June 25, 2005 in Business

Briefly

Associated Press
 

New defibrillator warning issued

Indianapolis

A second safety warning from Guidant Corp., one of the nation’s largest medical device manufacturers, has patients nervous and investors wondering whether Johnson & Johnson will complete its proposed acquisition of the defibrillator maker.

Indianapolis-based Guidant announced its second worldwide safety advisory in a week on Friday, telling doctors to stop using five defibrillator models because they could malfunction and may have to be recalled.

Shares in Guidant fell 6.9 percent, or $4.70, to close at $63.90 on the New York Stock Exchange.

Guidant voluntarily recalled seven defibrillator models last week. The pager-size devices sense an irregular heart rhythm and shock the heart back into correct beating. At least 74,900 defibrillators are now under a company warning.

Doctors said the new problems can be corrected without surgery, but some patients have begun requesting devices from different manufacturers.

The latest Guidant safety announcement affects the Contak Renewal 3 model, the company’s largest seller, and Contak Renewal 4, as well as the Renewal RF. It also covers the Renewal 3 and the Renewal 4 AVT models.

The five models have a magnetic switch that can become stuck in a closed position, preventing the device from treating irregular heart rhythms. The devices have had at least four malfunctions among them, Guidant said. A fifth case is suspected but not confirmed. No patients using the devices have died or been injured, the company said.

House vote opposes United’s pension shift

Washington

The House voted Friday to go on record against a deal that lets the Pension Benefit Guaranty Corporation take on United Airlines’ employee-pension plans, including the company’s $9.8 billion pension shortfall.

United’s deal with PBGC, which could mean pension cuts of 25 percent to 50 percent for more than 120,000 United workers and retirees, has drawn criticism from workers, unions and others, especially United’s flight attendants.

The House voted 219-185, with 31 Republicans coming on board for the amendment introduced by Rep. George Miller of California, ranking Democrat on the House Education and Workforce Committee, Rep. Jan Schakowsky, D-Ill., and Rep. Joseph Crowley, D-N.Y.,

“The message here … is that they ought to go back to the negotiating table,” Miller said. “I believe this plan was improperly terminated and it was improperly given to the PBGC.”

The airline maintains that the deal with PBGC is required to emerge from bankruptcy and supporters of the airline said that without the pension relief, 62,000 United employees could lose their jobs.

BlackBerry outage explanations slim

New York

Research In Motion Ltd. is offering few details about two major outages in a week with its popular BlackBerry service, which delivers e-mail to wireless devices that many users affectionately call CrackBerries.

RIM, which makes the pioneering mobile devices and provides the e-mail service over cellular networks, attributed a June 17 outage lasting nearly four hours to a software upgrade “that did not operate consistent with prior testing.”

The Canadian company said a second North American outage on Wednesday was the result of an unrelated “hardware failure.” RIM declined to elaborate on the number of customers affected or the nature of the software and hardware involved in the two incidents. The company also seemed to dispute the magnitude and length of last week’s disruption.

Windows to support Internet data feeds

Seattle

Microsoft Corp. said Friday that the next version of its Windows operating system will have built-in support for Internet data feeds, an increasingly popular way to get news and other information channeled straight to a computer.

RSS, short for Really Simple Syndication, hasn’t broken into widespread use yet, but the world’s largest software maker believes it will become a mainstay.

In the long-delayed Windows upgrade, code-named Longhorn and expected to be released late next year, an RSS icon will appear in the Internet Explorer Web browser to make it easy for people to find, much like Apple Computer Inc. has done with its Safari browser.

Perelman gets interest on verdict

West Palm Beach, Fla.

A judge added $130 million to the $1.45 billion verdict a jury awarded financier Ron Perelman in his fraud lawsuit against Morgan Stanley.

Circuit Court Judge Elizabeth Maass took off about $84.5 million from the verdict because of related settlements Perelman had previously received. But she added more than $208 million in interest to increase the verdict by nearly 10 percent to $1.58 billion, according to a written ruling issued Thursday.

Perelman, the billionaire chairman of Revlon Inc., won his case alleging the investment bank covered up the failing finances of Sunbeam Corp. so he would sell his Coleman camping-equipment maker to the company in 1998. A jury last month awarded him $850 million in punitive damages and $604.3 million in compensatory damages.

Citigroup, Legg Mason announce exchange

Baltimore

Citigroup Inc., the world’s largest financial-services firm, takes another step back from a one-stop “financial supermarket” in a $3.7 billion deal announced Friday to swap most of its asset-management business for the broker-dealer business of Legg Mason Inc.

Investors with Legg Mason mutual funds shouldn’t see much change from the deal, and while there could be minor hassles for Citigroup customers, analysts and company officials said they expected a largely painless transition.

In the deal, Citigroup, the world’s largest financial-services firm, will swap most of its asset-management business in exchange for Legg Mason’s broker-dealer business, as well as Legg Mason stock and a loan to the Baltimore financial-services firm.

Legg Mason, which started as a retail brokerage firm in 1970, will now focus solely on managing assets, becoming the fifth-largest U.S. asset manager, said CEO Raymond “Chip” Mason. Legg Mason’s brokerage work force of about 1,300 will move to Citigroup.

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