The Los Angeles Times from Los Angeles, California • Page 45

2003:03:06:21:59:23 biggest annual gain since 1950, the department said. productivity gains like these, not surprising that hiring was so in recent months, said Joel Naroff of Naroff Economic Advisors in Holland, Pa. Meanwhile, in a sign of hope that the struggling manufacturing sector may have started off this year with some momentum, factory orders in January posted their biggest gain since last summer, a Commerce Department report Thursday showed. Factory orders rose 2.1% to a seasonally adjusted $327.1 billion in January, after a revised 0.3% gain in December. The latest increase was the biggest since a 4.4% gain in July 2002.

Orders for durable goods those meant to last at least three years rose 2.9%. But the Institute for Supply report early this week on February manufacturing activity showed the sector slowed again. A Federal Reserve report confirmed the trend. From Reuters New claims for jobless benefits rose last week to the highest level since December, the government said Thursday, in a report that probably heralds a surge in the February unemployment rate. In other economic news, the Labor Department said U.S.

worker productivity rose last year at the fastest clip since 1950 as wary businesses extracted more from their workforces a trend that has apparently lingered this year, based on the jobless rolls. Aseparate report showed new orders to manufacturers in January posting their biggest monthly gain since mid-2002 on the back of auto sales. The Labor Department said initial jobless claims jumped by 12,000 to a seasonally adjusted 430,000 for the week ended March 1, the highest level since December. The department said some of the increase was due to a rise in claims from workers affected by winter storms in the East in recent weeks. The four-week average of claims, seen as a better gauge of labor conditions because it irons out weekly gyrations, rose to 408,750 from 400,000, also the highest since December.

The jump in claims the fragility of labor market said Anthony Chan, economist at Banc One Investment Advisors in Columbus, Ohio. certainly confirm the view that the economy is not creating, on balance, any new jobs at the Chan said. Economists will look to the February payrolls report today for a clearer view of the job market. Growth in payrolls outside the farm sector is expected to be meager at best. The overall unemployment rate is expected to increase to 5.9% from 5.7% in January.

of it is weather-related and part of it is the said Avery Shenfeld, an economist at CIBC World Markets. Experts note that layoffs can become self-perpetuating in a weak economy as businesses find they can do as much or more with fewer people. To that point, the Labor Department said the hourly output of workers outside the farm sector increased by 0.8% in the fourth quarter, a big improvement from the 0.2% fall previously reported. For the year, nonfarm productivity advanced by 4.8%, the Jobless Claims Climb; So Does Worker Output Factory orders New orders, seasonally adjusted Los An eles Times Source: Commerce Department (In billions) JFMMAJJASONDJ 200 225 250 275 300 325 $350 January: $327.1 billion Report hints at increase in unemployment rate for February. Separately, manufacturing orders surged in January.

By P.J. Huffstutter Times Staff Writer Auction giant EBay Inc. announced Thursday that it plans to close its Half.com Web site late next year, changing its approach to competing with rival Amazon.com Inc. in the growing category of used books, music, movies and other entertainment products. Half.com founder Josh Kopelman also said he would leave the company, which has its headquarters in Plymouth Meeting, on April 15.

San Jose-based EBay, the largest auction site, bought Half.com in 2000 in a stock transaction valued at nearly $214 million. The deal, made after the dot- com bubble had burst, was a gamble by EBay to expand its business to include features offered by one of its biggest Internet peers, Amazon. Half.com’s Web site resembles an online flea marketwhere goods can be bought and sold at fixed prices. Most of its users are small businesses and individuals looking to trade used or new books, CDs, movies and video games at half the list price. EBay spokesman Kevin Pursglove said Half.com’s site had become redundant to the parent efforts, given the rise in entertainment-related sales that EBay had seen on its own site.

game plan has been to merge the two operations, so that buyers have one place to go, and so do Pursglove said. Indeed, own site has begun to attract some of the same shoppers as Half.com, in part because the auction site added features such as fixed- price purchases. Pursglove said EBay merchants sold $1.2 billion of entertainment products last year. Efforts to expand Half.com into other categories such as athletic gear and fine jewelry stalled. Founded in 1999, Half.com gained fame in May 2000 when it persuaded officialsin tiny Halfway, to change the name to Half.com for one year.

