Business briefs for April 16, 2002

Tuesday, April 16, 2002 | 11:10 a.m.

WASHINGTON -- Consumer prices rose by a modest 0.3 percent in March despite sharply higher costs for gasoline and other energy products. Industrial activity shot up by the largest amount in two years.

The latest snapshot of economic activity paints a picture of an economy on the comeback from a recession that began in March 2001.

The advance in the Consumer Price Index, a closely watched inflation gauge, compared with a 0.2 percent increase in February, the Labor Department reported today.

The latest CPI report was a better reading on inflation than the 0.5 percent rise many analysts were expecting.

In another report, the Federal Reserve said industrial output at the nation's factories, mines and utilities rose by a bigger-than-expected 0.7 percent in March. That matched the rise registered in May 2000 -- before the battered industry fell into a long slump.

Federal settlement expected

WASHINGTON -- Federal prosecutors will defer pursuing criminal obstruction charges against Arthur Andersen LLP in a settlement requiring the accounting firm to admit it knew employees were wrongfully destroying documents related to the Enron Corp. collapse, people familiar with the ongoing negotiations say.

In the settlement, still being finalized, Andersen also must cooperate fully with the Justice Department's investigation of Enron's bankruptcy, these people told the Associated Press, speaking on condition of anonymity.

The most significant provisions of what was described as a "global settlement" on the criminal obstruction charge facing Andersen already have been resolved, though some details still were being worked out. The sides expected to announce the deal today in Washington, these people said.

Operating profit strong for firm

ATLANTA -- The Coca-Cola Co. reported a $125 million loss for the first quarter because of new accounting standards, but strong sales produced operating income that beat Wall Street expectations.

Revenue was $4.08 billion, up 3 percent from $3.96 billion in the first quarter of 2001.

The soft drink giant said today it lost 5 cents per share in the January-March quarter. It earned $863 million, or 36 cents per share, in the same quarter a year earlier.

Before one-time items that included the accounting adjustments, Coke reported earnings of 40 cents per share. Analysts surveyed by Thomson Financial/First Call had expected 38 cents.

The new accounting changes call for goodwill and some intangible assets to be reviewed annually rather than amortized. Another rule change requires companies to classify some selling expenses as revenue deductions.

Recovery seen despite huge loss

ATLANTA -- Delta Air Lines today posted a loss of $397 million in the first quarter, as passenger revenues continued to lag, but the carrier said it sees signs of a gradual recovery -- including a small operating profit last month.

The results fell short of analyst expectations.

The airline reported a loss of $3.25 per share. Not including one-time items, Delta lost $354 million, or $2.90 per share -- 3 cents a share worse than the consensus forecast of analysts surveyed by Thomson Financial/First Call.

Delta lost $133 million, or $1.11 per share, in the same period of 2001.

Revenue was down 19 percent to $3.10 billion, from $3.84 billion in the same quarter of 2001.

Court to consider trademark dispute

WASHINGTON -- Victoria's Secret, the store known for using ultra-glamorous models to sell push-up bras and other lacy unmentionables, hopes the Supreme Court will protect its good name.

The court said Monday it will take a look at a 4-year-old fight between the national chain of lingerie stores and a Kentucky shop that calls itself Victor's Little Secret. The small, family-owned store says it sells "everything for romantic encounters," including sex toys, adult videos and lingerie for men and women.

The eventual ruling could clarify rules for cases over allegations that a rival is watering down trademark protection by using a sound-alike name or slogan.

At issue is whether a company with a famous trademark has to prove it was really harmed under a law designed to stop copycat business ventures.

Conglomerate to lay off 7,000

STAMFORD, Conn. -- Analysts were not surprised or caught off guard after General Electric Co. said it would cut 7,000 jobs at GE Capital.

The move, announced Monday, is part of an effort to cut costs by $1 billion at the financial services division.

"That's not a big surprise to us at all," said Nicholas Heymann, an analyst with Prudential Securities Inc. in New York. "It's certainly in line with expectations."

James Parke, chief financial officer of GE Capital, discussed the plan in a conference call with analysts and investors, said David Frail, a company spokesman. The cuts represent slightly more than 2 percent of GE's work force of 310,000.

Heymann said additional layoffs are likely on the industrial side.

Frail said the cuts were not related to recent criticism of the company's finances or its first-quarter earnings report last week. GE Capital has previously cut its work force by 19,000 since the second half of 2000, he said.