www.ourmidland.com Beth Medley Bellor , The Midland Daily News 01/13/2003

    Dow employees got more details this morning about the belt-tightening their company is facing.

    In a company-wide communication, Bill Stavropoulos, president and CEO, outlined immediate action plans to restore the company’s profitability.

    "I know many of you are anxiously awaiting detailed announcements on any organizational restructuring, portfolio changes and, importantly, the impact our actions will have on jobs within our company," Stavropoulos said, noting those answers will be provided as soon as possible. "In the meantime, let’s all focus on contributing to Dow’s success by turning our short-term plans into a first quarter that we can be proud of and that will set the pace for a 2003 that will put us well on the road to recovery."

    Energy costs continue to be a challenge for Dow. In addition to the threat of war in the Middle East and the abrupt disruption in the oil supply from Venezuela, Stavropoulos cited price increases in naphtha and natural gas liquids.

    "While we can’t control external costs, we will control internal expenses," he said. "Beginning right now, we will act to raise our prices, protect and grow our volume, and dramatically decrease our costs. Simply put, if it doesn’t improve our bottom line in 2003, we just shouldn’t do it this year."

     He outlined the first steps to protect margins in the first quarter, directing all employees to focus on decreasing costs, increasing cash flow, and improving the bottom line, while remaining safe. Those steps include:     • implementing a six-month moratorium on all new, unauthorized or engineering-only capital projects;     • enacting an immediate freeze on all external hiring and geographic relocations;     • taking swift action, business by business, to raise prices to restore margins, especially in light of the very volatile oil and energy environment; and     • delaying 2003 Service Awards until the second half of the year and suspending the Special Recognition Award / Special Achievement Award Program for the first quarter.

    Dow’s comprehensive action plan includes a complete review of all assets, possibly leading to divestiture or shutdown of those that are non-strategic or underperforming.

    Details are available at www.dow.com/dow_news/corporate/2003/20030113a.htm.

sg.biz.yahoo.com Tuesday January 14, 12:31 AM By Erin Schulte The Wall Street Journal Online

With nothing notable to lure fresh money into the market Monday, major indexes slipped, and falling crude prices hurting a number of oil sectors like drillers.

Stocks had climbed in early trading, but gains were short-lived. By late-morning, the Dow Jones Industrial Average was off 15 points at 8770, while the Nasdaq composite gave back 5.20 to 1442.50.

ADVERTISEMENT "We're in a trading range, and we're at the high end of that right now. The market lacks a catalyst to get us through the 930 level on the S&P, and there's no good reason to buy stocks at this level," said Ryan Smith, managing director of equity trading at Banc One Investment Advisors in Columbus, Ohio. "We have uncertainty regarding earnings coming out, and geopolitical issues overseas."

The biggest news on Wall Street was the AOL Time Warner's chairman, Steve Case, said he would resign from the top job at the huge but troubled media conglomerate he helped create, succumbing to months of pressure from disgruntled shareholders and board members alike. He will remain a director. The company's shares rose about 2% on the news.

Mr. Case's departure from the top job means the company's leadership will be without any of the key architects of the blockbuster merger of America Online and Time Warner in 2001. The company said Sunday that Mr. Case would step down from the chairman post in May.

Falling crude prices hurt several oil-related sectors after the Organization of Petroleum Exporting Countries decided to increase its production ceiling by 1.5 million barrels a day. Prices have soared in recent weeks as a strike in Venezuela has paralyzed its crude exports.

Driller McMoRan was among the biggest losers on the Big Board, giving up 12%. Pipeline companies like Williams and El Paso fell, by 4.2% and 2.2%.

An earnings warning also hurt the market. Duke Energy warned that fourth-quarter and 2003 earnings will disappoint, prompting Merrill Lynch to downgrade the company to "sell" from "neutral." Its shares dropped 12%.

Merrill cut its earnings outlook and said Duke's announcement raised questions about the sustainability of Duke's $1.10 current dividend payout.

Geopolitical concerns were also at the forefront of investors' minds Monday.

"There was a lot of development with North Korea over the weekend... Some of it was good. If nothing else, it seems like they're trying to push issues forward a bit," said Jim Holtzman, a financial planner at Legend Financial Advisors.

Early Monday, a senior Bush administration envoy said the U.S. is willing to consider energy aid to North Korea as a means to end its intensifying nuclear standoff with the communist country.

North Korea withdrew from the landmark Nuclear Nonproliferation Treaty last week and has threatened to resume long-range missile tests and to begin reprocessing spent fuel rods from its nuclear reactor to make atomic bombs.

Fourth-quarter earnings season will give investors something to chew on later in the week, with a flurry of big-name reports from companies such as Intel, General Motors, General Electric and Microsoft. Many analysts have predicted that this earnings season will hold some pleasant surprises, which would be a plus for the market.