Despite complaints from many residents who considered it a marketing gimmick, the city erected a sign: to Half.com, Oregon, first dot-com AHalfway City Hall spokeswoman said Thursday that the town now is officially back to its original name, EBay officials said they expect to offer some Half.com employees, a small group mostly in the Philadelphia area, jobs in other parts of EBay, while others probably will be laid off with severance packages. Associated Press was used in compiling this report. EBay to Shut Its Half.com Operation The Web auction giant says it will roll the discount unit, a site formed to compete with Amazon, into its main business next year. From Reuters Ahefty percentage of major U.S. companies failed to accurately predict the cost of health insurance in 2002, and most see the spiral of health-care inflation becoming more dire in coming years, according to a poll released Thursday.

Of the 434 employers polled, said they miscalculated the escalating costs of employee health care last year despite heightened publicity about soaring prices, according to the Kaiser Family Foundation survey. is so hard to be able to predict as costs said Doris Powers, a spokeswoman for health benefits at General Motors the biggest private U.S. buyer of health care, with 1.2million employees and their dependents and retirees to cover. Companies point to greater use of expensive technologies and rising prices of drugs and hospital care. GM, for example, spent on health care last year of that on prescription drugs.

costs increasing even higher than anticipated, and little confidence they can do much to stem the rising tide, most employers are relying on fixes, said Helen Darling, president of the Washington Business Group on Health, a nonprofit organization that focuses on heath issues faced by 165 companies. Short-term fixes includes jacking up co-payments and cutting benefits, she said. Health-care costs have emerged as a hot-button issue between companies and employees, setting off a series of disputes at General Electric Hershey Foods Inc. and Lucent Technologies among others. About of the companies polled said they are not at all confident or not very confident in their skills at taming costs.

Some employers are taking consumer-oriented approaches to help solve the problem, the report said. Xerox Corp. offers one such plan. It has set up savings accounts from which workers can withdraw money for medical care. About 3,000 employees signed up this year.

Larry Becker, director of benefits for Xerox, said a big part of the cost dilemma stems from a lack of disclosure of data so insurers and patients can rank hospitals and doctors by quality. the of hospitals and doctors to oppose such efforts to disclose information, Becker said. Health Cost Errors Found A poll finds that of the companies responding say they miscalculated medical premiums amid a rapid escalation in prices. Associated Press BIG EXPENSE: Drugs make up a large share of medical costs. One-third of medical expenses last year were for drugs.

subject executive severance packages to a direct shareholder vote. The nonbinding resolution won to Such proxy votes hardly ever win majority support when opposed by management, as this one was. Aproposal to reappoint PricewaterhouseCoopers as auditor passed to The firm knew about some of the transactions that led to criminal charges against Kozlowski, ex-finance chief Mark Swartz and former general counsel Mark Belnick, New York prosecutors have said. shares fell 32 cents to the New York Stock From Times Wire Services Shareholders of Tyco International Ltd. voted overwhelmingly Thursday to keep the company based in Bermuda and to keep the outside auditor, defying calls for a shake-up at the conglomerate.

About of investors who voted rejected the plan, Tyco spokesman Gary Holmes said at the annual meeting in Bermuda. Stockholders also reappointed Pricewaterhouse- Coopers the auditor under L. Dennis Kozlowski. Kozlowski was ousted last year as chairman and charged with looting the company. In addition, 10 new directors were elected to board, including current Chairman Edward Breen.

No directors who served under Kozlowski remain. The board, which meets for the first time today, was approved by a vote. Those shareholders unhappy with scandals involving top management scored a victory with the approval of a resolution to Exchange. Last year, Tyco shares plummeted amid the scandal. But analysts were quick to point out Thursday that of the shareholders wanted Tyco to be based in the U.S.

once more, demonstrating growing impatience with the Bermuda charter. The California Public Retirement System, the largest U.S. pension fund, and other investors contend that U.S. incorporation would give shareholders more protection against executive dishonesty. Tyco incorporated in Bermuda in 1997 when it bought ADT Ltd.

