SEC probe of IBM turns formal
New York, USA: Computer giant, IBM, has issued a statement saying that the U.S. Securities and Exchange Commission (SEC) is now conducting a formal investigation into IBM Corp.'s disclosures relating to first-quarter 2005 earnings and the expensing of stock options.

The company had said last June that the SEC was conducting an informal investigation.
The conversion of the probe into a formal one allows the SEC to issue subpoenas for records or testimony. Subpoenas allow the commission to obtain documents such as bank statements, accounting records, phone records and internal memos, as well as compel people to testify about their activities under investigation.

IBM through its statement has said that it is cooperating with the SEC and will continue to do so. The company's statement also said the SEC has told the company the investigation should not be taken as an indication that any laws have been broken.

The first quarter of last year was the first time that the company included the effect of stock option compensation in calculating its earnings. IBM issued a statement last April 5 saying that it would expense options and that the change would reduce its earnings by 14 cents a share. Nine days later, IBM reported profit of 84 cents, missing the estimates. The stock option costs were 10 cents a share, meaning the company had overstated the expected reduction by 4 cents.
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Iran worries push the Dow below 11,000
New York, USA: Worries over Iran's nuclear intentions, as well as doubts about corporate earnings and downgrades of J. P. Morgan Chase and Coca-Cola, cast their pall on the markets as the Nasdaq composite index ended a seven-day winning streak and the Dow closed below 11,000. The Dow had crossed the level just three days back - for the first time since 2001.

Some analysts however played down the concerns over Iran saying that the market in any case was in an overbought position and Secretary of State Condoleezza Rice's support of a call from European powers, that Iran be referred to the United Nations Security Council over its nuclear plans, merely provided the excuse for the markets to sell.
The Dow Jones industrial average fell 81.08 points, or 0.7 percent, to close at 10,962.36. The Standard & Poor's 500-stock index declined 8.12 points, or 0.6 percent, to 1,286.06. The Nasdaq composite index dropped 14.67 points, or 0.6 percent, to 2,316.69.

Meanwhile Piper Jaffray lowered its rating on J. P. Morgan, saying healthy capital markets and synergies from the bank's merger with Bank One are now fully figured into J. P. Morgan's stock price. Shares of J. P. Morgan slid 75 cents, or 1.8 percent, to US$39.95, a day after hitting its highest in more than one and a half years.

Goldman Sachs cut its rating on Coca-Cola on expectations of lower European demand for soft drinks. Coke shares fell 23 cents, or 0.6 percent, to US$41.44.

Even as Iran states that it wants to pursue peaceful nuclear research, the United States and the European powers are worried that its programs could lead to the creation of nuclear weapons. Markets are reflecting their nervousness, as the dispute with Iran could lead to disruption in oil shipments from the country, the world's fourth-biggest exporter of crude oil.

The February contract for crude oil settled unchanged at US$63.94 a barrel.
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Tyco splits into three separate entities
Pembroke, Bermuda: Embattled company, Tyco International Ltd. said Friday it plans to split into three public companies, separating its electronics and healthcare businesses from its remaining operations at a cost of about US$1bn. The company said that the move follows a strategic review and will strengthen the businesses.

The company also lowered its earnings outlook for the first quarter and full-year 2006.

Tyco has been embroiled in accounting scandals, with its former CEO, L. Dennis Kozlowski, and former chief financial officer Mark H. Swartz, sentenced to prison last year for grand larceny, conspiracy, securities fraud and falsifying business records. They are appealing their convictions.

Tyco said Friday its board has decided to separate Tyco Healthcare and Tyco Electronics from the Tyco Fire & Security and Engineered Products & Services businesses. The three companies will have their own independent boards and corporate governance standards, and are expected to remain incorporated in Bermuda. Tyco Healthcare, which provides health-care products and services, booked nearly US$10bn in revenue during 2005, and has more than 40,000 employees.

Tyco Electronics, according to the company, is a US$12bn business with about 88,000 employees.Tyco's fire and security, as well as its engineered products and services business are a US$18bn electronic security business employing more than 118,000 people.
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