Business briefs for December 12, 2001

Wednesday, Dec. 12, 2001 | 10:56 a.m.

Nevada insurer's stock pounded

SANTA ANA, Calif. -- PacifiCare Health Systems Inc.'s deal to sell up to $150 million in stock as part of its effort to refinance debt distressed Wall Street Monday and Tuesday.

The Santa Ana, Calif.-based, health insurer's stock fell for the second straight day Tuesday as Merrill Lynch analyst Roberta Goodman joined other Wall Street pundits to publish bearish notes about the deal's ability to help solve PacifiCare's liquidity issues.

Goodman cut her intermediate investment rating on the stock to sell from neutral before the start of trading Tuesday.

Shares of PacifiCare -- a big health insurer in Nevada -- closed Tuesday at $14, down $2.15, or 13.3 percent on the Nasdaq stock market. The stock rebounded some this morning, rising 26 cents.

The deal with Acqua Wellington North America Equities Fund calls for the financial company to buy up to 6.9 million shares of stock from PacifiCare, providing the company with cash to pay down its $795 million in debt.

But Goodman argued that the deal won't only dilute PacifiCare's earnings, but that it also raises questions about the company's ability to refinance the $705 million in debt that matures in January 2003.

LV firm predicts profitability

PurchasePro of Las Vegas said Tuesday it believes it will achieve profitability.

In a statement, Chief Executive Richard Clemmer said the company expects its "turnaround" to take more than a few months.

In October, the e-commerce software company said lower than expected sales following the terrorist attacks forced the company to alter its financial plan.

The company followed its 50 percent June work force cut with another staff reduction in October, along with reductions in senior management salaries and occupied office space.

For the third quarter ended Sept. 30, the company lost $106.4 million, or $1.46 a share, on revenue of $3.6 million including special charges.

Financial giant cutting jobs

NEW YORK -- Financial giant American Express, hit hard by the drop in travel following the Sept. 11 attacks on the World Trade Center, said today it would eliminate 5,500 to 6,500 jobs at a cost of $240 million to $280 million in severance fees and other restructuring charges in the fourth quarter.

The company, which is headquartered in New York, also warned that its earnings in the October-December period were likely to be in a range of 34 cents to 36 cents, below the 40 cents expected by analysts surveyed by Thomson Financial-First Call and considerably less than the 50 cents recorded a year earlier.

The latest layoffs come on top of 7,700 cuts previously announced this year. Altogether, the 13,200 to 14,200 jobs eliminated amount to a 15 percent reduction in the American Express staff, which totaled 88,500 at the start of 2001.