Corporate executives optimistic about business prospects despite housing collapse…Houston CFOs and CIOs plan more full-time staff in first quarter of 2008…Two states endorse Illinois over Texas for FutureGen project…
The country’s top corporate executives foresee pretty good business prospects even as the economy gets squeezed by a housing collapse, a credit crunch, Wall Street turmoil and high energy prices. A survey by the Business Roundtable, indicates most executives expect sales, capital investment and hiring to remain at current levels or even improve in the coming months. While the economy’s problems have caused consumer confidence to tank, the survey’s results suggest that corporate executives’ assessment is that the business climate remains generally healthy despite all the strains. The economy, which logged its fastest growth in four years during the third quarter, is expected to slow to a pace of just 1.5 percent or less in the October through December period. In the survey, 87 percent of chief executives said they expected their sales to hold steady or increase over the next six months. That’s down only slightly from 88 percent in the previous survey in September. Seventy-eight percent said they expected to hold payrolls at current levels or boost them. That’s up a bit from 74 percent in the earlier survey.
The CEO of the nation’s largest mortgage lender says government needs to help pump more life into the nation’s housing market, which the head of a leading homebuilder says is vulnerable to further declines. These and other assessments of the troubled housing market were made Monday at a conference sponsored by the Office of Thrift Supervision. Treasury Secretary Henry Paulson said an agreement is imminent that will help thousands of homeowners avoid mortgage defaults by temporarily freezing their interest rates. Banking industry executives speaking on panels generally praised the Treasury Department-led plan. Countrywide chief Angelo Mozilo says he supports efforts to let Fannie and Freddie purchase bigger home loans and put more of them on their books as a way to kick-start funding for the staggering mortgage industry. Efforts to do so have been backed by Congressional Democrats but opposed by the Bush administration.
Houston chief financial officers and chief information officers plan to add more full-time staff in the first quarter of 2008, according to Robert Half International. Of CFOs surveyed, 13 percent plan to add staff, while four percent plan personnel reductions. Thirteen percent of CIOs surveyed say they plan to add staff during the quarter, and two percent expect reductions.
The Department of Public Safety is accepting applications for state trooper positions through January 4th, or December 28th for out-of-state applicants. Recruit school begins in Austin on March 30th, 2008. Applicants are needed to fill positions created by the legislature for border security and commercial vehicle enforcement. Troopers are initially assigned as uniformed officers in one of several services. They can compete for assignments in the Texas Highway Patrol, Criminal Law Enforcement, Driver License, Administration and Texas Ranger divisions.
A major crude oil pipeline is back to full capacity after a deadly explosion last week in northern Minnesota. Houston-based Enbridge Energy has reopened the line that was damaged in a fire that killed two workers from Superior, Wisconsin. The line is one of four through the Clearbrook, Minnesota, area. All four were shut down immediately when the fire erupted, but three of the lines were restarted within hours. Enbridge officials say oil began flowing through the last remaining shut-down pipeline early Monday. Enbridge says workers also continued to clean up the site after about 325 barrels of oil were released. Oil-soaked soil was taken off-site, and the company says it will continue working with the EPA and the Minnesota Pollution Control Agency to finish environmental cleanup. The cause of the explosion is sought.
Southwest Airlines says it’ll slow its planned growth in 2008 in the second time this year that it’s reined in expansion. The Dallas-based low-cost carrier has been slowing its expansion as it struggles with high fuel costs. It now says it’ll grow four to five percent next year, compared with earlier expectations of six percent. The company also will retire planes faster than it adds new ones in a bid to boost profits. Southwest made the announcement as it reported that November traffic grew 2.6 percent, measured by miles flown by paying passengers. That growth, however, failed to keep up with a 6.4 percent increase in capacity. As a result, average occupancy on Southwest flights slipped to 69.3 percent from 71.8 percent in November 2006. The announcement comes a day after Houston-based Continental Airlines cut its growth estimates for mainline operations to two to three percent.
Some Continental Airlines passengers flying out of Houston will be able to receive their boarding passes electronically on their cell phones or PDAs. Each paperless boarding pass will display a two-dimensional bar code, along with passenger and flight information to identify the traveler. Transportation Security Administration officials will use hand-held scanners to validate the passes. Continental is the first U.S. carrier to test paperless boarding passes. The TSA says the technology increases the ability to detect fraudulent boarding passes and will reduce paper use. Continental says that, for now, the 90-day program is limited to passengers leaving Houston and flying domestically with no connecting flight. A Continental spokesman says the airline hopes to expand the program to other cities for all customers.
