Halliburton spins off part of KBR…Trial for Ken Lay and Jeff Skilling begins Monday…General Motors head tells Houston crowd the company’s dismal earnings are no surprise…
Halliburton said today it plans to spin off a minority stake in its KBR engineering and construction unit. Halliburton President and Chief Executive Dave Lesar told analysts today that the company will file for an initial public offering of shares in KBR with the Securities and Exchange Commission. Halliburton Chief Financial Officer Cris Gaut said the Houston-based parent company plans to spin off a 20 percent stake in the engineering unit, with the parent company holding on to the rest. KBR has generated enormous controversy over how it has become the largest U.S. contractor in Iraq. The subsidiary builds and operates bases for the U-S military. Halliburton’s chief executive from 1995 to 200 was current Vice President Dick Cheney, and it’s been criticized since the beginning of the war in Iraq for multi billion-dollar government contracts. KBR posted $3 billion in overall revenue in the fourth quarter. Halliburton formed KBR when it combined its own Brown and Root unit with the M.W. Kellogg unit of Dresser Industries after Halliburton bought Dresser in 1998. K-B-R posted three-billion dollars in overall revenue for the fourth quarter. Parent company Halliburton reports the best annual profit in its 86-year history of two-point-four billion dollars on revenue of 21 billion. It’s stock price has doubled in the past year.
Jury selection for the trial of former Enron executives Ken Lay and Jeff Skilling gets underway here in Houston on Monday morning. U.S. District Court Judge Sim Lake says he expects to have all jurors picked by the end of the day. He’s asked prosecutors to be ready to present their case on Tuesday. Ken Lay says he’s prepared.
Ken Lay’s attorney Mike Ramsey still worries about holding the trial in Houston, especially following former chief accountant Richard Causey’s decision to plead guilty and cooperate with prosecutors.
“The case has gone on for so long and has been so hyper-sensitive to the Houstonians, or Houston has been so hyper-sensitive to the case, and have to some extent the personal feelings invested in the case, it’s just a bad time and a bad venue to try to pick a jury. We don’t know what the fallout from Mr. Causey’s situation will be. We don’t know what jurors have read about that, what they think about that, how it may affect their thinking about the case.”
Jeff Skilling’s attorney Daniel Petrocelli says the defense team is ready for this day.
“We’re looking forward to starting. It’s been a long, long haul. And Mr. Skilling is ready and his lawyers are trying to get ready, and finally, finally we’re going to get into a court room and deal with some real facts and real evidence. So while I’m sure my client would not prefer to have to endure this ordeal, on the other hand we’re relieved to be able to finally, finally get to the threshold. (Ed: “The judge says that it was possible to get a jury at the end of the first day. Do you see that possibility?”) “He’s pretty determined to pick a jury pretty quickly. You know, we’d like to speak to people and make sure that they’re coming in there with a fresh mind, and if we get 12 people who haven’t made up their mind already, we like our chances.” (Reporter question: “Mr. Skilling, any comment you could give us?”) Skilling: “Not really, but thank you very much.” (Petrocelli:) “Thanks.”
Nearly 100 unindicted co-conspirators were in on the alleged fraud at Enron, according to government prosecutors.
Retail gasoline prices across Texas rebounded this week after a small decline the week before. The AAA Texas retail gasoline survey released today shows the average pump price of regular, unleaded self-serve rose about a penny to $2.28 per gallon. The costliest gas is still in Dallas, where retail prices averaged $2.30 per gallon, a penny more than last week. The cheapest remains in Corpus Christi, where regular self-serve averages $2.17 per gallon–about the same as last week. The national average for regular self-serve is about $2.34 per gallon–up two cents from last week. Auto club spokeswoman Rose Rougeau says pump prices rose with crude oil prices. She notes that retail gas prices averaged $1.79 per gallon a year ago, when crude oil traded at $49 a barrel. The average retail gas rice is now 49 cents higher, when crude trades at about $66 a barrel.
The head of General Motors today said the company’s dismal earnings–are no surprise. GM Chairman Rick Wagoner says the numbers reflected a restructuring announced last year. Wagoner also warned the effects of reduced health care benefits, as GM is doing, will need to be addressed by the government and other businesses. He made the comments at the Houston Auto Show. GM this week reported losing $4.8 billion in the fourth quarter and $8.6 billion for all of 2005. Wagoner says internal studies had prepared GM executives for the bleak financial report. The company’s turnaround plan calls for eliminating 30,000 jobs and closing 12 facilities by 2008. GM anticipates stronger sales this year because of its new lineup of sport utility vehicles and trucks.
