SEC SETTLEMENT

DELOITTE & TOUCHE TO PAY RECORD PENALTY TO SETTLE ADELPHIA CASE

Deloitte & Touche, the largest American accounting firm, agreed yesterday to pay $50 million to settle Securities and Exchange Commission allegations that it failed to detect Adelphia Communications’ financial fraud. The settlement is the largest ever by an accounting firm and includes a record penalty of $25 million.

Deloitte knew or should have known the cable company, under the leadership of founder John Rigas, hid $2.3 billion in bank debts, the SEC said yesterday in a release.

– Bloomberg News

EARNINGS

MARTHA STEWART LIVING POSTS NARROWER LOSS IN FIRST QUARTER

Martha Stewart Living Omnimedia said yesterday its first-quarter loss narrowed from a year ago, but the company struggled with a 13% drop in revenue, hurt primarily by the absence of its daily syndicated TV show while its namesake founder was in prison. Publishing revenue, however, showed signs of improvement after a long slide.

The company also announced yesterday an exclusive multiyear agreement with Warner Home Video to create a new line of home video releases based on the company’s television programming library.

New York-based Martha Stewart Living lost $19.17 million, or 38 cents a share, in the three months that ended March 31, compared with a loss of $19.48 million, or 39 cents per share, in the same period a year ago.

– Associated Press

AMAZON.COMFIRST-QUARTER NET FALLS ON SHIPPING, TAXES

Amazon.com, the world’s largest Web retailer, reported first-quarter earnings fell 30%, hurt by discounts on shipping and increased taxes. The company’s shares fell on the news.

Net income declined to $78 million, or 18 cents a share, from $111 million, or 26 cents, a year earlier, Seattle-based Amazon.com said yesterday in a statement after the close of regular trading. Sales increased 24% to $1.9 billion.

Profit was hurt as Chief Executive Jeff Bezos introduced a $79 yearly fee for unlimited shipping to get customers to buy more. The company’s loss on shipping grew by $12 million. Amazon.com had an income tax expense of $56 million compared with a $2 million benefit a year earlier.

Amazon.com “has continued to be aggressive in terms of lowering prices and free-shipping incentives to its customers,” said American Technology Research analyst Mark Mahaney. He has a “hold” rating on the shares and doesn’t own any. “The single biggest issue on Amazon shares today is the direction of margins.”

The company said operating profit as a percentage of sales fell to 5.7% from 7.2% a year earlier. Shares of Amazon declined 82 cents to $32.71 yesterday in Nasdaq composite trading and have slipped 26% this year.

– Bloomberg News

WALL STREET

LANGONE, PREPARING BID FOR NYSE, WOULD SHUT FLOOR

Billionaire Kenneth Langone, who’s considering a takeover bid for the New York Stock Exchange, wants to close its trading floor, ending the way the world’s biggest stock market has operated for more than two centuries.

The plan would be phased in over several years and would change the NYSE, where much of U.S. stock trading takes place face-to-face, into an electronic-trading network, said a person familiar with Mr. Langone’s thinking. Mr. Langone, 69, has yet to make a proposal to Big Board seat holders, who own the exchange.

An offer from the former NYSE board member would disrupt CEO John Thain’s effort to turn the 212-year-old exchange into a publicly traded, for-profit company through a merger. Mr. Langone’s plan to cut costs may risk the jobs and support of many of the 3,000 brokers, traders, clerks, and auctioneers, called specialists, who work on the trading floor at the corner of Broad Street and Wall Street in Manhattan.

“Specialists have a lot of seats,” said exchange member William Higgins. Bidders for the NYSE should “want to make friends. You don’t want to make enemies.”

John Mack, the former Credit Suisse First Boston CEO and Morgan Stanley president who’s helping with the potential bid, said today that he asked Mr. Thain to meet with Wall Street firms seeking additional information on Mr. Langone’s proposals. Mr. Thain agreed, Mr. Mack said in a statement.

– Bloomberg News