Business memo 7/22/02

WorldCom on edge of bankruptcy

JACKSON, Miss. -- WorldCom Inc., struggling to find billions to keep its telecommunications empire from crumbling, may be only days from a bankruptcy filing that would dwarf those seen in the past.

The Clinton-based long distance, Internet and data services provider revealed last month that it disguised nearly $4 billion in expenses to make it appear more profitable. Since then, analysts have said a bankruptcy filing was inevitable.

A source in the company familiar with WorldCom's financial situation said the telecom could opt for Chapter 11 by Monday. Company officials declined to comment.

Criminal probe hurts Johnson & Johnson

TRENTON, N.J. -- Shares of Johnson & Johnson plunged Friday after a published report said a criminal investigation had been launched into one of the company's factories in Puerto Rico.

The Ortho Biologics plant in Manati manufactures the anemia drug Eprex, which has been linked to serious illnesses in Europe and Canada.

The investigation by the Food and Drug Administration and the Justice Department was linked to a whistle-blower lawsuit filed by a fired factory worker, The New York Times reported in Friday's editions.

In prepared statements, the company said it was aware of the government investigation, "presumably related to the lawsuit."

R.J. Reynolds Tobacco reports earnings rise

CHARLOTTE, N.C. -- R.J. Reynolds Tobacco Holdings Inc. reported its second-quarter earnings rose as shipments declined to reflect lower demand, but the nation's second-largest cigarette company also warned that its third-quarter profits may fall below Wall Street's expectations.

Net income for the Winston-Salem-based company in the second quarter was $211 million, up from $127 million during the same period of 2001. Earnings per share increased to $2.29 from $1.26.

The reported results reflect goodwill amortization expense of $80 million, or 80 cents per share, in last year's second quarter.

Airlines cut ticket prices despite losses

DALLAS -- Despite more than $1.4 billion in second-quarter losses, much of it blamed on lower fares, the major U.S. airlines cut ticket prices last week in a move that could signal fear of a much longer slump in air travel.

US Airways touched off the fare reductions Wednesday night. By Friday, American, United and Northwest had matched US Airways' action, and even expanded upon it in certain markets. Some of the cuts lowered prices by 40 percent or more.

The sales, most of which run through September, come at a curious time for the airlines. Last week, they reported results for the three months ended June 30, and only one -- Southwest Airlines, the nation's sixth-largest airline -- earned a profit in the second quarter.

-- From wire reports