Broadcom probe revealed: The WSJ and LAT provide some details on the federal investigation into backdating stock option grants at the Irvine chipmaker. The Journal reports on an e-mail from former CFO William Ruehle in which he urges that Broadcom options be priced at an earlier date than scheduled, providing extra profits. Prosecutors are seriously considering filing criminal charges against Ruehle, using a bunch of those e-mails. Meanwhile, both the Journal and LAT report that Broadcom Chairman Henry Samueli has refused to be questioned in the inquiry, which seems like a weird and dangerous position to take unless you've got something to hide. Samueli did not regularly receive stock options himself. From the WSJ:
The Broadcom probe is a sign of how long-running investigations of stock-options backdating are heating up. Yesterday, a former general counsel of Monster Worldwide Inc. pleaded guilty to securities fraud in federal court in Manhattan. The day before, the founder of Take-Two Interactive Software Inc. pleaded guilty to a New York State charge in a backdating scheme. Prosecutors in a half-dozen jurisdictions are zeroing in on other cases. The filing of criminal charges in some of these in coming months would mark a watershed in the scandal, as prosecutors and regulators winnow the roster of some 140 companies with options problems to a tighter list of promising cases.
American on the block?: BW is reporting that Goldman Sachs and British Airways are considering a bid for American Airlines that could be as high as $11 billion. But Reuters, citing its own undisclosed sources, reported that Goldman and British Airways have "no current plans" to bid for American. There has been chatter in recent days about a possible American sale, but Wall Street analysts are downplaying the possibilities - especially since it involves a foreign carrier. Anyway, it might be worth watching.
Piracy costs: All those bootleg DVDs, CDs, prescription drugs and phony designer handbags have cost L.A.'s economy more than 100,000 jobs and $5.2 billion in lost sales, according to a study by the L.A. County Economic Development Corp. Half those losses cover pirated movies, followed by the CDs. Of course, none of this is exactly new and the numbers cited in the study are little more than guesstimates (especially as it relates to jobs). This week, the cops seized about 15,000 counterfeit CDs and 1,200 bootleg DVDs from a small record store in Los Angeles. LAT
Oscar ads: It's a sell-out for the big show - again. ABC is charging around $1.7 million per 30-second spot, slightly higher than a year ago and a relative bargain compared with the $2.6 million that was shelled out for the Super Bowl. Advertisers include the usual crowd: AT&T, Bank of America, Coca-Cola, Eastman Kodak, General Motors, Mars, MasterCard, McDonald’s, Microsoft, J. C. Penney and Unilever. Several advertisers are sponsoring coverage on oscar.com. The Oscar ceremony is typically the second-most-watched show each year, after the Super Bowl, and it illustrates the power of big-event TV. NYT.
Allstate leaving California?: The state's third-biggest insurer has stopped writing new homeowners policies in coastal states that are regularly hit by hurricanes, and California may be next. Citing the state's potential for natural disasters, Allstate is seeking a 12 percent rate increase from its policyholders (other insurers are cutting rates).Lt. Gov. John Garamendi calls it an "exit strategy." No comment from Allstate. LAT
Flying high: There are the super-rich and the super-ridiculous. Turns out that an unidentified Middle East head of state has cut a deal for Airbus to build him (I'm assuming it's a him) one of those massive A380 jets, which sell for about $300 million. The buyer will spend another $100 million to turn the wide body jet normally configured to seat as many as 853 passengers into something they're calling The Flying Palace. WSJ reports that it will have two dining areas, a 600-plus-square-foot master bedroom, and a lounge with giant curtains that somehow mimics tents of the Arabian desert. Oh, they're also planning some sort of missile-defense system. From the WSJ:
The tabs for the wide-body jets easily surpass the prices paid by a previous generation of jumbo-jetsetters, including Donald Trump. In 2005, for example, Google founders Sergey Brin and Larry Page bought a used 767-200 that had seated 180 during its years in commercial service. Industry sources estimate Messrs. Brin and Page paid less than $15 million, 1/20th the cost of the big new Airbus. The latest private jets dwarf the most expensive Gulfstreams and Learjets, as well. The top-of-the-line Gulfstream, the G550, carries 10 to 15 passengers and costs about $47 million.
Speaking of excesss...: Jeffrey Katzenberg, whose net worth totals around $860 million, was awarded $2.17 million by a Denver jury in a suit against Goodyear Tire and Rubber. (The NY Post calls it the Best Dramatic Performance by a Spoiled Rich Guy.) Apparently, Goodyear's faulty heating hoses leaked and damaged his 13,000 square-foot, seven-bedroom, 10-bath Utah vacation home. Katzenberg testified that the Deer Valley home "will never be the same" because the special materials used to finish the walls and floors will have to be ripped up to repair the damage. "I have this treasure of mine, and I realize now it's flawed. It breaks my heart that I have to rip this house apart," Katzenberg said during testimony. Katzenberg had sought $6 million in damages.