Houston-based Continental Airlines says its average occupancy or “load factor” in November slipped nearly one percent from last November. But CFO Jeff Misner says Continental’s load factors are still pretty good. Misner added that when the industry’s next slump hits, it won’t be as bad as previous ones because carriers have cut costs. AMR’s American Airlines is cutting up to 300 management jobs by year’s end. American is based in Fort Worth.
A California judge has tentatively signed off on a deal that would end class-action lawsuits brought against Ford by about 800,000 Explorer owners. The suits claimed the sport utility vehicles lost value because of a perceived rollover danger. The deal would end lawsuits against Ford in four states. Personal injury and wrongful death claims involving the Explorer will continue. The settlement allows people who bought the Explorer from model years 1991 through 2001 to receive $500 vouchers to buy new Explorers or $300 vouchers to buy other Ford or Lincoln Mercury products. Ford will also shell out as much as $25 million in costs and attorneys’ fees. The plaintiffs claim Ford marketed the vehicles as safe even though it knew they had a tendency to flip. Ford isn’t admitting any wrongdoing.
Some members of Congress are denouncing credit card industry practices that include raising interest rates for customers whose credit ratings decline, even if they make their card payments on time. Senator Carl Levin, who chairs a Senate Homeland Security and Governmental Affairs Subcommittee, is holding out the club of possible legislation to spur voluntary changes. Levin’s subcommittee, which has been investigating the industry, will look at how credit-card issuers raise consumers’ rates–to as high as 30 percent–when their so-called FICO credit scores decline even if they’ve paid credit card bills regularly and promptly. According to the subcommittee, five big financial companies–Discover Financial Services, Bank of America, Citigroup, JPMorgan Chase and Capital One–issue around 80 percent of U.S. credit cards. CitiGroup and JPMorgan chase recently have said they will discontinue the practice. But Levin says legislation may still be needed to get other companies to do the same.
Credit card holders could receive small refunds after an upcoming settlement approval hearing in a class-action lawsuit against Visa, MasterCard and DinersClub related to foreign currency transactions. The suit alleges that the companies hid the price of foreign transactions by card holders outside of the U.S., including fees of up to three percent, in violation of federal and state law. It alleges the companies inflated base exchange rates before applying the fees.
Two more states are throwing their support behind Illinois’ quest to beat out Texas for a coveted next-generation power plant. Illinois Governor Rod Blagojevich says his counterparts in Michigan and West Virginia say the cutting-edge, coal-powered plant known as FutureGen would be good for Illinois. The United Mine Workers head thinks so, too. Cecil Roberts says such a project belongs in a coal state such as Illinois. Developers are to announce this month whether the $1.5 billion project will go to Mattoon or Tuscola in Illinois, or to either of two Texas sites. Developers say the plant will minimize air pollution by storing emissions underground. Wisconsin, Pennsylvania, Indiana, Ohio, Kentucky and Wyoming already were backing Illinois’ bid.
Clear Channel Communications expects the closing of its buyout to be extended into the first quarter of 2008. San Antonio-based Clear Channel awaits federal approval of the nearly $19 billion deal. The termination date for the purchase of Clear Channel by private equity firms Bain Capital Partners and Thomas H. Lee Partners will be extended to June 12th. The termination date, or the date on which either party may terminate the merger agreement, is currently set at December 12th. The advertising and media giant says it will exercise its right to extend the termination date to provide more time for necessary regulatory conditions to be satisfied.
Dell plans to repurchase $10 billion in common stock, starting this week. Chairman and Chief Executive Officer Michael Dell broke the news on the stock buyback to investors at a shareholders meeting at Dell’s Round Rock headquarters. Dell’s founder says the company’s “committed to a long-term share repurchase program.” The aim is to support growth and return value to shareholders. Dell had suspended its share buyback program in August 2006 until it could file a backlog of earnings restatements to the Securities and Exchange Commission. Those delayed restatements, filed in October, reduced profits by $92 million for fiscal years 2003 through 2006 and the first quarter of fiscal 2007. The restatements resulted from an internal accounting probe which found employees had misled auditors and manipulated results to meet performance goals.