Executive Business Briefing

Oct. 4, 2002 at 11:47 AM
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Here are some of the top business stories for Friday

Asian stocks end mixed; Tokyo pulls higher

SINGAPORE, Oct. 4 (UPI) -- Asian stock markets ended mixed Friday, but Tokyo managed to break its losing streak on bargain hunting and short covering.

The Nikkei 225 Stock Average rose 1 percent to 9027.55, with interest in automakers and pharmaceuticals lending support. Honda gained 2.3 percent, while Toyota added 1.3 percent. The banking sector remained under pressure, having been heavily sold off on Thursday. UFJ Holdings lost 4.8 percent and Sumitomo Mitsui Banking 4.6 percent.

In Hong Kong, the Hang Seng Index managed to claw back above the 9,000 level, up 0.8 percent to 9,051.37, supported by property stocks. But investors remained concerned that a prolonged U.S. ports' lockout could start to affect the economy.

Property stock New World Development rose 2.5 percent, while Sun Hung Kai Properties gained 2 percent. Hutchinson continued to fall after it postponed a Euro bond issue and news of a writedown by Japan's NTT DoCoMo -- its British partner -- of its 3G investments.

In Singapore, banking shares led the way higher for the Straits Times Index, which ended 1.15 percent higher at 1,367.57. DBS Holdings rose 2.65 percent, United Overseas Bank 2.59 percent and OCBC Bank 1.04 percent.

In South Korea, the Kospi index rose 0.4 percent at 650.92 with reported foreign buying of futures contract supporting the spot market. Samsung Electronics added 2.2 percent, SK Telecom rose 3.6 percent.

The Stock Exchange of Thailand Index rose 1.3 percent at 340.92 as the market reacted positively to the Cabinet reshuffle announced Thursday. Siam Cement rose 4.3 percent, while Shin Corp. jumped 4.7 percent.

But in Taiwan, the main index closed down 0.2 percent at 4067.79, with technology shares remaining under pressure. The Malaysian weighted Composite Index lost 0.4 percent at 644.09 points, while the 30-company Philippine Stock Exchange Index ended down 0.2 percent at 1101.64.

Dock shutdown hurts Action Performance

LOS ANGELES, Oct. 4 (UPI) -- Action Performance Cos. Inc. will not be able to book about $5.7 million in revenue for its fourth quarter ended Sept. 30 because of the backup in shipping caused by the lockout of longshoremen at dozens of ports on the West Coast.

The company, which designs, promotes, markets and distributes licensed motor-sports merchandise, including die-cast replicas, apparel and souvenirs, said it would have met its fourth quarter revenue guidance of about $116 million if not for the port closings.

Action's Chairman and Chief Executive Officer Fred Wagenhals, however, said he expects the company can still achieve its double-digit growth estimates for revenue, earnings and cash flow for fiscal 2003. Based in Phoenix, Action Performance expects to record the delayed revenue in its fiscal first quarter.

"Based upon preliminary revenue information, were it not for the labor issues, revenue would have met our guidance for the fourth quarter ending Sept. 30," said David Martin, Action's chief financial officer. "This is simply a shift in the timing of revenue recognition." In a statement, the company said product made in China for Action Performance and already sold by the firm, remained in containers or on ships in the port of Long Beach. The product cannot be booked as revenue until it is unloaded by union longshoreman and loaded onto trucks for shipment to distributors.

Port officials say even if the lockout at 29 West Coast ports, which is in its fifth day, were ended Thursday it would take roughly two weeks to clear the backlog of containers and vessels.

"We have close to 90 ships at the two ports in Los Angeles and Long Beach, and buy the weekend 40 more ships are expected," said Art Wong, spokesman for the Port of Long Beach. "It takes roughly two days to unload each ship." The ports in California, Oregon and Washington handled about $300 billion in cargo in 2001, much of which is headed for retailers importing goods from Asia. Wong said the Port of Long Beach handled $95 billion in cargo last year. The ongoing dispute between the International Longshore and Warehouse Union and the Pacific Maritime Association, which runs the West Coast shipping ports, also has caused costly interruptions to various other U.S. industries. The PMA locked out almost 10,600 dockworkers at all West Coast ports Sunday, claiming workers had engaged in an illegal slowdown after failing to extend their expired contract.

The question of whether or not ports can use technology for both shipping and tracking deliveries has the ILWU fearing that some 600 jobs, or 6 percent of its workforce, could be lost. For the PMA, the procedural updates could triple the rate of arrivals that are processed.

In Fremont, Calif., the dispute has shut down the only vehicle production line west of the Mississippi.

New United Motor Manufacturing Inc. stopped truck production on Wednesday as its supply of auto parts sat idle in cargo holds at the Port of Oakland. The plant has also stopped assembling General Motors and Toyota cars. The plant employs about 5,500 workers, including 4,400 hourly workers represented by the United Auto Workers. Steve St. Angelo, vice president of manufacturing at NUMMI, said there were no plans for layoffs. The lockout has affected the California agriculture industry, as fruits and vegetables sit in containers rotting. Unable to move any cargo for days, thousands of independent truckers have been forced to wait around at transfer stations, hoping for a settlement.

Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., said the dispute has cost some 6,000 independent truck drivers in Los Angeles an estimated $2.7 million a day in lost wages, which they will never be able to make up.

"This is quickly becoming a very serious economic problem," said Kyser. He also warned that a prolonged lockout could have a negative effect on consumer confidence, which could do further damage to already shaky economy. Tom Williams, a spokesman for Wal-Mart Stores Inc., said the nation's largest retailer is concerned about the impact the lockout will have on consumers, and in turn the company if the dispute causes shoppers to curtail their expenditures.

"For the near-term we are able to take care of our customers," Williams added. "If this goes on for any length of time it is going to cause some great strains on supply." He said Wal-Mart had accelerated some shipments in anticipation of a lockout or strike.

Based in Bentonville, Ark., Wal-Mart, with almost 2,800 stores nationwide, is the biggest importer at West Coast ports, according to the PMA.

Alcoa profit drops sharply

PITTSBURGH, Oct 4 (UPI) -- Alcoa announced Friday that its third quarter 2002 profit was $193 million, or 23 cents per share, after a special after tax charge of $23 million relating to curtailment of production in the company's primary smelting operations. This compared with $232 million, or 27 cents per share in the second quarter of 2002 and $339 million, or 40 cents per share in the third quarter of 2001. Sales for the quarter were $5,222 million, down 6 percent from 2001's third quarter. Chairman and CEO Alan Belda said "despite lower aluminum prices and idle capacity, our alumina and primary metals businesses performed well. These upstream businesses partially offset continued weakness in the aerospace, industrial gas turbine and telecommunications markets."

The results were in line with analysts' expectations.

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