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0,64% (-)3,47% (-)36,51% BEL20 53,45 BARCO NEW 52,75 (-)1,31% 33,88% (-)65,18% 13 = - 50,55 BEKAERT 49,83 (-)1,42% 15,16% (-)14,82% 42,40 GIB 40,60 (-)4,25% (-)8,14% (-)26,18% 62,80 JOHNSON&JOHNSON 63,61 1,29% 7,63% (-)39,46% 7 = + 124,28 3M CORP 125,50 0,98% 6,17% (-)31,37% 31,28 SBC COMMS 31,58 0,96% (-)19,38% (-)46,13% DJIA 41,35 EXXON MOBIL 40,30 (-)2,54% 2,54% (-)62,03% 23 = - 34,87 EASTMAN KODAK 33,94 (-)2,67% 15,32% (-)50,50% 18,04 HEWLETT-PACKARD 17,21 (-)4,60% (-)16,21% (-)86,26% 70,00 SANOFI-SYNTHELAB 71,30 1,86% (-)14,92% (-)16,90% 12 = + 142,40 DANONE 144,30 1,33% 5,33% (-)15,86% 105,80 LAFARGE 107,10 1,23% 2,10% (-)7,35% CAC 40 34,29 TF1 33,10 (-)3,47% 16,59% (-)64,86% 28 = - 35,75 BOUYGUES 34,02 (-)4,84% (-)7,55% (-)64,00% 56,65 SCHNEIDER ELECTR 52,90 (-)6,62% (-)2,04% (-)36,95% Business news at a glance Our sources are the following : Bloomberg (B), The Nihon Keizai Shimbun Edition (Nikkei), Financial Times Information (FT ou AFX), 2 Les Echos (E), L 9Echo (EB), De Tijd (T) and Vie Financière (VF) Economic Overview BEF Le baromètre de conjoncture de la BNB continue de progresser La confiance des chefs d'entreprise se renforce pour le quatrième mois consécutif. La courbe lissée s'est orienté à la hausse pour la première fois depuis le début de l'année 2000.<br><br> L'indice de conjoncture établi mensuellement par la Banque nationale de Belgique (BNB) a réalisé une nouvelle poussée en mars, soit la quatrième hausse consécutive. En effet, l'indicateur synthétique s'établit à -7,4 en mars, contre -8,8 en février et -12,2 en janvier dernier. On notera que le regain de confiance des chefs d'entreprise s'est particulièrement focalisé dans le secteur du commerce (-1,3 contre -5 en février et -11 en janvier).<br><br> Notons également la progression dans l'industrie manufacturière, qui passe de -9,9 à -8,3. En revanche, le climat conjoncturel s'est nettement détérioré dans le secteur de la construction et ce malgré des conditions climatiques relativement bonnes. Ainsi, la courbe synthétique brute indique une aggravation dans la construction passant de -7,7 en février à -9,4 en mars.<br><br> La courbe lissée quant à elle, qui reflète avec un délai de quelques mois l'évolution fondamentale de la conjoncture - par élimination des points extrêmes -, s'est orienté à la hausse pour la première fois depuis le début de l'année 2000. "Cette tendance s'explique grâce au retournement positif observé dans l'industrie manufacturière et le commerce", indique la BNB. Notons que l'amélioration du climat conjoncturel dans l'industrie manufacturière se traduit également par une hausse du degré d'utilisation des capacités de production.<br><br> Enfin, dans les services aux entreprises, l'indicateur synthétique brut, après avoir fléchi au cours du mois précédent, a repris sa progression en mars (+2,7 contre 0,3 en février). (EB) ITL Italian Business Confidence Rises More Than Expected Rome, April 24 (Bloomberg) -- Italian business confidence rose to its highest level in more than a year in April, as executives in Europe's fourth-biggest economy said they expect to crank up production in coming months to meet growing demand. The state-funded Isae research institute's index of Italian business confidence -- based on a survey of 4,000 companies --rose to 97, the highest since January 2001, from 94 in March, Isae said.<br><br> Economists had predicted a reading of 95. ``I'm confident a recovery will take hold in coming months,'' said Mario Moretti Polegato, chairman and founder of Treviso, Italy based shoemaker Geox International Srl, which sells its footwear in Italy, Germany and Austria. ``Orders are going well.'' A recovery in the U.S., which buys about a fifth of Europe's exports, is helping manufacturers.<br><br> Companies such as Ducati Motor Holding SpA, Italy's biggest maker of high-performance motorcycles, and Negri Bossi SpA, a machinery maker, are expecting sales to rise. Business confidence in Germany, Europe's biggest economy, probably rose for a six month in April, economists said. Ducati said last week first- quarter revenue rose 5.7 percent as sales of accessories advanced.