The Exxon Mobil appeal of a $5 billion judgment against the company for the 1989 Exxon Valdez oil spill is back in a San Francisco court this morning. It’s the third time the Irving-based oil giant’s case has come before the Ninth U.S. Circuit Court of Appeals in one of the nation’s longest-running legal disputes. It stems from a 1994 decision by an Alaska jury to award punitive damages to 34,000 fishermen and Alaskans. Their property and livelihoods were harmed when the Valdez struck a reef and spilled 11 million gallons of crude oil across the Alaskan coastline.
The government reports the U.S. economy posted the slowest growth rate in three years in the fourth quarter. The Commerce Department says the Gross Domestic Product expanded at an annual rate of just 1.1 percent. That’s well below expectations and off the pace of more than four percent seen in the previous quarter. Consumer spending was the weakest since the spring of 2001. There was lower spending on durable goods, including cars and trucks. Government spending declined, while business spending was on the rise. The economy’s momentum will be one of the key questions discussed next week when the Federal Reserve holds its first policy-setting meeting of the New Year. It will be the last meeting for Chairman Alan Greenspan. GDP attempts to measure the total value of all goods and services in the economy.
New home sales were on the rise as 2005 came to a close. And for the entire year, new home sales posted a record. That’s the fifth year in a row. The Commerce Department says December sales of new single-family homes rose 2.9 percent. Analysts had been looking for a decline. The new home sales reading comes after reports have shown declines in other aspects of the housing market. Sales of previously-owned homes, a larger slice of the overall market, declined five-point-seven percent, and housing starts dipped 8.9 percent. It is widely expected that the housing market will cool this year. Economist Michael Carliner with the National Association of Home Builders, says 2006 will see a decline of up to seven percent in home sales from last year. He says that could still be the second or third best year ever.
Two doctors are no longer included in a lawsuit that claims the painkiller Vioxx led to a Rio Grande City man’s fatal heart attack. The action came on the second day of the nation’s fourth Vioxx trial against Merck. The family of Leonel Garza had sued Merck as well as Dr. Michael Evans and Dr. Juan Posada, both of McAllen. They accused the doctors of negligence for giving the painkiller to Garza, a man with heart problems. But yesterday, those attorneys agreed to remove the doctors from the lawsuit. Merck is facing hundreds of lawsuits from people who took the once-popular painkiller. The drug was pulled in September 2004, when a study showed it could double the risk of heart attack or stroke if taken for 18 months or longer. Merck says no such risk has been shown for shorter periods.
The U.S. Department of Agriculture today announced $2.8 billion in hurricane-related aid for producers and rural communities. USDA says 29 Texas counties are eligible for assistance due to Hurricane Rita. Rita slammed Southeast Texas in late September. The counties are: Angelina, Brazoria, Chambers, Cherokee, Fort Bend, Galveston, Gregg, Hardin, Harris, Harrison, Houston, Jasper, Jefferson, Liberty, Marion, Montgomery, Nacogdoches, Newton, Orange, Panola, Polk, Rusk, Sabine, San Augustine, San Jacinto, Shelby, Trinity, Tyler and Walker.
High hay prices and costs for supplemental livestock feed have caused the Texas drought loss estimate to balloon to $1.5 billion. The updated figure comes from Texas Cooperative Extension. The increase is more than 30 percent above projections made just two months ago–when extension officials estimated losses through spring would be $1 billion. Economist Carl Anderson says the drought’s severity kept winter pastures and wheat from growing, which has forced ranchers to look elsewhere for feed. Only about half of the state’s 2005 hay crop was harvested, which has led to higher prices. Dry conditions have plagued Texas since last April. Governor Rick Perry last week declared a drought disaster for all 254 Texas counties.
Mexico’s Banorte says it’s acquiring 70 percent of McAllen-based InterNational Bank. It’s a $259 million deal. Officials say Banorte has the option of acquiring the remaining 30 percent stake in INB, which has 11 branches in McAllen and three in El Paso. The Mexican bank says it hopes to acquire the remaining stake within three to five years, depending on INB’s performance. Monterrey-based Banorte says the deal will take advantage of the growing economic integration between the U.S. and Mexico. Banorte CEO Luis Pena Kegel says the bank would like to buy another U.S. bank in the future. But he rules out such an acquisition this year and says it’s also unlikely in 2007.
Baker Hughes in Houston today reports the number of rigs actively exploring for oil and natural gas in the U.S. jumped by 15 this week–to hit 1,487. One year ago the rig count was 1,256. Texas gained 14 rigs this week.