Business Desk

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

PUBLISHING

TIME MANAGING EDITOR STEPS DOWN TO OVERSEE STANDARDS Ending weeks of speculation, Time’s managing editor James Kelly is stepping down to take a newly created position as managing editor of Time Incorporated to oversee the journalistic standards, practices, and ethics, according to a staff memo from John Huey, Time Inc.’s editor-in-chief.

Mr. Kelly, 52, became the managing editor of Time in 2001,and has won four national magazine awards, including the prize for general excellence this year. At the same time, however, Time magazine, like other news weeklies, has steadily been losing its dominance in the face of competition from online news sources and other media.

Mr. Kelly’s new role is designed to monitor standards and ethics for Time Incorporated’s wide array of magazines, which include everything from People to In-Style to Fortune magazine.

“As I described it to him, the job would entail both proactive policymaking and pre-publication vetting of controversial stories, but crisis management as well,” Mr. Huey’s memo said. “In addition, I asked him to become involved with me in the recruitment of big-time outside talent for the company.”

– The Wall Street Journal

IN THE COURTS

PROSECUTORS TREATED ENRON AS IT WOULD THE MAFIA, LAWYER SAYS The government bore down on Enron as it would the Mafia, intimidating top lieutenants into pointing fingers at their bosses because someone had to pay for crimes that preceded the company’s stunning collapse, the lawyer for the former chief executive, Jeffrey Skilling, said yesterday.

“This was all manufactured after the fact,” Daniel Petrocelli declared in an impassioned plea for jurors to acquit his client of all 28 fraud and conspiracy counts against him. “Because it’s Enron. After all, somebody has to pay. It’s Enron.”

In a searing closing argument, Mr. Petrocelli sought to drive home the defense theme that neither Mr. Skilling nor Enron founder Kenneth Lay perpetuated an overarching fraud at the company because none existed.

But prosecutors, unable to dig up tangible proof, found mouthpieces in a string of ex-Enron executives “robbed of their free will,” who pleaded guilty to crimes they didn’t commit, Mr. Petrocelli said. He said fear of lengthy prison terms and expensive legal battles drove those witnesses to say whatever the government wanted them to in testimony against Messrs. Lay and Skilling.

“That’s how they take down Mob kingpins,” Mr. Petrocelli said.

– Associated Press

RETAIL

WAL-MART ISSUES WARNING FOR SECOND-QUARTER RESULTS Wal-Mart Stores hit on nearly all cylinders in its first quarter – posting a 6.3% increase in net and making progress on its cost-cutting efforts – but sounded a cautionary note.

The retailing giant said its second-quarter results could be pulled down by factors outside of its control, including gasoline prices and rising interest expense.

“We continue to see higher gasoline and utility prices affecting our customers around the world,” Chief Executive Lee Scott said on a recorded message released yesterday. “And these could pressure our results as we move into the second quarter.”

For its quarter ended April 30, the Bentonville, Ark.-based retailer posted net income of $2.62 billion. That amounts to a 13% increase if $145 million in one-time gains from last year’s first quarter are factored out. Wal-Mart’s earnings per share of 63 cents beat the consensus forecast of Wall Street analysts by two cents.

Net sales rose 12% to $79.61 billion. Wal-Mart’s strong first-quarter results came a day after rival Target Corporation reported a shortfall in earnings for the quarter due partly to higher-than-expected expenses and markdowns on home furnishings.

Wal-Mart set its forecast for second-quarter earnings per share at 70 cents to 74 cents but kept its prediction for the fiscal year at $2.88 to $2.95 a share.

– Dow Jones Newswires

HOME DEPOT REPORTS 19% JUMP IN PROFIT, BUT SHARES DROP 5% Home Depot executives are often asked about their company’s lagging stock price amid quarter after quarter of strong profit growth.

It happened again yesterday as the nation’s largest home improvement-store chain reported a 19% jump in first-quarter profit, only to watch its shares drop more than 5%.

“Our stock price is a conundrum, but rather than spending a lot of time stewing about that, we focus on growing the business,” Chief Financial Officer Carol Tome said in an interview.

Disappointing retail sales were the culprit this time. Although the Home Depot’s profit and sales rose by double-digits, the revenue came in below Wall Street expectations.

– Associated Press

CONSUMER PRODUCTS

BAUSCH & LOMB FAILED TO WARN OF 35 CASES OF FUNGUS ROCHESTER – Bausch & Lomb failed to promptly notify federal regulators about 35 cases of a potentially blinding fungal infection among contact lens wearers in Singapore who reported using its newest contact lens cleaner, the Food and Drug Administration said yesterday.

The eye-care company permanently pulled its ReNu with MoistureLoc solution from markets worldwide Monday as health officials investigate its links to an outbreak of Fusarium keratitis infections dating back to June 2005.

The failure to notify the FDA about the Singapore infections within 30 days was among 20 potential violations the agency listed after inspecting a Bausch & Lomb factory in Greenville, S.C., where MoistureLoc was made for markets in America and several Asian markets.

The company also did not notify the FDA in writing that it had removed MoistureLoc from the Singapore and Hong Kong markets in February. In addition, it failed to follow some proper procedures to prevent contamination of equipment at its Greenville plant, the FDA said.

– Associated Press

PHARMACEUTICALS

NEW SLEEPING PILL FAILS TO WIN APPROVAL; DRUG STOCKS FALL A new sleeping pill by Neurocrine Biosciences failed to win regulatory approval, sending shares of the biotechnology company to their lowest price in five years.

The Food and Drug Administration needed more information before it could approve two of the doses of the drug, indiplon, and wouldn’t approve an extended release version in a higher dose, San Diego-based Neurocrine said in a statement yesterday.

The failure suggests that Pfizer, the largest American drugmaker, may drop its marketing agreement with Neurocrine to sell indiplon, an analyst at First Albany Capital in New York, Lucy Lu, said. Indiplon is the lead product for Neurocrine, which hasn’t put a drug on the market in its decade as a publicly traded company. Pfizer agreed in 2002 to pay Neurocrine as much as $400 million for rights to the drug.

“We believe there is a possibility that Pfizer may decide to drop the program,” Ms. Lu pf First Albany Capital said yesterday in a note to clients. “We advise investors to stay on the sidelines until we get further clarity on the program’s regulatory pathway and hurdles.”

Indiplon is similar to Sanofi-Aventis’s Ambien, the top-selling insomnia medicine, and Sepracor’s Lunesta. Both have come under scrutiny because of reports that people who took Ambien ate and drove in their sleep.

– Bloomberg News

AUTOMOTIVES

ICAHN SEEKS TO INFLUENCE REORGANIZATION OF DANA CORPORATION Billionaire investor Carl Icahn, who is showing an interest in troubled automobile parts companies, has sought to influence Dana Corporation’s bankruptcy reorganization by acquiring a big chunk of debt securities issued by the company.

Mr. Icahn’s American Real Estate Holdings owns at least $101.25 million of Dana’s $2.25-billion unsecured debt and is contemplating acquiring even more, according to court documents. Dana has said Mr. Icahn’s company bought the debt after the auto-parts supplier’s bankruptcy filing in March.

American Real Estate “may seek to acquire additional claims against [Dana] and would intend, in any event, to be an active participant” in the bankruptcy case, Mr. Icahn’s company said in a filing with the U.S. Bankruptcy Court in Manhattan. A court hearing on the dispute is scheduled for Wednesday.

– Dow Jones Newswires

INTERNET

YAHOO UNVEILS REDESIGN SAN FRANCISCO – Yahoo’s Web site unveiled a new look yesterday as the Internet powerhouse strives to remain the world’s most popular online destination and strengthen its advertising appeal.

The overhaul marks the first facelift to Yahoo’s home page since September 2004. The redesigned page includes more interactive features that reduce the need to click through to other pages to review the weather, check e-mail, listen to music, or monitor local traffic conditions.

– Associated Press


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