The charter saves Tyco as much as $280 million a year in taxes, according to Institutional Shareholder Services. Even though the Bermuda and auditor resolutions were defeated, their support among shareholders exceeded expectations, said Richard Ferlauto, a director of policy for the American Federation of State, County and Municipal Employees. AFSCME was among those to propose Tyco leave Bermuda. are not hedge funds, we are not short sellers. We are simply asking you to come back to Ferlauto told Breen.

Breen, hired in July to replace Kozlowski, promised shareholders to study requests to move the company. Tyco Shareholders Like Bermuda Investors reject calls to incorporate the firm in the U.S. and to replace its outside auditor. But a resolution on executive severance passes. Associated Press ON BOARD: Chairman Edward Breen is elected.

From Reuters ICN Pharmaceuticals Inc. on Thursday reported a fourth- quarter loss versus a year-earlier profit as it took charges to consolidate after years of geographic expansion spearheaded by retired founder Milan Panic. ICN, based in Costa Mesa, had a loss of $100.7 million, or $1.20 a share, compared with a profit of $33.5 million, or 40 cents ashare, a year ago. Excluding one-time items, ICN reported a profit of 11 cents ashare for the latest quarter. Wall Street analysts on average had expected a profit of 10 cents, according to Thomson First Call.

Revenue rose nearly to $199.6 million on increased royalties from higher sales of its hepatitis drugs. ICN a year ago partially spun off Ribapharm Inc. in an initial public offering. Ribapharm makes ribavirin, an antiviral drug sold by Schering-Plough Corp. as part of its combination treatment for hepatitis C.

ICN said it expects to earn $1.20 to $1.25 a share for 2003. Analysts on average expect $1.10. On Thursday, shares of ICN fell 7cents to $9.31 on the New York Stock Exchange. ICN Posts Loss on Charges to Consolidate BUSINESS OC C3 LOSANGELESTIMES THE ECONOMY Mortgage Rates Drop to Record Lows U.S. 30-year mortgage rates averaged 5.67% in the week ending today, breaking the previous record low of 5.79% set last week, mortgage company Freddie Mac said.

Fifteen-year mortgages averaged 5.01%, down from the previous record of 5.14% set last week. Freddie Mac said lenders charged an average of 0.6% in fees and points on 30- and 15-year mortgages, unchanged from last week. From Reuters U.S. Net Worth, Borrowing Up U.S. households were a tad richer in the fourth quarter as arebound in the stock market and continued home-price gains offset the sharpest rise in mortgage debt liabilities since 1987, the Federal Reserve said.

Net worth for households and nonprofit organizations totaled $39.1 trillion in the fourth quarter, up from in the third quarter, the Fed said. The 2.3% advance was the first rise in household wealth since the first quarter of 2002. Household borrowing rose 10.7%. From Reuters TECHNOLOGY Intel Warns Revenue Might Drop 2.7% Intel Corp. said its first- quarter revenue could fall 2.7% from a year earlier amid sluggish sales of flash memory chips used in portable devices such as cell phones.

The Santa Clara, firm said first-quarter sales would be flat at best, ruling out the rebound in demand it earlier had indicated could be possible. Intel narrowed its expected first-quarter sales range to $6.6 billion to $6.8 billion. The previous forecast was $6.5 billion to $7billion. Intel shares fell to after-hours trading from a close of $16.70 on Nasdaq. From Reuters EA to Create Games for GameCube In a critical boost for Nin- tendo GameCube console, Electronic Arts Inc.

said it plans to develop 20 games for the platform over the next two years. Sales of the GameCube have lagged behind rival consoles, including the Xbox made by Microsoft Corp. and the PlayStation 2 from Sony Corp. Launched in November 2001, Nintendo has sold 3.7million GameCubes in North America versus 17 million PS2s and 5.4million Xboxes. EA games are considered key to a survival.

