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JULY 12, 2004
Edited by Monica Roman HEADLINER Glenn Tilton: Flying On Fumes  For bankrupt UAL (UALAQ
), parent of United Airlines, there was no charm the third time with the Air Transportation Stabilization Board. On June 28, CEO Glenn Tilton got the bad news: The panel again rejected the company's request for federal loan guarantees, even though the amount had been cut to $1.1 billion. Case closed.Now Tilton, a former TexacoChevron (CVX ) vice-chairman who took the helm at UAL in 2002, must go back to employees and vendors for another round of painful cost-cutting. That's after already slashing $5 billion annually, about a third of United's expenses. He may even have to attack one of labor's sacred cows -- pensions -- hurting worker morale at the nation's second-largest carrier. With sky-high fuel costs and rapidly growing discount carriers holding down fares, Tilton doesn't have much room to maneuver. Some question whether he can keep his job if a major equity investor comes to the rescue. For now, he has no choice but to roll up his sleeves and get back to work. By Wendy Zellner A Burdened Halliburton The bad news just keeps flowing from Halliburton (HAL ). This time it has nothing to do with controversial government contracts in Iraq. On June 29, the Houston-based oil services giant said it would take charges totaling $815 million in the second quarter because of further setbacks on an offshore project in Brazil and lower-than-expected asbestos insurance recoveries. The $615 million write-off related to asbestos was expected. But analysts were caught off guard by an additional $200 million charge for the troubled drilling platform project, which to date has racked up at total of $715 million in charges. Although the charges are considerable, Standard & Poor's analyst Andrew Watt says the company has "adequate liquidity" to handle them. Halliburton had $1.9 billion in cash as of Mar. 30.   Freddie's Frenetic Year  Steady Freddie is no more. The era of predictable earnings by Freddie Mac (FRE
), the housing finance company, is officially over with its June 30 revelation that 2003 earnings plummeted 52%, to $4.9 billion. But it was no ordinary year, notes Chairman and CEO Richard Syron, who took over after last year's accounting scandal forced out several top officials. Freddie's earnings are likely to be volatile in the future, too. Much of the earnings hit came from lower values on derivatives used to hedge interest-rate risk. Freddie previously used accounting tricks to smooth over such swings -- tricks that new management, new auditors, and a newly aggressive regulator won't condone.Nortel Won't Roll Its Own Nortel Networks (NT ) is leaving the manufacturing game. Singapore-based outsourcing giant Flextronics International (FLEX ) will acquire Nortel's plants in Canada, Brazil, France, and Northern Ireland. By selling the plants, the Canadian telecom equipment giant will reap between $675 million and $725 million. The cash will come in handy as Nortel cleans up its accounting mess. The company said it would update the restatements of financial results from previous years by late July. It will also release limited preliminary audited results for the first half of 2004 by mid-August. Office Depot's Offensive The office-supply superstore wars are heating up. Office Depot (ODP ) is planning its first major invasion of the Northeast, long dominated by industry leader Staples (SPLS ). After several years of modest store growth, Office Depot now plans to open 100 stores annually, with about half of those in the Northeast. It is also moving to a new store design that will feature smaller, better organized, and more colorful stores. It's an effort to close the gap with Staples, which has revamped many stores, and has been posting stronger sales. But with a market value less than half that of Staples, Office Depot has a ways to go. Et Cetera... -- Fidelity Investments Vice-President Charles Fishkin will head the SEC's new Office of Risk Assessment. -- A U.S. appeals court rejected Massachusetts's bid to overturn Microsoft's (MSFT ) antitrust settlement with the federal government. -- Bank One (ONE ) will pay $90 million to settle allegations of improper mutual-fund trading. Closing Bell: Research In Motion  Research in Motion (RIMM
) is on the move. Shares of the company, which makes BlackBerry e-mail wireless devices, rose 14.2%, to $91.36, on June 30. The reason? RIM posted higher than expected earnings and raised its forecast, thanks to strong subscriber growth.
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