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"I am very sad that I will miss the holiday seasons." -- Martha Stewart, asking to serve and finish her five-month prison sentence as soon as possible Sure, the labor market remains sluggish, and plenty of U.S. tech workers still can't find good jobs. But that hasn't dampened employers' appetite for foreign workers: Companies are close to using up next year's allotment of H-1B visas for skilled foreigners.
Employers filled this year's quota by April and were allowed to apply early for the 65,000 H-1B visas that will become available in fiscal 2005, which begins Oct. 1. So far nearly 46,000 petitions for 2005 have come in, says U.S. Citizenship & Immigration Services. So it's likely that the 65,000 cap will be met even before the new year.
Foreign work visas have provoked fierce debate. In 2000, workers' groups unsuccessfully fought a temporary hike in H-1B visas, to 195,000. But that hike expired this year, and the cap dropped back to 65,000. Employers have lobbied for another boost, but with jobs a key election issue, a bill in Congress is likely to remain idle for now. As the election draws near, the AFL-CIO has found what it believes are financial shenanigans at a building trade group. BusinessWeek has learned that the union is asking the Internal Revenue Service and the Labor Dept. to investigate financial practices at 19 chapters of Associated Builders & Contractors (ABC), which supports GOP causes.
ABC has 80 chapters and 23,000 members, mainly construction businesses. Each chapter has an independent nonprofit trust to train new workers. In a review of ABC's records, the AFL-CIO says it found that some chapters seem to be charging the trusts inflated fees, taking inappropriate loans from the trusts, and failing to disclose other financial transactions. The fees paid to one Florida chapter grew more than 13-fold over a five-year period even as student head count rose by less than 70%, records show. A chapter official says the cost increase was the result of program changes.
Edward Sullivan, president of the union's Building & Construction Trades Dept., says, "it now appears these programs are more valuable... as a source of money for their activities than for workforce training." In 2004, ABC gave $1 million to GOP congressional campaigns.
If the allegations hold, ABC chapter employees could face fines, loss of nonprofit status, or even jail time. CEO Kirk Pickerel calls the charges a "political smear campaign." He says the records examined by the AFL-CIO aren't detailed enough to support the union's conclusions.
The AFL-CIO and ABC clash on a number of issues, such as union-only labor on federal contracts. No wonder the union is eager to keep the heat on. With damages from Hurricane Ivan yet to be tallied, companies with a large presence in Florida are still reeling from two earlier storms.
Hurricanes Charley and Frances left a combined $30 billion in damages, according to Wachovia. And Hurricane Ivan added to the devastation. Hundreds of millions of dollars of the tab for damages will be picked up by just a few insurance companies. Allstate (ALL
), Chubb (CB
), St. Paul Travelers (STA
), and Hartford (HIG
) have estimated that they will pay out in total some $600 million from Charley alone.
The earnings damage was not limited to underwriters, however. Wal-Mart Stores (WMT
) closed 150 of its outlets during the storms, hurting sales in the affected areas. Federated Department Stores (FD
) blamed Frances for a $20 million drop-off in September sales, and Office Depot says profits for the rest of the year will fall short of forecasts because of the storms. After canceling hundreds of flights on Labor Day weekend, AirTran Airways (AAI
) warned that it would be posting a third-quarter loss.
Companies that depend on the tourist trade naturally took a hit. Walt Disney (DIS
) says the temporary closure of its Orlando theme park during Frances could cost the company as much as $45 million in pretax earnings. Carnival (CCL
) says Frances forced it to cancel three cruises and shorten six others. The cruise line warned analysts to trim 3 cents to 4 cents off earnings estimates for the fourth quarter ended Nov. 30.
Some companies may actually benefit from the storms. Home Depot (HD
) and Lowe's (LOW
) are both seeing strong demand as householders start to rebuild after boarding up. Other businesses should be so lucky. A pioneer of the widely used prostate specific antigen (PSA) screening test for cancer now says it is "all but useless." In 1987, Dr. Thomas Stamey of Stanford University found that rising PSA levels could be linked to prostate cancer. But in a new study in October's Journal of Urology, he says PSA levels indicate only the size of the prostate gland. The test's ability to predict cancer can be as low as 2%. Until a better test comes along, he says men over 50 should have a digital rectal exam yearly. Some experts worry that PSA tests have led to needless treatment -- such as radiation for tiny tumors that could have been left alone. Here's a piece of advice budding billionaires could get on Mark Cuban's new ABC (DIS
) reality show, The Benefactor: Ditch your DVDs. Cuban, the dot-commer turned NBA team owner, also owns a high-defi-nition TV network, HDNet, and he's busy buying content, from old sitcoms to low-budget movies shot in high-def.
Soon he'll start offering those shows to home libraries -- but not on DVD. Cuban, 46, prefers hard-disk drives because they hold more, are dropping in price, and are re-recordable. "Hard-drive distribution will become a no-brainer," says Cuban, whose show premiered on Sept. 13.
Industry experts say DVDs are here to stay. But Cuban predicts that soon you'll be able to buy a high-def movie on a pocket-size hard drive that plugs into a laptop or TV. On DVD that would take five disks. New movies could be downloaded at airport or mall kiosks. "He's defining new opportunities to make money," says In-Stat/MDR analyst Gerry Kaufhold. Maybe Cuban really is a benefactor. How many times can a mogul sell his empire? Kirk Kerkorian's pending sale of Metro-Goldwyn-Mayer (MGM
) to a consortium led by Sony (SNE
), is the third time the 87-year-old billionaire has sold the fabled studio. In all, the deals have earned him profits in the neighborhood of $3 billion.
Kerkorian, who controls a 73.6% stake in MGM, is expected to collect nearly $2.1 billion if Sony's $12-a-share bid is completed. With an estimated cost basis of $8 a share for his 174 million shares, according to MGM, that's a hefty $700 million profit. That's on top of $1.4 billion he collected from a one-time $8-per-share dividend MGM gave shareholders in May.
MGM has been the gift that keeps giving ever since the reclusive dealmaker first won the studio in a 1969 proxy battle. He made his first sale to Ted Turner in 1986, for $1.5 billion, netting $480 million for his 50.1% stake. He then spent $300 million to buy back the United Artists studio, MGM's home video unit, and the rights to MGM films such as Moonstruck, A Fish Called Wanda, and the TV series Fame. In 1990, Kerkorian sold the rebuilt MGM again, this time for $1.3 billion to media concern Pathe Communications. He regained possession in 1996 after Pathe's bankruptcy.
Add the profits from a casino spin-off and sale, and Leo the Lion has put plenty of cash into Kerkorian's account over their 35 years together.