In the Region
Legg Mason shares fall 5.3% after stock rating is cut to 'sell'
Shares of Legg Mason Inc. fell 5.3 percent, or $2.53, to close at $44.93 after Merrill Lynch & Co. analysts cut the money manager's stock rating to "sell" from "neutral."
The analysts expect Legg Mason's shares to decline as much as 12 percent in the next year, according to a Merrill report. Flows into Legg Mason's retail brokerage business will "remain muted intermediate term," and growth in its institutional managed asset business may falter short-term, the report said.
Pretax returns on revenue in the brokerage and managed asset businesses are below industry benchmarks, and improvement will be tied to growth in the economy, the report said.
Allegheny Energy sued over trading practices
Wolf Haldenstain Adler Freeman & Herz LLP has filed a lawsuit against Allegheny Energy Inc. and its leadership on behalf of shareholders, claiming the Hagerstown-based energy company failed to disclose that its revenues depended on deceptive trading practices.
Allegheny's stock price has plunged 70 percent since it filed a lawsuit against Merrill Lynch & Co. Inc. on Sept. 25 amid allegations that the investment firm allowed the business to engage in sham trades with Enron Corp. to inflate revenue and trading volumes, making it more attractive for sale. Allegheny's action was in response to a Merrill Lynch suit accusing the energy company of failing to buy out the firm's remaining investment in the trading business.
The lawsuit alleges sham trades and subsequent misleading statements by Allegheny deceived investors about the financial health of the company.
Elsewhere
Australia to become 8th partner to join U.S. on F-35 fighter
Australia has agreed to become the eighth international partner to join with the United States in developing the F-35 Joint Strike Fighter.
Yesterday's decision by the Australian Cabinet is seen as a further endorsement of the futuristic aircraft being developed by Lockheed Martin Aeronautics.
Senior defense officials of Australia and the United States are expected to meet and sign the formal agreement Oct. 31. Australia will contribute $175 million to the program. Tom Burbage, executive vice president of the aeronautics division and general manager of the F-35 program, said the eight nations involved have pledged $4.5 billion, or about 15 percent of the projected cost of designing, developing and building prototypes of the F-35 that will be used for flight testing.
Bill would give Pa. official say in OK of Hershey sale
Pennsylvania's state attorney general would have the power to require court approval of any sale of Hershey Foods Corp., or any other publicly traded corporation controlled by a charitable trust, under legislation that the state House of Representatives passed yesterday.
The bill, which was approved 154-43, now goes to Gov. Mark S. Schweiker for his signature. Schweiker spokesman Michael Lukens said the governor has not decided whether to sign it. The Senate approved the legislation Oct. 9.
The vote was praised by Attorney General Mike Fisher, who called for changes to the state law governing charitable trusts in August when he went to court to block a proposed sale of the nation's largest candy maker.
EU approves Deutsche Post purchase of 25% of courier
The European Union on Tuesday approved Deutsche Post AG's planned purchase of another 25 percent stake in DHL Worldwide Express Inc., pushing its control in the courier to more than 75 percent.
The EU executive commission said there were only "minor overlaps" between the two companies and therefore posed no antitrust problems. Deutsche Post is paying 610 million euros ($596 million) for the stake. The commission said in a statement that "Deutsche Post is mainly active in mail delivery in Germany, a market where DHL is not active."
Regulators to challenge merger of pickle makers
Federal antitrust regulators voted to challenge a combination of the nation's two largest pickle makers, Vlasic Foods International and Claussen Pickle Co.
Vlasic parent Pinnacle Food Corp., owned by investment firm Hicks, Muse, Tate & Furst Inc., agreed in May to buy Claussen from Kraft Foods Inc., the Federal Trade Commission said.
The FTC said the purchase would create a monopoly in the U.S. market for refrigerated pickles by combining the two biggest pickle brands and eliminating their "unique rivalry." The FTC said Vlasic, which sells mostly nonrefrigerated jars of pickles, serves as the "primary price constraint" on Claussen's refrigerated products.
Blockbuster in the black, but short of expectations
Blockbuster Inc. returned to the black in the third quarter, earning a $51 million profit that nonetheless fell short of the video chain's expectations because of higher marketing costs and additional money spent to add more DVDs and video games to its stores.
The results contrast with a year-earlier loss of $224.9 million stemming from write-downs as it continues clearing out videocassettes to make room for higher-profit DVDs and video games. Revenue in the quarter rose 9.6 percent, to $1.39 billion from $1.26 billion.
The Dallas-based company, which is 82 percent owned by entertainment giant Viacom Inc., said it was disappointed with the per-share earnings of 28 cents, which fell 3 cents short of Wall Street projections.
WorldCom still losing money as it reorganizes
Embattled WorldCom Inc. continues to lose money as it struggles to reorganize in bankruptcy court while competitors poach its best employees and lure away customers.
WorldCom reported yesterday that it lost $429 million on revenues of $4.46 billion in July and August even as competitor AT&T; Corp. said it's picking off some of WorldCom's customers.
The telecommunications company said an evaluation of its balance sheets may result in charges of as much as $50 billion to write down the value of goodwill and other intangible assets such as intellectual property, FCC licenses and trade names.
China's major automakers report 45% profit increase
China's 15 major automakers, including First Automotive Works Corp., Dongfeng Motors Corp. and Shanghai Automotive Industry Corp., reported a combined 45 percent rise in profit in the first nine months of the year as auto demand increased.
The combined profit made by the automakers rose to 14.8 billion yuan ($1.8 billion), the State Economic and Trade Commission said on its Web site.
Total sales for the 15 automakers rose 31 percent to 240.8 billion yuan in the nine months period, the commission said. Their vehicle inventory dropped 15.7 percent to 17.5 billion yuan.
6 German research groups cut forecasts for growth
Germany's leading economic research groups slashed yesterday their growth forecast for this year and next, and they predicted that unemployment will rise next year.
In a semiannual report, the six institutes predicted that Europe's biggest economy would grow by just 0.4 percent this year and 1.4 percent next.
In their last forecast in April, the groups predicted 0.9 percent growth in gross domestic product for this year and 2.4 percent next year.
U.S. presses investigation of Jeep Grand Cherokee
The federal government announced yesterday that it is stepping up its investigation into the 1997 Jeep Grand Cherokee because its hood may open unexpectedly while the vehicle is moving.
Nineteen people complained about the problem, but no injuries or accidents were reported.
The investigation by the National Highway Traffic Safety Administration covers 262,135 vehicles.
This column was compiled from reports by Sun staff writers, the Associated Press, Bloomberg News and The New York Times.