Bernard Ebbers orchestrated one of the largest corporate frauds in history -- and now it looks like he'll be serving one of the longest sentences ever meted out to a former chief executive. On July 13, U.S. District Judge Barbara Jones sentenced the former WorldCom CEO to 25 years in prison. A Manhattan jury convicted Ebbers, 63, on Mar. 15 of conspiracy, securities fraud, and seven counts of making false regulatory filings. Ebbers is appealing his conviction.
The tough sentence stemmed, in large part, from the estimated $2 billion in investor losses prosecutors attributed to Ebbers' fraud at WorldCom. Judges can still take this into account in determining punishment for white-collar felons, even though the federal sentencing guidelines were overturned by the U.S. Supreme Court earlier this year.
That should be a sobering thought for other execs facing criminal trials in coming months, notably Enron's former Chairman Kenneth Lay and ex-CEO Jeffrey Skilling.
Fears of declining consumer interest in iPod and Mac products turned out to be unfounded. Apple Computer on July 13 reported sales jumped 75% over its year-earlier third quarter, to $3.52 billion. Net income rose to $320 million from $61 million as the iPod juggernaut showed no signs of slowing. Apple hasn't released any new products since January. Instead, it has used enhancements such as color screens, music downloads, and podcasting software to spur demand. The result? Remarkable 616% year-over-year growth for iPod. And sales of sleek flat-screen iMacs rose 35% as Apple fans embraced a new operating system. Despite the continued momentum, Apple execs were cautious about the back-to-school season. With the company planning to switch to Intel chips from IBM's next year, there are concerns consumers may delay Mac purchases.
Ever since former Visa U.S.A. CEO Carl Pascarella announced his retirement last year, speculation has swirled about his successor. Few would have guessed the job would go to John Coghlan, a former Charles Schwab (SCH) exec with no prior experience in the payments business. Upon accepting the post on July 12, Coghlan stressed his experience as founder of San Francisco Grocery Express, a now-defunct grocery delivery business that accepted Visa cards. Coghlan joins the card association at a time when it is entangled in litigation with merchants over fees. Watch for Visa to give special attention to the cash register set.
Remember the National Hockey League? After being sidelined for a full season, the NHL is getting ready to skate back into arenas next season. On July 13, the league and the NHL Players' Assn. announced a deal in principle to end the longest work stoppage for a major pro sports league. League and players union officials weren't talking details, pending ratification of the deal. But NHL Commissioner Gary Bettman and the 30 teams owners appear to have won a system that ties player salaries to league revenues. The lockout slammed NHL players in the wallet, with top stars forfeiting salaries up to $10 million. But the owners claim that by skipping last season, they actually gained.
Harley-Davidson (HDI) is still bumping along a patch of rough road. On July 13, the bikemaker reported a 4% drop in earnings for the second quarter on flat revenues. It also revealed that the Securities & Exchange Commission is looking into its April forecast of slower sales growth this year. The prediction triggered a 23% slide in Harley's stock price, sparking shareholder suits alleging top executives used dubious accounting to keep the stock aloft. Still, investors shrugged off news of the probe on July 13 as Harley shares rose 1.4%, to $50.38.
-- PepsiCo (PEP) reported a 13% gain in second-quarter earnings.
-- Colin Powell joined Kleiner Perkins Caufield & Byers as a part-time limited partner.
-- Institutional Shareholder Services will purchase longtime rival Investor Responsibility Research Center.
Shares of HCA (HCA) took a turn for the worse on July 13, slipping 9%, to $50.04, after the nation's largest hospital chain's forecast for second-quarter earnings fell short of Wall Street's consensus. Admissions at hospitals open more than a year are expected to decline slightly.