<br><br> Italy's benchmark Mib30 stock index has gained more than 35 percent since sinking to almost a four-year low on Sept. 21. ``Things are going well in the company and the general economic situation is improving,'' said Andrea Riello, chief executive officer of Riello Sistemi SpA.<br><br> The company, based near Verona in northern Italy, makes machine tools for companies such as Mandelli SpA, which supplies parts for Ferrari cars. Stocks Gain Italy's benchmark Mib30 stock index gained for a second ay, adding 122 or 0.4 percent to 32,917. The yield on Italy's benchmark 10-Year bond was little changed at 5.43 percent.<br><br> A seasonally adjusted index measuring manufacturers' expectations for orders in the next three months rose to 24 this month, from 23 in March, Isae said today. A separate index measuring the production outlook rose to 22, the highest since January 2001, from 18 last month. While most signs indicate a recovery, recent discord between Prime Minister Silvio Berlusconi's government and unions over changes to labor legislation may hurt business confidence in coming months, analysts said.<br><br> Italy's three largest unions last week staged the first eight- hour general strike in 20 years to protest Berlusconi's plans to make firing easier. An Isae index of April consumer confidence published the next day fell to a 17-month low. Retail sales in February dropped for the first time in five months, national statistics institute Istat said today.<br><br> Inflation Concern Italian executives said they were less optimistic about the general outlook for the Italian economy over the next three months due to concern about inflation, Isae said. An index measuring the general economic outlook dropped to 8 in April, from 9 in March. ``This is probably due to recent increases in energy prices in international markets,'' Isae said.<br><br> Crude oil prices have risen more than 30 percent this year. Italian consumer prices rose twice as fast as expected in April, according to data from 12 Italian cities published this week, as rising oil costs drove transportation prices higher. The price reports suggest the European Central Bank will fail for a 23rd month to meet its goal of bringing inflation below 2 percent.<br><br> Still, raising borrowing costs too early to curb price growth may harm Europe's economic recovery, executives said. ``The ECB's monetary policy is supportive for growth,'' said Mario Casoni, chairman of Modena-based Italian alcoholic drinks maker Casoni SpA. ``Raising interest rates right now would certainly be premature.'' Isae surveyed about 4,000 mining and manufacturing companies during the first 18 days of the month, asking about production, orders, inventories, prices and jobs.<br><br> The index peaked at 116 in 1973. The low was 53 the following year. JPY 3 Japon: Tokyo confirme une chute de 1,2% du PIB au 4ème trimestre Le produit intérieur brut du Japon s'est contracté de 1,2% sur le quatrième trimestre 2001 par rapport aux trois mois précédents, comme estimé en mars par le gouvernement japonais, selon des chiffres révisés diffusés jeudi.<br><br> En rythme annuel, le PIB réel du trimestre achevé en décembre a reculé de 4,8%, contre une estimation de 4,5% en mars, a précisé le Bureau du gouvernement. Il s'agit de la plus forte baisse depuis 1981, première année complète pour laquelle l'on dispose de données comparables. (EB) USD U.S.<br><br> March Durables Orders Fall 0.6%; Chips Excluded Washington, April 24 (Bloomberg) -- U.S. orders for durable goods unexpectedly fell in March, according to a government report that excludes semiconductors because many chipmakers declined to supply data. Orders fell for communications equipment, automobiles and computers.<br><br> The 0.6 percent drop in orders for durable goods to $173.4 billion followed a 2.7 percent increase in February, the Commerce Department said. Analysts had expected a 0.5 percent increase. Semiconductors were removed from the January and February totals to make comparisons with those months possible.<br><br> Based on data from the prior three months, semiconductors accounted for as much as 4 percent of durables orders. Declines in other categories suggest the recovery in manufacturing may be slow to take root. ``After a really strong start to 2002, we're going to see a bit of a lull,'' said Mark Vitner, senior economist at Wachovia Securities in Charlotte.<br><br> ``It's a pullback from the gains we saw earlier in the year.'' Rockwell Automation Inc., the world's second-largest maker of factory automation equipment after Siemens AG, said today its profit fell 18 percent in the quarter that ended last month compared with a year earlier. Cooper Industries Inc., which makes power and hand tools used in manufacturing, said yesterday its net income fell 13 percent in the most recent quarter and expects profit in the second quarter will miss estimates. Machinery orders fell 1.4 percent last month after falling 0.1 percent in February.<br><br> Business Investment Lags Recovery Business investment still needs to pick up for the economy to strengthen later this year. ``It's very evident that whatever that growth is, it is going to be driven by the rapidity with which the capital goods markets recover,'' Federal Reserve Chairman Alan Greenspan said on Monday. Treasury securities rose after the report.<br><br> The 4 7/8 percent note maturing in February 2012 gained 1/16, pushing the yield down 1 basis point to 5.15 percent. A basis point is 0.01 percentage point. There were signs production may have to increase: Inventories of durable goods fell 1.1 percent in March, the 14th straight decline, leaving it up to factories to meet future demand.<br><br> Durable goods are products such as semiconductors, airplanes and cars made to last three or more years. Increased orders usually lift manufacturing, which accounts for one-sixth of the U.S. economy.<br><br> U.S. industrial production has risen for three consecutive months, Fed statistics show. Production was nonetheless down 2.9 percent last month from March 2001 and 6 percent from its peak in June 2000.<br><br> Analysts had expected a 0.5 percent increase in orders to $181.4 billion after a previously reported 1.8 percent gain in February, based on the median of 57 forecasts in a Bloomberg News survey. They had also projected a 1.5 percent gain in orders excluding transportation equipment. Computers, Transportation Equipment Orders for computers and electronics products fell 1.7 percent, matching February's decline.<br><br> Orders for communications equipment fell 14.6 percent last month. Juniper Networks Inc., the world's second biggest maker of equipment to direct Internet traffic, last month reduced its first- quarter sales forecast as customers such as Qwest Communications International cut spending. Orders fell 1.6 percent in March for transportation equipment such as automobiles, ships and tanks after an 11.2 percent increase in February.<br><br> Orders for autos and parts alone fell 2.6 percent after falling 6.4 percent. Aircraft orders rose 9.5 percent. U.S.<br><br> March New Home Sales Fall 3.1% to 878,000 Annual Rate Washington, April 24 (Bloomberg) -- U.S. new home sales fell in March from a February pace that was faster than reported last month, government figures showed. The 3.1 percent decrease brought the annual sales rate to 878,000 new single-family homes from a revised 906,000 in February, the Commerce Department said.<br><br> Last month, the government reported February sales at an 875,000-unit pace. The March level is in line with analysts' expectations and still close to a record 908,000 homes that were sold last year. ``Housing is in terrific shape,'' said Christopher Low, chief economist at First Tennessee Bank in New York, before the report.<br><br> ``Interest rates are important, but incomes are even more important and income growth in bound to be stronger in a healthy economy.'' Richmond American Homes parent M.D.C. Holdings Inc. and Beazer Homes USA Inc.<br><br> are among builders reporting higher orders last month, as the industry prepares for the second best year on record. Some 902,000 new homes will probably be sold in 2002, according to a recent forecast by the National Association of Home Builders. Analysts had expected March sales to rise to 883,000 homes at an annual rate.<br><br> New homes account for 15 percent of all sales. Sales of previously owned homes, which were at the second- strongest pace on record in February, account for the rest. Incomes, Mortgage Rates Rising incomes and 30-year mortgage rates close to 7 percent are underpinning housing.<br><br> U.S. personal incomes rose 0.6 percent in February, the biggest increase in more than a year, after rising 0.5 percent in January, according to government figures. The average rate on a 30-year mortgage was 7.01 percent last month, according to Freddie Mac, the No.<br><br> 2 buyer of U.S. mortgages. That's close to the 6.45 percent recorded during November, the lowest in the three decades that Freddie Mac has kept records.<br><br> The rate fell to 6.94 percent in the week ended Friday. Beazer, the tenth-largest builder by revenue, received orders for 1,127 homes in March, up 4 percent from the same month last year. The Atlanta-based 4 company took orders for 3,142 homes in the first quarter, a 3.8 percent increase from last year.<br><br> March was a record-setting month at M.D.C. Holdings, the ninth-largest builder. The Denver-based company took 1,095 orders last month, up 24 percent from March 2001 and had net income of $32.3 million for the quarter, both records.<br><br> Inventory The inventory of new homes for sale rose to a 4.3-month supply in March from 4.1 months, the Commerce report showed. The median price of new homes fell last month to $176,700 from $182,900 in February. By region, sales fell 19.3 percent in the Midwest to an annual pace of 134,000 last month, declined 4.4 percent in the Northeast to an annual rate of 65,000, and dropped 0.2 percent in the South to an annual rate of 431,000.<br><br> In the West, sales increased 3.3 percent to 248,000 homes at an annual rate. The number of new homes for sale rose to 311,000 last month, from 310,000 in February. The median number of months that new homes have been for sale rose to 5 months in March, the highest since last June, from 4.5 months in February.<br><br> The economy may have expanded at a 5 percent annual pace in the first quarter, based on the median of 68 forecasts in a separate Bloomberg News survey. Gross domestic product grew at a 1.7 percent rate in the fourth quarter of 2001 after contracting in the third. The recession began in March of last year.<br><br> Consumer and Builder Confidence Consumers have grown more confident as the economy improved. Consumer confidence last month rose to 110.2, the highest in seven months, according to data from the New York-based Conference Board. Still, they were making fewer plans to buy a home.<br><br> The percentage of those planning to buy a home in the next couple of months dropped to 3.2, down from 3.9 percent in February and the lowest since Nov. 2000. Builders are also optimistic.<br><br> The National Association of Home Builders said last week its housing market index held at 60, the highest level in almost 1 1/2 years. The group forecasts sales will reach 902,000 new homes this year, the second-best year on record. Centex Corp., the largest U.S.<br><br> homebuilder by revenue, and its next four largest rivals all reported better-than-expected first-quarter earnings this month. Real estate agents also profited. ``Clearly, we have had a very, very robust first quarter,'' said Robert Moles, chief executive officer of Cendant Corp.'s Real Estate Franchise Group, in an interview last week.<br><br> The unit franchises the Coldwell Banker, Century 21 and ERA residential brokerages. Revenue at the real estate services unit rose 21 percent to $410 million in the first quarter. ``The idea of having these low interest rates and the economy being sound, bodes well for home ownership,'' Moles said.<br><br> The strong housing market is reflected is improved appliance sales. Whirlpool Corp., the largest U.S. appliance maker, said last week it's looking for a 10 percent rise in earnings this year.<br><br> Stock Exchanges ASIA Asian Stocks: S. Korea's LG Chem, Japan's Tokyo Electron Drop Seoul, April 25 (Bloomberg) -- South Korean stocks fell as LG Group companies' shares plunged after the founding family of the nation's third-largest business group shuffled its shareholdings, raising concern it's backtracking on promises to give its units management independence. The Kospi index fell 3.4 percent to 884.64 after a family member sold his 14 percent stake in LG Petrochemical Co.