Ukiah Daily Journal from Ukiah, California • Page 3

COMMERCE WEDNESDAY, SEPT. 8, 2004 3 NESS HIGHLIGHTS Is the nation's business spending really going up? VeriSign up; Jamba unit spark revenue view boost NEW YORK (Dow VeriSign stock closed up Tuesday after the Internet and telecommunications "services company said it expects third-quarter revenue to come dn ahead of its July forecast. The shares closed at $19.40, up $1.55, or 9 percent on the -Nasdaq Stock Market. The Mountain View, company said in a Securities and Exchange Commission filing that its Jamba business, a German wireless-content services firm it acquired in early June for $273 is performing "significantly" ahead of expectations. Verisign's other business lines are performing as expected, company said in the filing.

However, Piper Jaffray analyst Gene Munster said his research shows that Verisign's Internet domain registry business is also doing well. VeriSign didn't provide new revenue projections in its filing, but said it would update investors on its overall strategy, current business trends and the Jamba acquisition at investor conferences this week. However vague, the positive statement cheered investors have been waiting for the telecom side of Verisign's business to regain some momentum. Verisign's Internet-related ventures domain names, digital certificates and e-commerce payments have been 'improving. In July, VeriSign said it expected to report third-quarter earnings before items of 16 cents a share on revenue of $285 million, including $35 million from Jamba.

The company predicted Jamba would not add to earnings per share during 2004, but would contribute one cent to results in each quarter of. 2005. Jamba's 2005 revenue was put at $180 million to $200 million, assuming no significant uptick in U.S. sales. Biogen Idee, Sunesis to collaborate on drugs CAMBRIDGE, Mass.

(Dow Biogen Idee Inc. and Sunesis Pharmaceuticals Inc. will collaborate on cancer 'treatments, the companies said Tuesday. Sunesis, a privately held South San Francisco, biotechnology company, will receive an upfront $7 million technology access fee and $14 million equity investment, research funding. Cambridge-based Biogen Idee said the capital will be used to support Sunesis scientific personnel, milestone and royalty payments.

A team of Biogen Idee and Sunesis scientists will work together on kinase drugs targeting kinases, a family of cell- signaling enzymes that play a major role in the progression of cancer. This collaboration is the second between the companies. In December 2002, Sunesis and Biogen agreed to collaborate on treatments of inflammatory and autoimmune diseases. Biogen Idee shares closed Tuesday at $60.90, up 43 cents, or 0.7 percent, on the Nasdaq Stock Market. Former Silicon Valley banker Quattrone faces likely prison time 1 NEW YORK (AP) Frank Quattrone, the master Silicon Valley dealmaker of the 1990s technology stock boom, faces a likely prison sentence Wednesday, four months after he was convicted of obstructing a federal investigation.

The 48-year-old former investment banker would be the highest-profile Wall Street figure to face time behind bars since junk-bond king Michael Milken in 1990. Quattrone, who headed the technology group at Credit Suisse First Boston, was convicted in May of obstructing a probe into how shares of hot initial public offerings of stock were allocated during the tech boom. The case hinged on an e-mail that Quattrone forwarded to bankers in 2000, encouraging them to "clean up" their files. Quattrone contended he was simply following CSFB policy and did not know the scope of the investigation. Quattrone, convicted of two counts of obstruction and a single count of witness tampering, faces 10 to 16 months in prison upder federal sentencing guidelines.

Martha Stewart, convicted of lying about a stock trade, faced the same range and was sentenced in July to a term of five months in prison and five months of house arrest. Quattrone's sentence will be imposed by Judge Richard Owen of Manhattan federal court, who presided over Quattrone's two trials. The first ended in a hung jury last fall. Quattrone testified in his own defense at both trials. 1 Owen could sentence Quattrone to more than the 10-to-16- month range, legal experts said, finding that Quattrone lied on ihe witness stand.

But, they added, Owen may feel constrained a recent U.S. Supreme Court decision that questions the sen- fencing discretion of judges. i Leaders of pilots union decline to send US Airways' latest proposal to members ARLINGTON, Va. (AP) Shares of US Airways Group inc. tumbled nearly 9 percent in early trading Tuesday after the pilots' union refused to send the airline's latest contract pro- oibsal to its members for a vote.

