrysler ranked as the biggest polluter. The report says Ford is on track to meet its goal, announced two years ago, of boosting the fuel economy of its SUV fleet by 25 percent by the 2005 model year.
An economist testified that forcing Microsoft to include the latest version of Sun Microsystems' Java programming language in Windows would restore competitive fairness between the two companies. Dennis Carlton of the University of Chicago made the statement in a federal court hearing in Baltimore on Sun's request for a temporary injunction against Microsoft. Sun says Microsoft has gained an unfair advantage by shipping its system with an outdated version of Java.
NASD fined American Express Financial Advisors $350,000 for improper sales of variable annuities and life insurance. The regulatory body said American Express representatives, over 30 months ending in 2000, failed to explain the costs and features of variable annuity products. American Express neither admitted nor denied NASD's findings. An American Express spokesman said the company has amended its polices on annuities and related products since NASD's findings in 2000.
Mirant Chief Financial Officer Raymond D. Hill resigned to take a teaching job at Atlanta's Emory University, opting to leave at a time when the Atlanta-based power-plant owner faces a federal investigation of its trading and accounting practices.
Lehman Brothers Holdings is firing between 100 and 125 investment bankers today, part of 500 job cuts announced last month to reduce expenses, Bloomberg News reported, quoting a person familiar with the matter. The cuts, which started in November and included Chief Investment Strategist Jeffrey Applegate, will total 4 percent of Lehman's workforce. Stephen Slifer, co-chief U.S. economist, also confirmed that he has left Lehman.
ING Groep said it may have to buy as much as $510 million of bonds sold by Mont Blanc Capital, a subsidiary of National Century Financial Enterprises, which filed for bankruptcy last month. The Dutch financial services firm included the warning in a prospectus to investors. National Century, an Ohio-based company that advanced cash to health care providers and floated bonds backed by the incoming payments from insurers, owes more than $4 billion to investors. Its bankruptcy triggered bankruptcy filings by several of its customers, including Greater Southeast Community Hospital in the District.
Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers