Wednesday, May 21, 2003
Stocks slip on new terror alert NEW YORK — The stock market gave up early gains and finished narrowly lower Tuesday as fears about mad cow disease and a heightened terror alert pressured Wall Street.
Analysts said investors chose to play it safe and cash in profits from several weeks of advances despite better-than-expected earnings from Home Depot.
The Dow Jones industrial average closed down 2.03, or 0.02 percent, at 8,491.36, for a three-day loss of 221 points. Earlier in the day, the blue chips gained as much as 56 points, although they also recovered ground after hitting an intraday drop of 76 points.
The broader market also finished slightly lower. The NASDAQ composite index dropped 1.68, or 0.1 percent, to 1,491.09. The Standard & Poor's 500 index fell 1.04, or 0.1 percent, to 919.73.
Feds cut oil platform inspections SANTA BARBARA, Calif. — Federal inspections of oil platforms operating off the coast of California have dropped dramatically in the last six months, prompting complaints from angry local activists.
The 23 platforms, located in the Santa Barbara Channel, used to be inspected weekly. But in November, the U.S. Minerals Management Service quietly cut back the inspections to once a month.
Additional, unannounced inspections also were reduced from once a month to every three months, according to John Romero, a Minerals Management spokesman.
Romero said federal law requires only one comprehensive annual inspection for oil platforms, plus "periodic inspections without advance notice." Inspectors will be visiting the platforms seven days a week, he said.
Oil spill readiness exercises will continue, as will the comprehensive yearly inspections.
HealthSouth founder sues his company BIRMINGHAM, Ala. — The ousted founder of HealthSouth Corp. is suing the company to recover legal fees incurred defending himself against government allegations the rehabilitation services giant falsified its books.
Richard Scrushy, fired in late March as chairman and chief executive, cites a 1994 indemnity agreement with HealthSouth that requires the company to pay for any lawsuits brought against him related to business. Scrushy claims the agreement lasts 10 years after his departure.
The Securities and Exchange Commission sued Scrushy and HealthSouth on March 19, contending the company systematically faked earnings since 1986, the year it went public. Scrushy has denied any knowledge of the scam.
Home Depot reports record profits ATLANTA — The Home Depot Inc. said customer service improvements, advertising and stocked shelves are paying off, leading to a record first-quarter profit that topped Wall Street expectations. Company shares surged more than 9 percent on Tuesday.
Home Depot's sales at stores open at least a year — a key measure of retail vitality — fell 1.6 percent in the quarter ending May 4, a much smaller amount than the 6 percent same-store sales drop in the fourth quarter. The company predicts flat or slightly positive same-store sales for the 2003 fiscal year.
Atlanta-based Home Depot, the nation's second-largest retailer, said earnings improved to $907 million, or 39 cents a share, compared to earnings of $856 million, or 36 cents a share, in the same period last year. The results were 2 cents better than the 37 cents predicted by analysts surveyed by Thomson First Call.
Home Depot's report came a day after rival Lowe's Cos. Inc. reported it missed sales projections but increased earnings by 22 percent. Lowe's stock fell more than 9 percent Monday.
Accounting change hurts Staples profits BOSTON — No. 1 office supply chain Staples Inc. saw first-quarter profits fall on an accounting change and separately disclosed it is one of several major New England retailers contacted in an informal Securities and Exchange Commission inquiry into accounting practices.
Framingham-based Staples said Tuesday said profits fell 74 percent to $25 million, or 5 cents per share, from $94 million, or 20 cents per share, in a quarter last year that included a one-time tax benefit.
Paul Capelli, a spokesman for Framingham, Mass.-based Staples, said the accounting change that caused fourth-quarter earnings to fall 74 percent to $25 million, or 5 cents per share, was unrelated to the inquiry, though both concern how the company records its financial dealings with vendors.
The accounting change was prompted by a directive from the Financial Accounting Standards Board, which sets national accounting rules for how companies log vendor rebates. The SEC has been gathering information on how companies deal with vendors in a broader range of activities, including rebates but also such things as allowances, discounts and cooperative advertising, Capelli said.
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