US Airways is seeking about $800 million in labor cuts, including $295 million a year from pilots, after emerging from Bankruptcy protection a year ago. The Master Executive Council of the Air Line Pilots Association met during the Labor Day weekend, but adjourned Monday night after voting against putting the proposal up for possible ratification. "At this time it is uncertain as to whether or not discussions continue between ALPA and the company," union spokesman Jack Stephan said in an e-mail. Under the proposal, pay would have been cut by up to 35 percent and retirement plan contributions slashed by up to 30 percent, sources familiar with the discussions said. US Airways says it needs to cut costs by $1.5 billion a year to avoid returning to bankruptcy and possible liquidation.

"We are profoundly disappointed that the actions of a few prevent our pilots from making their own decisions," US Airways spokesman David Castelveter said Tuesday. '(Nevertheless, we remain firmly committed to reaching an agreement that is responsive to our pilot's needs, but also meets c)ur required financial target." In early trading on the Nasdaq Stock Market, US Airways shares were down 21 cents at $2.14. None of the airline's unions have reached an agreement on a labor deal, although some are in negotiations. By RACHEL BECK AP Business Writer NEW YORK All the reasons are there for companies to ramp up spending, but that doesn't mean commitment-phobic executives are ready or willing to boost their buying budgets just yet. For almost two years, there have been expectations for an imminent upswing in capital expenditures.

Then came the war in Iraq, volatility in the stock market and a slow economic recovery, all of which rattled corporate confidence enough to hold down spending. And now there is again big talk about a likely spending surge. Take the Commerce Department report last week that showed factory orders rising in July for the third monthly increase in a row. Good news? It certainly was. But can that run continue? We will believe it when we see it.

Should capital spending take off, it would be a welcome development. Consumers, who have mostly fueled the economic recovery with the excessive buying, are showing some signs of pulling back. That isn't to say that they have called it quits, but with debts mounting, gas prices rising and jobs still hard to find, they are starting to feel pinched. A report issued by The Conference Board reflected just that, with consumer confidence tumbling last month for the first time since February. New retail sales data also shows some softening in their spending, with Wal-Mart Stores Inc.

the industry bellwether having its weakest performance last month since December 2000. For the economy, this is bad news because consumer spending makes up two-thirds of its activity. Businesses, therefore, need to pick up the slack. There are plenty of reasons why they should be ready to buy again. To start, many companies haven't made significant purchases since the booming days of the late 1990s, so it's time to replace or repair their older equipment and facilities.

And they have ample cash on hand to cover costs. The financing gap the difference between capital spending and corporate cash negative last year and continues to go that route. It was a whopping negative $62.8 billion in the first quarter, the most recent data available from the Federal Reserve. In addition, there are incentives for corporations to spend. Under a.

use-it-or- lose it provision in Bush's 2003 tax cut plan, companies can write off 50 percent of a capital investment when it's bought, thus reducing their tax bill. But they have to make their purchases by year-end. With such factors in mind, ratings- agency Standard Poor's is forecasting that capital expenditures for companies in its 500 stock index will be up 5.53 percent in 2004 from a year ago, reversing two years of massive cutbacks. Those gains were reaffirmed by a new survey by The Business Roundtable, an advocacy group of chief executives from some of the nation's biggest companies. It found that 49 percent expect capital spending to rise over the next six months, up from 44 percent in June.

But even though there are expectations for spending to soar, that doesn't mean it will. For instance, should higher oil and commodity prices remain, it could hold buying down. Lehman Bros, chief U.S.. economist Ethan Harris worries that there are some indications that capital spending isn't taking off; He points to core capital goods orders, the best leading indicator of equipment spending. They rose 0.6 percent in July but were roughly flat over the last three months and have stopped accelerating on a year-over-year basis, according to data from the Commerce Department.

Shipment of these goods have also softened. "As the consumer slows, it is impor- tant that the business sector take the baton with strong hiring and capital spending," Harris said. "The question is whether they can carry the load." Only adding to the pressures on already gun-shy executives is the resistance of money managers to letting corporate cash go toward capital spending. An August survey by Merrill Lynch of nearly 300 mutual fund managers found that 41 percent of respondents wanted companies to use cash for stock buybacks and dividend payments, topping the 31 percent who preferred increases in expenditures. So it seems that at least one class of big investors wants to line its own poek- etbooks rather than encouraging companies to spend, thus helping the economic recovery gain better footing.

That's something to remember next time the stock market is rattled by weak economic news. Rachel Beck is the national business columnist for The Associated Press. LOCAL STORE CATERS TO SCOUTS Quiiuy Dully Journal Mac Nab'8 Men's Wear, located at Hi N. State Street, has been the sole provider of Boy Scout uniforms and supplies In Lake and Mendoclno counties since the 1940s. BUI (left) and Sandy (right) Mac Nab continue a tradition that started with their grandfather John J.

Mac Nab In 1904..