American International Group, the world's largest insurer, said the Justice Department is investigating whether the company broke securities laws when it helped PNC Financial Services Group remove bad loans from its books. The criminal investigation is in addition to a possible civil lawsuit by the Securities and Exchange Commission. AIG said action would be "unwarranted."
Computer Associates to Cut 800 Jobs
Computer Associates International, a week after settling U.S. accounting fraud charges, will lay off 800 employees and reduce the number of software products it sells to save $70 million a year. The cuts, about 5 percent of the workforce, will cost $40 million, or 4 cents a share, mostly in this quarter, the company said.
Prosecutors in the Tyco case have abandoned the charge of enterprise corruption, the top count against former executives L. Dennis Kozlowski and Mark H. Swartz when they are retried in January. Enterprise corruption is the state version of the federal RICO statute, punishable by up to 25 years in prison. Kozlowski and Swartz still face charges of first-degree grand larceny, conspiracy, securities fraud and falsifying business records in their retrial.
Walter Forbes, the former chairman of Cendant, testified at his fraud trial that he didn't read public financial statements that he signed at a predecessor company that prosecutors say inflated its earnings. Forbes was chief executive at CUC International, which merged with HFS in 1997 to form Cendant. Cendant, the world's largest hotel franchiser, revealed accounting misstatements at CUC in 1998, prompting shares to lose $14 billion in value that day. Cendant restated $500 million in CUC earnings and paid $3.2 billion to shareholders in the largest securities-fraud lawsuit settlement in U.S. history.
Boeing settled government complaints that it delivered military aircraft containing parts made of Russian-melted titanium rather than the required U.S. product. Boeing agreed to forfeit $6 million and provide aircraft parts valued at $1.4 million to the government.
General Motors said it will cut more than half the workforce at its 440-employee Martinsburg, W.Va., distribution center over the next few years as it shifts responsibilities to Michigan. As many as 100 jobs will be moved out of Martinsburg within six months. An additional 150 to 200 will be shifted more slowly, the company said. Under a contract with the United Auto Workers, the transferred positions are not considered layoffs. Workers will be given the option to move to other GM plants.
Delphi, the world's largest auto-parts maker, said the Securities and Exchange Commission is investigating accounting for $86.5 million of the company's transactions with computer-services provider Electronic Data Systems. Delphi said the SEC is also looking at $3.5 million it received from another company, but it didn't name that firm.
Google shares hit their highest level since the search engine company's Aug. 18 initial public offering, reaching $135.02 in intraday trading on the Nasdaq Stock Market. The share price began rising after five securities firms that helped sell Google stock issued positive research reports on the company. Google originally suggested a share price of $108 to $135 for its IPO but cut that to $85 in the face of weak demand from institutional investors. Google closed yesterday at $131.08 a share.
Late payments on credit card bills rose in the second quarter, from April through June, to 4.28 percent, compared with 4.21 percent in the first quarter, the American Bankers Association said. It attributed the increase in delinquencies to higher gasoline costs eating into disposable income. Late payments on other forms of loans, however, declined to 1.8 percent for the quarter, the lowest level in 10 years.
Media firm Belo said it would cut 250 jobs, 150 of them at its flagship Dallas Morning News, citing flat revenue in the Dallas-Fort Worth market, where it also owns cable and network television stations. The company also said its investigation into circulation overstatements at the Morning News will result in lower figures than it had previously thought, with declines as high as 11.9 percent for Sunday papers. To make amends with advertisers, who often pay based on circulation, Belo said last month that it would pay $23 million in cash, spend $4 million on newsprint for makeup ads and take a $26 million charge against earnings.
Mexican business leaders angry at competition from stolen, counterfeit and smuggled goods launched a campaign yesterday to stamp out the vast informal economy. Heads of several major business chambers joined politicians and anti-piracy activists in announcing an "Alliance for a Legal Mexico," calling for the government to push millions of Mexicans into the legal, taxpaying sector.
Microsoft added India to the list of nations where it will sell an inexpensive, stripped-down version of Windows to keep customers from using pirated software or the free Linux operating system. The company hasn't said what Windows XP Starter Edition will cost. Microsoft had previously announced that it would sell the product in Russia, Thailand, Indonesia and Malaysia.
RCN, a bankrupt provider of cable television, phone and Internet services, can spend money owed to lenders until it completes its reorganization, a judge ruled.
Saudi Arabia's highest religious authority has banned the use of mobile phones with built-in cameras, blaming them for spreading obscenity. The edict, which follows a failed ban on the sale and import of the wildly popular devices, is the most sweeping attempt by any nation to prevent the voyeurism invited by the new technology.
Spicemaker McCormick said third-quarter profit slipped 4.1 percent, to $46.2 million (33 cents a share), from $51.3 million (36 cents) in the same period last year, despite higher sales. The Sparks company, however, beat Wall Street estimates by a penny a share. Revenue for the period ended Aug. 31 was $613.5 million, up from $557.6 million in the third quarter of 2003.
Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers.