TOP STORIES -- Jan. 11-16

Fastow, Wife Plead Guilty in Enron Case

Andrew and Lea Fastow, the onetime Enron Corp. power couple, pleaded guilty to fraud- related charges, opening the door for an insider’s tour of the failed energy firm’s misdeeds.

Andrew S. Fastow, the former chief financial officer who built Enron’s web of off-the-books partnerships to hide debt and boost profit, accepted a possible 10-year sentence. He pleaded guilty to conspiracy to commit wire and securities fraud.

Lea Fastow, a former assistant treasurer at the company, agreed to spend five months in prison. According to statements in court, she filed a false tax return involving $141,000 in income over four years from one of the illegal Enron partnerships.

Her husband promised to help prosecutors build a case against others at Enron, perhaps including former Chairman Kenneth L. Lay and former Chief Executive Jeffrey K. Skilling.

Lay and Skilling have maintained that they did nothing wrong.

Fastow agreed to pay nearly $30 million in restitution of profit he reaped from the off-balance-sheet partnerships.

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More Retirees to Face Fewer Health Benefits

More Americans are likely to learn in the next three years that they will retire without any health-care benefits, according to a survey of some of the largest U.S. companies.

Citing the rising costs of health care, 71% of 408 companies surveyed by the Kaiser Family Foundation and Hewitt Associates said they had made retired workers shoulder a bigger share of insurance premiums in the last year. About 10% said they had eliminated subsidized health benefits for future retirees, and 20% said they probably would eliminate them by 2007.

Kaiser, a nonprofit health policy organization, and Hewitt, a consulting firm, did not identify the companies surveyed but said they included 45% of the Fortune 100. Each of them has more than 1,000 employees.

Companies across a number of sectors -- including phone company SBC Communications Inc., computer services firm NCR Corp., and Tribune Co., a large media company and owner of the Los Angeles Times -- are shifting more health costs to retired workers.

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Tech Bellwethers More Than Double Earnings

In a hopeful sign for the technology industry, Intel Corp. and IBM Corp. said fourth-quarter profit more than doubled.

Chip maker Intel attributed the better-than-expected results to healthy equipment purchases by businesses.

Silicon Valley has been counting on a pickup in corporate capital spending to end the tech industry’s long slump.

The Santa Clara, Calif., company said earnings rose to $2.2 billion, or 33 cents a share, from $1.05 billion, or 16 cents, a year earlier. Revenue topped $8.74 billion, up 22%.

At IBM, earnings rose to $2.7 billion, or $1.55 a share, from $1 billion, or 59 cents, a year earlier. Sales rose 9.4% to $25.9 billion. The results from 2003’s final quarter included $1 billion in charges.

“I would characterize 2004 as the year when the information technology industry will begin its next growth cycle,” said IBM finance chief John Joyce.

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California Employers Shed More Jobs

California employers shed a net 8,400 jobs in December, capping three straight years of falling payroll employment -- the worst performance since the 1990s recession.

The jobless rate dipped one-tenth of a point to 6.4% but only because more workers dropped out of the labor force and thus were no longer counted as unemployed.

The report was discouraging to economists, who have been expecting an uptick in hiring, and unsettling to budget watchers who know that California can’t hope to emerge from its deep budget hole without an increase in payrolls and income.

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BMG Forces Out CEO of Arista in Shake-Up

Bertelsmann Music Group ousted Antonio “L.A.” Reid as chief executive of Arista Records, the label that has owned the top spot on the nation’s pop chart with its double CD from rap duo OutKast.

The move was BMG’s response to lackluster financial results at the New York-based label, once BMG’s biggest U.S. unit. The company did not name a successor to Reid, who sources said had about a year and a half remaining on his contract.

BMG, a unit of Germany-based Bertelsmann, said Arista would be managed by Executive Vice President Larry Mestel.

Sources said Reid’s exit could be the first step in a realignment of BMG’s domestic music division. Bertelsmann and Sony Corp. have proposed merging their music businesses. If that deal is approved, insiders suggest, Arista could be more easily combined with BMG’s Jive Records or another label.

A BMG spokesman said Reid’s departure was “unrelated to our proposed joint venture with Sony Music.” Reid could not be reached for comment.

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Home Prices Soar 23.7% in Los Angeles County

The Los Angeles County housing market is as hot as ever and prices are at new highs.

In December, the median home price hit $345,000. That was 23.7% more than the median of $279,000 a year earlier, said real estate data provider DataQuick Information Systems.

The year-over-year increases have exceeded 20% every month since July. Prices probably will continue to shoot up at that pace into the spring before “easing back to the mid-teens” by April or May, said DataQuick analyst John Karevoll.

The county’s median sales price for all of 2003 was a record $319,000, up 21.8% from 2002.

December sales remained brisk, rising 8.3% from a year earlier, with 11,059 new and used homes and condos trading hands. For the year, the sales tally of 125,907 was up almost 4% from 2002.

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Top 2 Spanish-Language Papers in U.S. to Merge

The two largest Spanish- language newspapers in the United States said they had joined forces to create a publishing empire that would compete with major media firms for Latino readers.

Executives said the merger of the parent companies of La Opinion, the dominant Spanish-language daily in Los Angeles, and El Diario/La Prensa, its New York counterpart, was the first step toward building a network of papers serving the nation’s fastest-growing minority group.

The combined company, to be called Impremedia, would be run by the Lozano family, which founded La Opinion in 1926, and investment group CPK Media, owner of El Diario/La Prensa. Terms weren’t disclosed.

Jose Ignacio Lozano, former publisher of La Opinion, would serve as vice chairman of the new company. He said it would have enough capital to begin buying existing weekly and daily newspapers across the country within the next 18 months.

Impremedia’s two newspapers combined have a daily circulation of about 175,000.

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Oscar Screener Films Show Up on the Internet

Downloadable copies of the films “Something’s Gotta Give” and “The Last Samurai” have turned up on the Internet, prompting an Academy of Motion Picture Arts and Sciences investigation and signaling a fresh setback in Hollywood’s battle against movie piracy.

The copy of “Something’s Gotta Give” available on the Internet carried markings -- some clearly visible, others hidden -- that identified it as having been from the videocassette sent to film and TV actor Carmine Caridi, said a person familiar with the academy’s probe.

The academy’s investigation could end with the expulsion of any member found to be involved.

Caridi, 69, would not comment. His commercial agent, Malcolm Cassell, said the actor had hired an attorney. Cassell said Caridi was “mightily embarrassed” about the situation and unhappy with the “angry and threatening” communications he received from the academy.

Time Warner Inc.’s Warner Bros., which distributed “The Last Samurai,” declined to say whether it had identified the source of the unauthorized copy.

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KB Toys Files for Chapter 11 Bankruptcy

KB Toys Inc. filed for Chapter 11 bankruptcy protection, the latest victim of a holiday-season price war that forced FAO Inc. to liquidate part of its business and cut into the sales and profits of other big toy sellers.

Pittsfield, Mass.-based KB, said its restructuring could include closing as many as 500 underperforming stores. KB operates 1,200 stores -- 134 in California -- and employs 13,000 people nationwide. The company should be able to recover from the troubles of 2003, said KB executives, who hope the company will emerge from Chapter 11 before next Christmas.

Chief Executive Michael L. Glazer said a four-year, $350-million loan from Fleet Retail Group Inc. would allow privately held KB to continue operations during the restructuring.

In December, KB indicated that cutthroat pricing among big toy sellers took a toll in what should have been prime selling season. To preserve cash, KB said it would halt payments to some suppliers. Its problems were exacerbated by high rents in hundreds of ailing malls.

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For a preview of this week’s business news, please see Monday’s Business section.