IBM faces scrutiny of stock disclosure
Armonk, N.Y. IBM Corp. announced Monday that the Securities and Exchange Commission is investigating how the company disclosed its methods for expensing employee stock options in the first quarter. The technology giant described the investigation as informal and said it was cooperating.
When IBM released its first-quarter earnings on April 14, it said employee stock options cut into earnings by 10 cents per share. The consensus analysts’ estimate was 14 cents a share.
The 14-cent figure had emerged in a chart that chief financial officer Mark Loughridge put out during an April 5 conference call, when he disclosed what options costs would have been in the year-ago quarter had IBM been expensing stock compensation at the time. He indicated that the then-current quarter’s results would be similar.
Some analysts complained that IBM led them to believe the options-expensing costs would be higher so as to cushion the disappointing results IBM ended up posting. IBM’s first-quarter earnings amounted to 84 cents per share in the quarter, well short of the 90 cents per share analysts had been expecting.
Northwest to stay in air despite labor disputes
Minneapolis Northwest Airlines’ CEO on Monday repeated his pledge to keep flying through a strike as the carrier called a wage cut offer from its mechanics inadequate.
Mechanics reversed months of tough talk on Friday and said they’d consider wage cuts. Northwest is seeking $1.1 billion in annual labor concessions, but so far only pilots have agreed to cuts.
Mechanics told Northwest “that we understand the serious state of the company and the industry, and have expressed our willingness to share in the burdens necessary to meet the situation,” Jeff Mathews, contract coordinator with the Aircraft Mechanics Fraternal Association, wrote in a negotiations update on Friday.
Stock sales by Northwest board members, downgrades of the airline’s bond ratings, and Northwest’s large pension shortfall “indicate to us that a bankruptcy filing may be imminent,” Mathews wrote.
Chief Executive Doug Steenland has said Northwest could be forced into bankruptcy if it doesn’t get labor concessions.
GM promotion leads to record-high sales
Detroit General Motors Corp.’s monthly U.S. sales could reach a four-year high in June thanks to a heavily promoted discount, but the campaign could hurt future sales, analysts said Monday.
Automakers report June sales this Friday. In a note to investors, Merrill Lynch analyst John Casesa predicted June will be GM’s best month since the post-Sept. 11 incentive blitz in October 2001. Casesa said GM could grab as much as 30 percent of the market, up from its 25.4 percent share in the first five months of this year.
“After five terrible months of market share, this is relatively good news for GM,” Casesa said.
Between June 1 and July 5, GM is offering its employee discount to anyone who buys a new car or truck. Dealers like Kim Bushy, who manages Suburban Buick Co. in Wheaton, Ill., say they’re urging the automaker to continue the discount because it’s led to a huge boost in sales.
“This is just very straightforward. It’s easy to understand, and it doesn’t confuse the customer,” Bushy said.
Mark LaNeve, GM’s North America sales and marketing chief, said the company is considering extending the promotion and will make a decision based on inventories once the program ends. Customers can save up to $8,000 under the program in some cases.
Jury mulls case against ex-HealthSouth chief
Birmingham, Ala. A federal jury deliberated a 20th day Monday in the trial of fired HealthSouth Corp. chief Richard Scrushy.
It was the jurors’ fourth day of work since the judge replaced a sick member with an alternate and told them to start over.
Prosecutors contend Scrushy directed a $2.7 billion earnings overstatement over seven years, but the defense blames Scrushy aides, including 15 former HealthSouth executives who pleaded guilty.
Scrushy is the first chief executive tried under the Sarbanes-Oxley corporate reporting law. He also is accused of conspiracy, false reporting, fraud and money laundering.
Google launches free video-viewing software
New York
Google Inc. unveiled a video-viewing channel on its Internet-leading search engine Monday, creating another media outlet that may open new money-making opportunities for a company already so profitable its stock has tripled to above $300 in 10 months.
Watching the amateur and professional videos in Google’s index requires free software available at http://video.google.com. The software, consisting of about 1 megabyte, won’t do anything except stream Google’s videos through the Internet Explorer or Firefox Web browsers.
The limited scope of Google’s viewer means it won’t be competing – for now at least – with the popular multimedia players made by Microsoft Corp. and RealNetworks Inc.
The Mountain View, Ca.-based company announced the video viewer just a few hours before its red-hot stock reached a new closing high. Google’s shares ended Monday’s trading session up $6.85, or 2.3 percent, to $304.10 on the Nasdaq Stock Market.
Son of Wal-Mart mogul dies in plane crash
Bentonville, Ark. John Walton, the billionaire son of Wal-Mart founder Sam Walton and a member of the company’s board, died Monday in a plane crash in Wyoming.
Walton, 58, of Jackson, Wyo., was piloting an ultralight that crashed shortly after takeoff from the Jackson Hole Airport in Grand Teton National Park, the company said. He was pronounced dead at the scene, and the cause of the afternoon crash was not known, officials said.
The plane was an experimental ultralight aircraft with a small, gasoline-powered engine and wings wrapped in fabric similar to heavy-duty sail cloth, officials said.
In March, Forbes Magazine listed John Walton as No. 11 on its list of the world’s richest people with a net worth of $18.2 billion. He was tied with his brother Jim, one spot behind his bother Rob, and just ahead of his sister Alice and his mother Helen.
Walton joined the board of Wal-Mart Stores Inc. in 1992, but did not work for the company.