For weeks, it looked like the appointment of John Biggs as chairman of the new Public Company Accounting Oversight Board was a done deal. Sources say Securities & Exchange Commission Chairman Harvey Pitt had informally offered the job to Biggs, who is the chairman of giant pension fund TIAA-CREF.
But opposition from accounting professionals and their Republican allies has put Biggs' appointment in jeopardy--prompting Pitt to deny on Oct. 1 that an offer had been made. Why? Biggs, 66, would be a tough chief cop at the board, which has a broad mandate to regulate the industry and discipline accountants. He was an early supporter of a ban on accounting firms doing consulting work for audit clients. And he testified before Congress on the need for just the sort of agency he would head.
House Financial Services Committee Chairman Michael Oxley (R-Ohio), whose panel oversees the SEC, is leading the anti-Biggs brigade. Still, Pitt may stick with Biggs. Backing out would invite fresh criticism that Pitt is soft on the accounting firms he represented. The new leadership team at AT&T (T) is nearly complete. On Oct. 2, AT&T tapped its consumer-division president, Betsy Bernard, to be president. Bernard will head the business-services division, network services, international operations, and AT&T Labs. She returned to AT&T 17 months ago from a stint at Qwest Communications. Bernard will report to Chairman and CEO-elect David Dorman, who will succeed C. Michael Armstrong, expected to leave when AT&T sells its cable-TV unit later this year. With WorldCom on the ropes, Bernard has a chance to boost the fortunes of the new, stripped-down AT&T. The Bush administration is warning drugmakers not to reward doctors in order to increase sales and not to mislead the government about drug prices. On Sept. 30, the inspector general of the Health & Human Services Dept. issued a draft "guidance" to the pharmaceutical industry suggesting that every company set up "effective compliance programs" to prevent such abuses. Among the practices that could be seen as illegal: paying bonuses to physicians or health plans to switch drugs; offering entertainment, consulting fees, or trips to doctors to influence prescriptions; or fudging data on the price of drugs to regulators and government reimbursers. The standards are voluntary and could still be changed after a comment period. But even public interest groups agree that the government is sending a signal that it will crack down more aggressively on abuses. Most technology companies may be in the doldrums, but Dell Computer (DELL) is on a roll. On Oct. 1, the pesky PC giant raised sales estimates for its third quarter, which ends Nov. 1. In August, the Austin (Tex.) company had predicted sales would jump 19%, to $8.9 billion, up from $7.5 billion a year earlier. Now, Dell expects its revenue for the quarter to climb 22%, to $9.1 billion. Dell's prosperity isn't coming from an uptick in demand for information technology. Instead, Chief Financial Officer Jim Schneider said it is gaining market share from rivals. Importers ranging from clothiers and toymakers to auto factories could find themselves empty-handed as goods from overseas languish at 29 West Coast ports. Shippers on Sept. 27 ordered a lockout of 10,500 dockworkers in a dispute largely over the use of new technology that the International Longshore & Warehouse Union contends will eliminate existing jobs and create new but nonunionized positions. Negotiations broke down Oct. 1, despite federal mediation. The fallout has been swift: While some tech outfits that move goods by air aren't feeling much pain, many other companies are already scrambling to divert shipments to other ports. Even though it has fallen short of projected sales gains in recent months, Wal-Mart Stores (WMT) is moving ahead with an aggressive expansion plan for its fiscal 2003, which starts in February. In the U.S., the company plans to open as many as 210 massive "supercenters" that combine groceries and general merchandise. It also intends to open up to 55 new discount stores, 25 Neighborhood Markets, 45 Sam's Clubs, and 130 stores in its existing international markets. Despite the difficult retail environment, analysts figure Wal-Mart stands a good chance of gaining market share, especially as discount rival Kmart flounders. -- KPMG Consulting will change its name to BearingPoint and will move to the Big Board.
-- Northwest Airlines (NWAC) wants 1,600 flight attendants to take voluntary leave for up to a year.
-- Comerica (CMA) restated second-quarter earnings, to $161 million from the previously reported $184 million. Guidant (GDT) shares skidded 15.5%, to $27.73, on Oct. 2, after the company lost a federal court battle with Boston Scientific over access to a drug-coated stent from Cook Group. Unless Guidant gets a stay of the Oct. 1 ruling, it says 2003 earnings will fall 9% below earlier forecasts, with sales down at least 20%.