Displaying some resiliency, the stock market managed a slim advance Friday despite news that the country lost jobs last month. The Dow industrials climbed 8.77 points to 8784.95. The Nasdaq Composite Index, dominated by technology issues, added 9.26 to 1447.72.

Among stocks to watch Monday, Wal-Mart Stores is expected to make a bid for Safeway, Britain's fourth-largest supermarket group, which has agreed to be acquired by William Morrison Supermarkets. Wal-Mart shares slipped.

Corning said late Friday that its recent cost-cutting moves will save it more than $400 million annually, but the company plans on making additional cuts to bring it to profitability in 2003. The world's largest maker of optical fiber used in communications networks already has cut its work force to 23,500 employees from its high of 42,000 workers in 2000. Its shares rose 1.6%.

In major U.S. market action:

Stocks slipped. On the Big Board, where 504.4 million shares traded, 1,666 stocks advanced and 1,371 declined. On the Nasdaq, where 707 million shares changed hands, 1,570 issues gained while 1,331 fell.

Bonds inched higher. The 10-year Treasury note rose less than 1/8 point, or $1.25 for each $1,000 invested. The yield, which moves inversely to price, fell to 4.13%. The 30-year bond was ahead about 1/4 point to yield 5.03%.

The dollar was mixed. It traded at 118.89 yen, down from 119.22 late Friday in New York, while the euro fell against the dollar to $1.0554 from $1.0572.

For continuously updated news from The Wall Street Journal, see WSJ.com at wsj.com.

www.businesseurope.com London, January 13 2003, (BusinessEurope.com)

The price of manufactured goods edged up in December at a much slower rate than raw material costs, piling more pressure on manufacturers' profit margins.

Margins are tight

Factory gate prices rose just 0.1% last month, while input prices like oil, metals and chemicals, rocketed 2.8% - 1% more than anticipated by analysts - according to the Office of National Statistics (ONS).

The price of oil was the main reason for the surprising figures. This surged 17% in December, the highest monthly increase for two and a half years. Removing food, drink, tobacco and petrol prices, underlying input prices actually fell 0.1%, said ONS.

Oil prices have been rising steadily because of fears of a possible war between the US and Iraq - the world's second biggest oil producer. A general strike in Venezuela - the fifth biggest producer - has added to this.

Over the weekend, the oil producing nations' cartel OPEC agreed to step up its production of oil by about 5% to compensate for this, although prices have remained unchanged since.

Economists said that the rise in overall input prices should not worry monetary policy makers at the Bank of England because they would be unlikely to have have much of an impact for consumers.

George Buckley, UK economist at Deutsche Bank, said: "It is the negative impact on growth from higher oil prices rather than the positive effect on inflation that we should be focusing on, especially given the fragile state of global demand."

UK producer prices have remained largely unchanged for seven months as manufacturers struggle to balance their costs with an overall lack of demand from customers.

An economic slowdown in the EU, where the UK sends most of its exports, threatens to drag the area into a recession in the first half of this year. The European Union has predicted that its economy will shrink between January and March.

www.forbes.com Reuters, 01.13.03, 11:30 AM ET By Alexander Manda

LONDON, Jan 13 (Reuters) - Substantial new issuance by emerging market borrowers aiming to raise funds ahead of a threatened war in Iraq could weigh on bond prices in coming weeks, choking off a new year rally, analysts say. Last week, Chile, Mexico, Turkey and the Philippines all brought new bonds, raising more than $4 billion between them in a few days. Emerging issuers are bringing forward issuance plans as any conflict over Iraq would raise risk aversion and effectively close capital markets for lower-rated borrowers.

Emerging market debt has done well so far this year, up 1.7 percent on average, with investors chasing yields in a segment that returned 13 percent last year.

But analysts say the unusually heavy and early supply of bonds may undo these gains. "At some point the market should at least pause. I don't see the market having a great performance... It may tumble a bit," said Vincent Megard, emerging bond fund manager at AXA Investment Managers in Paris.

Fears of conflict over Iraq, which the U.S. suspects of developing nuclear and biological weapons in violation of UN resolutions, have been hanging over financial markets for weeks.

"Issuance has been crammed in to the beginning of the year, because people are expecting the market to be closed out to them for a period," said Tim Ash, emerging bond strategist at Bear Stearns in London. "For instance, Turkey had to issue, and had one eye on Iraq," he said. War would send risk aversion and oil prices soaring, locking countries like Turkey, Iraq's northern neighbour and a key U.S. ally, out of international capital markets. That would be a serious problem for Ankara which promised the IMF it would borrow $3.5 billion by the end of 2003.

Turkey, which issued a $750 million 10-year bond yielding 11.25 percent, might have wished to wait for its bond yields to fall back to levels reached in December, at the height of optimism about the country's bid to join the European Union.