Its decision not to make games for Sega DreamCast was widely viewed as a factor in that demise. EA shares rose $1.15 to Nasdaq. Pham Suit Alleges IBM Is Abusing Trade Secrets IBM the second-biggest software maker, is misappropriating trade secrets related to the Unix operating system, the company that owns the rights to Unix claims in a lawsuit. Lindon, Utah-based SCO Group which purchased the rights to Unix in 1995, is seeking at least $1 billion in damages. The suit, filed Thursday in Utah state court, contends that IBM improperly transferred elements of its AIX version of Unix into Linux software.

IBM has been phasing out its AIX version of Unix in favor of Linux in many of its products. IBM pushes Linux as a low-cost alternative to Microsoft Windows operating system. Joe Stunkard, a spokesman for Armonk, N.Y.-based IBM, said the company had not yet seen the lawsuit and declined to comment. IBM shares fell 66 cents to the New York Stock Exchange. From Bloomberg News 8 National Semiconductor Corp.

said its third-quarter loss narrowed to $36.4 million, or 20 cents a share, from or 21 cents, a year earlier. Sales rose 9.4% to $404.3 million, the Santa Clara, firm said. ENERGY Examiner Says Enron Hid Its Condition Enron Corp. inappropriately counted $5 billion it raised in the four years leading to its December 2001 bankruptcy filing with the knowledge of two major banks that played in the transactions, a court-appointed examiner said. Atlanta attorney Neil Batson, appointed by the Bankruptcy Court to examine En- ron, said in a report that Enron repeatedly misrepresented its financial condition using a handful of accounting techniques to disguise loans as income.

Batson wrote that Citi- bank, a unit of Citigroup and J.P. Morgan Chase Co. helped Enron devise the strategies known as The banks deny anything was wrong with their relationships. From Associated Press 8 Credit Suisse First Boston investment banking chief Adebayo Ogunlesi and six other bank executives have been subpoenaed to testify about transactions they performed for Enron Corp. FINANCE Visa to Mask Credit Card Numbers Visa USA said it will require merchants that accept Visa payments to display only the last four digits of a card number on receipts in an effort to thwart a surge in financial identity theft.

New terminals that process payment by Visa cards will be outfitted with the information-masking function beginning in July, the company said. Visa wants all merchants accepting Visa card payments to remove the first 12 digits of the card number and its expiration date from receipts by July 2006. From Reuters ENTERTAINMENT Blockbuster Wins Suit Over Late Fees Blockbuster Inc. said a California judge ruled in the video favor in a lawsuit over late fees. An Alameda County Superior Court judge found that late fees were not a penalty and up to consumers whether to keep rented videos beyond the initial rental period, Dallas- based Blockbuster said.

The ruling by Judge Ronald M. Sabraw came in a lawsuit filed by Sharon Pickens, who objected to late-fee policy. Blockbuster has been hit by many class-action lawsuits accusing it of making unfair profit with late fees, which accounted for of the revenue in 2000. From Associated Press AUTOMOBILES Ford Wins Calif. Acceleration Case Ford Motor Co.

was cleared of responsibility by a jury in a case in which a California woman claimed the cruise control on her Ford Taurus malfunctioned. Plaintiff Carolyn Watts said an electrical charge activated the cruise control after she shifted into reverse. The car accelerated out of her driveway, across the street and into a house, permanently damaging one of her legs. Ford said the acceleration was caused by driver error. Her attorney said Watts will appeal.

Shares of Dearborn, based Ford fell 31 cents to $7.45 on the NYSE. From Bloomberg News IN BRIEF Of the 101 largest publicly traded companies in Orange County, these 10 made the biggest change in price Thursday. Bridgford Micro Wet Ista Capital ICU New Horizons Collectors Biggest GainersBiggest Losers Last saleLast Bloomberg Orange County Index: 236.60 An index of Orange County companies, based on a value of 100 calculated on Dec. 29, 1994 Los Angeles Times Orange Countystock watch.