A purchasing executives group says the services sector of the economy expanded at an increasing rate last month. The Institute for Supply Management says its index covering the non-manufacturing sector rose to 59 in January. That's up more than two points from the previous month and stronger than expected. Any reading above 50 indicates expansion, while one below that level indicates contraction.
Major U.S. airlines have rolled back a $10 round-trip fare increase started last week by Delta Air Lines. Delta raised many of its domestic fares Thursday night. That was matched over the next two days by Fort Worth-based American Airlines, United Airlines and other big carriers. But analysts say Northwest Airlines matched the increase on only about one-fifth of its routes. Neil Bainton of Farecompare.com says United and American retreated to their pre-weekend fares last night. He says they were followed today by Delta, Houston-based Continental Airlines and U.S. Airways. It was the second failed attempt—mixed with one successful effort--by carriers to broadly raise fares in 2007. Strong demand for travel helped airlines boost fares repeatedly over the past two years. But airline travel analyst Terry Trippler predicts increases will slow from about 15 percent the last two years to about five percent this year. Trippler says the low-cost carriers--most of which didn't match the weekend increase--are adding planes for new routes. He says that will keep pressure on the bigger airlines not to raise prices.
BP will seek to reassure investors about its battered reputation when it posts its annual results and a strategy update tomorrow. Analysts expect the struggling British oil major to report a significant drop in profits after six successive quarters of lower oil and gas production, despite soaring oil prices. But the focus tomorrow will be on BP plans to restore confidence after a series of high-profile setbacks. Those include a deadly 2005 blast at its Texas City refinery and a giant oil spill in Alaska. The company has already taken some steps toward repairing its reputation with investors and the public, particularly in the United States. It announced last month that chief executive John Browne would step down by the end of July, bringing his expected departure forward by more than a year. He'll be succeeded by Tony Hayward, the current head of exploration and production. But analysts say tomorrow's earnings announcement will need to show the company is taking further steps.
Days after returning as Dell's CEO, Michael Dell has some sobering news for employees of the beleaguered computer maker. He's quashing bonuses for 2006 and reducing managers. The move is to help cut costs and steer the company back toward dominance. Friday's e-mail also revealed that Dell will not hire a chief operating officer, will push faster product development and will expand into new business to drive revenue growth. Details of the shake-up came after Michael Dell replaced Kevin Rollins as CEO. The change comes as Dell tries to fix mounting problems that include a string of disappointing earnings, eroding market share and an ongoing federal accounting probe.
Triad Hospitals said it's agreed to be taken private. Plano-based Triad is one of the nation's largest hospital operators. It says its deal is with affiliates of private-equity firm CCMP Capital Advisors and Goldman Sachs' GS Capital Partners. The cash transaction is valued at $50.25 per share--or $4.39 billion. But once assumed debt is included, the deal's valued around $6.4 billion. Triad's board has approved the agreement and recommends stockholders do likewise. But the transaction's subject to some closing conditions, including shareholder and regulatory approvals. Under the deal, Triad may solicit superior bids from third parties during the next 40 days. But it a competing bid is accepted, Triad would have to pay a $20 million break-up fee and reimburse up to $20 million of their expenses. Triad owns or operates about 50 hospitals and ten outpatient surgery centers in 15 sunbelt and western states. Triad's facilities have more than 8,000 beds total. The hospital operator also said Monday that lower collection rates on bad accounts hurt earnings for the fourth quarter.
Sears Holdings Corporation says it'll take a $73.5 million pre-tax charge in the fourth-quarter as it appeals a north Texas jury verdict. A Dallas jury ruled last week that the company's subsidiary--Sears Roebuck and Company--must pay institutional bondholders $73.5 million. The jury says Sears breached a contract related to a 2004 bond redemption. The bondholders' group includes JP Morgan Securities and subsidiaries of American International Group. Suburban Chicago-based Sears Holdings says it'll appeal the verdict. It says the charge will reduce its after-tax earnings by $44 million.
Houston-based ExpressJet Airlines said it'll start new nonstop service between Colorado Springs, Colorado and three California cities. The flights to San Diego, Sacramento and the Los Angeles area are part of the regional carrier's new service to 24 cities beginning in April. The carrier said it'll spend about $525,000 on equipment and infrastructure at the Colorado Springs airport and plans to hire about 12 employees for the operation. Until recently, ExpressJet Holdings operated the airline as Continental Express.