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DECEMBER 22, 2003
Edited by Monica Roman James Owens: The Vet Running Cat  Caterpillar is ringing in the new year with a new chairman and CEO. On Jan. 31, James Owens, a 21-year company veteran first hired as a corporate economist, will take the throttle from Glen Barton. Barton reaches Cat's mandatory retirement age of 65 next August. But he said he wanted to leave early so Owens, 57, could get rolling closer to the year's start.Owens, who was named vice-chairman at the company's board meeting on Dec. 10, gets the top job as the heavy-equipment maker is finally pulling out of a stubborn slump. The Peoria-based company predicts revenues will rise 10% in 2004, to a record $23.9 billion. Profits will go up even more, with analysts forecasting a 33% increase, to $1.4 billion. But Owens, since 1995 a group president in charge of components and Latin American operations, among other things, will have his work cut out for him, too. Cat just opened contract talks with the United Auto Workers, which struck twice in the early 1990s. The current pact lapses on Apr. 1. By Michael Arndt Freddie Gets Fingered Mortgage financier Freddie Mac (FRE ) on Dec. 10 agreed to pay a $125 million civil fine after an accounting scandal that required a $5 billion restatement of 2000-02 earnings. Without admitting wrongdoing, Freddie signed a consent order with the Office of Federal Housing Enterprise Oversight that says it disregarded accounting rules and its own internal controls to manage earnings. OFHEO in part blamed potential rich rewards from stock options for the inappropriate conduct of several former Freddie execs. Freddie, meanwhile, announced on Dec. 7 that former American Stock Exchange Chief Richard Syron would become its new chairman and chief executive. But because the consent order requires Freddie to separate the two management jobs, Syron must begin a search to replace himself as CEO by 2006, at which time he will become executive chairman.   Moody's Pans The Gov  Moody's Investors Service (MCO
) downgraded California's debt rating to its lowest level in history, just three notches above junk status. The agency cited Governor Arnold Schwarzenegger's rollback of the state's controversial vehicle license fee as the main cause for the downgrade. The fee rollback will lead to a $7.5 billion widening of the state deficit over the next year and a half, according to Moody's. Schwarzenegger has proposed budget cuts, a spending freeze, and a massive $17 billion bond issue to help California out of its budget crisis. Democratic State Treasurer Phil Angelides called the Moody's downgrade "an ominous sign that California is headed for a financial meltdown." Fusion Energy At HP In a bid to sell more tech gear to corporations, Hewlett-Packard (HPQ ) on Dec. 9 combined its enterprise and IT-services businesses into a single unit. The change comes after HP's enterprise business posted a 5% decline in revenues, to $15.4 billion, during fiscal 2003. The reorganization should help HP present a cohesive image to corporate customers. Ann Livermore, the head of HP's services business, will run the combined unit. The move means more clout for Livermore, a 21-year HP veteran who is credited with spearheading the company's successful foray into high-end IT services. One Sizzling Chinese IPO The three-word recipe for a hot initial public offering in a market still wary of startups: e-travel, China, and profitable. Or so it seems from the 89% first-day jump in shares of Ctrip.com International (CTRP ), the Shanghai-based Web travel agency that went public on Dec. 9. At day's end, Ctrip was worth more than $500 million. That represents the largest first-day IPO pop since Dec. 12, 2001, when chip-design software company Nassda (NSDA ) closed up 104% on its first day of trading, according to Renaissance Capital of Greenwich, Conn.
Et Cetera... -- Former Wall Street Journal editorial page editor Robert Bartley passed away. -- Costco Wholesale (COST ) reported a 10% jump in profits for its first quarter. -- Search firm Korn/Ferry International (KFY ) posted its first profit in 10 quarters. Closing Bell: Washington Mutual  The share price of Washington Mutual slid 12%, to $38.57, in the two trading days ended Dec. 10, following its announcement that plunging mortgage demand would sharply reduce 2003 profits. The Seattle thrift plans to cut 2,900 jobs to help cut expenses by $1 billion.
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