Turkey said on Monday it planned to raise at least $4 billion in privatisation revenue this year but, if it had to return to the bond market, analysts reckon its terms might not be as favourable as last week.

"If Turkey comes with another issue now there will be some pressure. The latest issue initially traded down around half a point, and now people are saying that the leads are supporting the deal. It is not a market that can take a lot," said Borislav Vladimirov, emerging debt strategist UBS Warburg in London.

MARKET PAUSE SEEN According to the industry benchmark, JPMorgan's Emerging Market Bond Index plus <11EMJ>, emerging debt has risen 1.7 percent, or 47 percent annualised, in the first 13 days of the year. Low U.S. interest rates have encouraged investors to take on more risky, high-yielding assets.

But this may not last long, said Peter West, senior economist at Poalim Asset Management in London.

"The increase in risk appetite could be reversed by a long conflict with Iraq, or if something were to go terribly wrong in Brazil. Venezuela is also looming as a potential problem," he added. Brazil elected a new president in October, who took power at the start of this year. The EMBI+ priced Brazil's risk more than 4.5 percentage points higher at the beginning of January than a year earlier, because the new president's team is left-wing and untested.

Venezuela is gripped by a general strike, now in its sixth week, which has brought its oil industry, the provider of 90 percent of its export revenues, to a standstill.

NET REPAYERS IN 2003 Overall though, analysts reckon that with cash raining into funds managers' coffers from redemptions, demand for emerging debt will outstrip bond supply through 2003, meaning prices should resume their upward path.

Also limiting supply, Russia, the second largest element in the JPMorgan index, has been a net creditor since its financial crisis in August 1998, and may not need to do an international bond this year.

Mexico, which launched a $2 billion bond last week, is not expected to come back to market this year.

"The market may well be net receiving money at the end of this year," said UBSW's Vladimirov.

www.nola.com The Associated Press 1/13/03 7:10 AM

SEOUL, South Korea (AP) -- North Korea might get energy aid from the United States and other countries if it resolves concerns over its nuclear weapons development, a top U.S. envoy said Monday after meeting South Korea's president-elect.

Assistant U.S. Secretary of State James Kelly appeared to be offering an incentive to North Korea to give up its nuclear programs, though he did not say whether his comment represented a change in U.S. policy.

U.S. officials have previously said they would not reward North Korea for abandoning its nuclear programs, and that discussions of aid and better ties can only follow steps to dismantle those programs.

"Once we get beyond nuclear weapons, there may be opportunities with the U.S., with private investors, with other countries to help North Korea in the energy area," Kelly said at a news conference in Seoul.

One analyst said the Bush administration seemed divided over how to deal with North Korea, with some officials espousing dialogue and others opposing it.

Steve Case, an architect of merger that created AOL Time Warner, to resign as chairman in May

NEW YORK (AP) -- Blamed by shareholders for AOL Time Warner's sharp fall in fortunes, Steve Case said he will step down as chairman of the conglomerate he helped create -- a marriage of old and new media first hailed as revolutionary but now struggling for a future.

Case's departure means the company's leadership will be without any of the key architects of the blockbuster merger of America Online and Time Warner in 2001. The company said Sunday he would step down in May.

In a brief statement, Case said he had concluded AOL Time Warner was better off without him as chairman.

"Some shareholders continue to focus their disappointment with the company's post-merger performance on me personally," he said.

Analysts had speculated that an accounting scandal, along with anger about a drop of more than 60 percent in the company's stock price, would eventually force Case to resign. And his decision may have been hastened by recent reports of more financial problems at the company.

AOL Time Warner, which took a $54 billion charge last year to account for a decline in America Online's value, is expected to report another multibillion write-down later this month for the same reason -- possibly in excess of $10 billion, according to some analysts.

115 Palestinian minors killed in fighting last year, most by army fire

NABLUS, West Bank (AP) -- One hundred fifteen unarmed Palestinians younger than 18 were killed in 2002, an increase of more than 50 percent from the year before, according to an Associated Press count.

The toll underlines the military's failure to quell riots without killing civilians, particularly minors. Most of the youngsters killed in 2002 were stonethrowers or bystanders hit by Israeli army fire.

Palestinian militants, who target Israeli civilians, killed 36 Israeli minors in bombings and shootings last year.

Saying its soldiers operate in a hostile environment under threat from Palestinian militias, the Israeli government contends that gunmen often take cover behind civilians and that children and teens are sent to the front lines by cynical adults trying to win the world's sympathy by provoking casualties among the young.

However, Israeli human rights activists say Israeli soldiers often receive vague open-fire orders and are not punished if they overreact. "There is no culture of deliberately shooting children. There is a culture of impunity," said Lior Yavneh of the human rights group B'tselem.

