Thursday, May 16, 2002

Business Digest

Consumer costs rise

        Consumer prices shot up in April by the largest percentage in almost a year. The Consumer Price Index jumped 0.5 percent last month, following a 0.3 percent advance, the Labor Department reported Wednesday. Gasoline, air fares, hospital services and tobacco led the rise.

        The core rate of inflation, excluding volatile energy and food prices, rose 0.3 percent last month, up from a tiny 0.1 percent increase. But economists aren't expecting inflation to become a problem.

Feds probe deeper

        Software maker Computer Associates International Inc. said federal investigators had broadened their investigation into its accounting practices, sending subpoenas to unnamed “third parties.” In a filing with the Securities and Exchange Commission on Wednesday, the Islandia, N.Y.-based company said it is cooperating with an investigation that began in February.

        The SEC and U.S. Department of Justice are conducting a joint investigation. The Wall Street Journal reports investigators are looking into whether Computer Associates executives manipulated revenue to boost the stock price and meet goals of a $1 billion compensation package for senior executives.

Disney scrutinized

        The Internal Revenue Service is auditing the tax returns of The Walt Disney Co., the entertainment giant disclosed Wednesday in its quarterly filing with the Securities and Exchange Commission. Disney said the IRS is examining returns from 1993 through 1995 and that auditors have indicated they will challenge “certain of the company's tax positions.”

Superstores planned

        Wal-Mart Stores Inc. plans to start selling groceries in California, the biggest U.S. food market, by opening as many as 40 warehouse-size stores with supermarkets in the next four to six years.

        Specific locations weren't provided. Wal-Mart, the world's largest retailer, currently has 125 discount stores in the state.

        Kroger Co., the No. 2 California chain, has 456 stores in the state, more than in any other.

Kmart loss: $2.4B

        Kmart Corp. posted a loss of $2.42 billion, or $4.89 per share, in fiscal year 2001, according to a financial statement released Wednesday that also amended some previously reported earnings.

        The loss is nearly a tenfold increase over the discount retailer's loss in 2000 of $244 million, or 48 cents a share.

        For the fourth quarter ended Jan. 30, Kmart lost $1.5 billion, or $3.49 per share. That compares with earnings of $249 million, or 48 cents per share, for the fourth quarter of 2000.

Cartridge price probed

        Hewlett-Packard Co., Lexmark International Inc. and other makers of computer printers face a European Union investigation into accusations that they charge artificially high prices for ink cartridges.

        “We intend to examine this in detail,” EU Competition Commissioner Mario Monti said in Brussels.

        Hewlett-Packard last year was the top seller of cartridges in Europe with a 43 percent share of sales, followed by Seiko Epson Corp. with 23 percent and Canon Inc. with 15 percent, according to IDC Intelect.


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