Palestinians charge that the Israeli army does nothing to prevent killings of civilians because it wants to instill fear among Palestinians. "The rate of Palestinian children killed at the hands of Israeli soldiers is alarming and requires immediate international intervention," said Saeb Erekat, a Cabinet minister in the Palestinian Authority.

Espionage case appears headed for rare public trial

ALEXANDRIA, Va. (AP) -- Unless the government quickly negotiates a plea agreement with defense lawyers for a retired Air Force master sergeant, he'll become the focus of the first espionage trial in nearly 50 years that could end in a death sentence.

Jury selection was to begin Monday in U.S. District Court for Brian Patrick Regan, accused of offering satellite secrets to Iraq's Saddam Hussein and others for more than $13 million in Swiss currency.

Although a plea arrangement was possible, many experts said they would be surprised if the government agreed to a deal so near the trial's start.

"I think you can assume any offers that were put on the table have been long since rejected," said Lawrence S. Robbins. He was the losing defense lawyer in the last espionage trial, in 1997, when a federal jury convicted a married couple of spying for East Germany.

Regan's lawyers waged a late, unsuccessful fight to delay the trial because of a possible U.S. invasion of Iraq, one of the countries Regan was accused of offering to sell secrets to.

All sides said they expected jury selection to take as long as two weeks, mostly because of the death-penalty question.

Seven Palestinians, two Israelis killed in escalating violence ahead of Israeli election

JERUSALEM (AP) -- In rapidly escalating violence just two weeks before Israel's general election, seven Palestinians, two other Arab attackers and two Israelis were killed in raids and infiltrations in a 24-hour period.

Israeli Defense Minister Shaul Mofaz was evasive when asked about reports that he is planning to step up strikes against Palestinian militants. Mofaz said Israel is facing a growing wave of terror, but that there would be "nothing very much out of the ordinary" in Israel's response.

Palestinian officials have accused Prime Minister Ariel Sharon of escalating military action to deflect attention from corruption allegations that have been hurting his re-election bid. Two Israeli opinion polls indicated Monday that Sharon's Likud party is recovering somewhat from a monthlong drop in support.

Venezuelan president threatens to revoke TV broadcasting licenses as protests continue

CARACAS, Venezuela (AP) -- President Hugo Chavez threatened to revoke the broadcasting licenses of Venezuela's main TV and radio stations, accusing them of supporting opposition efforts to overthrow him through a six-week-old strike.

Chavez said the stations were abusing their power by constantly airing opposition advertisements promoting the strike, which has dried up oil revenue in the world's No. 5 oil exporter but hasn't shaken the president's resolve to stay in power.

Venezuela's main television stations have not broadcast any commercials during the strike except the opposition ads. Media owners say they adopted that stance because Chavez incites his supporters to attack reporters.

Venezuela's largest labor confederation, business chamber and opposition parties began the strike Dec. 2 to demand that Chavez resign or call early elections if he loses a proposed nonbinding referendum on his rule.

'Lord of the Rings,' a box-office favorite, gets two big honors at People's Choice Awards

PASADENA, Calif. (AP) -- "The Lord of the Rings: The Fellowship of the Ring" proved a crowd-pleaser at the 29th Annual People's Choice Awards, sharing the favorite motion picture award with co-nominee "Spider-Man" and winning in the best dramatic motion picture category.

The "Fellowship of the Ring" captured the two top awards while its sequel, "The Lord of the Rings: The Two Towers," was topping the box office.

At the awards ceremony Sunday night, Mel Gibson was named favorite motion picture actor and Julia Roberts won the favorite actress award, her ninth win in the category.

Jennifer Aniston also made a return engagement as favorite female television performer for her role as Rachel on "Friends," which also won in the favorite comedy series category.

Ray Romano took home the favorite male television performer prize, and "CSI: Crime Scene Investigation" dethroned longtime top vote-getter "ER" in the favorite television drama series.

Country singer Faith Hill and rap sensation Eminem were named as favorite musical performers.

Raiders beat Jets, 30-10, to head to AFC championship game

OAKLAND, Calif. (AP) -- In blowing out the mistake-riddled New York Jets 30-10 Sunday, the Oakland Raiders advanced to the AFC title game against Tennessee next weekend. Counting the AFL, it is the 14th time the Raiders have gotten this far.

After a 10-10 halftime tie, the Raiders rattled Chad Pennington, the league's most efficient and seemingly unflappable quarterback. And they got big plays from league MVP Rich Gannon throwing to Jerry Porter and Jerry Rice.

Oakland came away with its eighth victory in nine games, getting Zack Crockett's 1-yard TD run after Pennington's first fumble; Gannon's two touchdown passes; and three field goals (29, 34 and 31yards) from Sebastian Janikowski.

The Tampa Bay Bucaneers go to Philadelphia for next Sunday's NFC championship game against the Eagles, who ended the Bucs' season in the first round of the playoffs at Veterans Stadium the past two years.