<br><br> to LG Chem Ltd. and bought its 4.3 percent stake in LG Investment & Securities Co. LG Group units made up four of the six most active stocks by value as minority shareholders fret they'll lose out.<br><br> ``After Enron, foreign investors in particular are trying to avoid companies that are not transparent,'' said Jung Sang Jin, who manages $38 million in equities at Global Asset Management Co. in Seoul. He said he doesn't own LG stock or plan to buy any.<br><br> In other markets, economic figures suggesting the U.S. may not be recovering as quickly as expected sent Japan's Nikkei 225 stock average down 0.3 percent and exporters in Singapore and Hong Kong lower. Taiwan Semiconductor Manufacturing Co.<br><br> slid on a report Intel Corp. won't place more orders with it, dragging the TWSE Index down 1.6 percent. The Philippines' PSE Composite Index fell 2.1 percent after ABS-CBN Broadcasting Corp.'s first-quarter profit plunged.<br><br> Markets in Australia, New Zealand and Malaysia are closed for public holidays. South Korea LG Chem tumbled 10 percent to 39,150 won on concern its purchase of a stake in affiliate LG Petrochemical contradicts earlier efforts to shed less profitable businesses. The stock plunged by its 15 percent daily limit yesterday.<br><br> ``There is still going to be some concern about LG's management,'' said Kim Joon Kie, a strategist at SK Securities Co. in Seoul. LG Petrochemical dropped for a fourth day, losing 10 percent to 13,350 won.<br><br> LG Investment slumped 8.6 percent to 18,000 won. LG Electronics Inc. lost 7.2 percent to 52,900 won.<br><br> Samsung Electronics Co., the world's biggest maker of memory chips, fell 3.1 percent to 418,500 won, tracking a slide by its U.S. peers. The Philadelphia Semiconductor Index fell for a fifth day to an eight-week low.<br><br> Japan The Nikkei fell 24.16 to 11,648.72, while the Topix index lost 0.2 percent to 1096.84. Tokyo Electron Ltd. shed 4.6 percent to 9390 yen, leading other chip-related companies lower.<br><br> Goldman Sachs Japan Ltd. downgraded the world's No. 2.<br><br> maker of semiconductor production equipment, citing concerns about demand. Banks as a group were the heaviest drag on the Topix. Mizuho Holdings Inc.<br><br> plunged 5.5 percent to 260,000 yen after the government said Mizuho misled regulators by concealing problems it identified while testing computer systems that caused transaction failures this month. Sony Corp., which 5 will report at 3:00 p.m. Tokyo time, gained 1.9 percent to 7,150 yen.<br><br> The world's No. 2 consumer electronics maker may post a 6.4 billion yen loss for the quarter ended March 31 because of declining electronics sales, said analysts. Fujitsu Ltd., which also reports today, rose 2.4 percent to 1,070 yen.<br><br> ``Earnings are likely to show that technology companies' restructuring efforts have paid off to restore profits in the current year'' said Sadaharu Nagumo, who helps manage $6.2 billion in Japanese equities for Japan Investment Trust Management Co. Meanwhile, ``the pace at which the U.S. economy is recovering may not be as fast as some had expected.'' Singapore, Hong Kong, Taiwan The latest U.S.<br><br> reports on durable goods and new home sales suggested Asia's biggest export market may not recover anytime soon, sending Singapore's economically sensitive stocks lower. Singapore Press Holdings Ltd., the island's dominant newspaper publisher, fell 0.9 percent to S$22.50. CapitaLand Ltd., which will announce results on Friday, gained 1.2 percent to S$1.64.<br><br> The island's No. 1 developer by sales is expected to say it had earnings growth in the three months ended March 31. The Straits Times Index rose 0.1 percent to 1736.66.<br><br> In Hong Kong, Johnson Electric Holdings Ltd., which generates a third of its sales in North America, dropped 3.2 percent to HK$11.95. Still, Techtronic Industries Co. rose 1.5 percent to HK$6.60 after its chairman said sales of the company's Ryobi power tools in the U.S.<br><br> will almost double this year. The Hang Seng Index slid 0.1 percent to 11,387.10. Taiwan Semiconductor, which will report first-quarter earnings later today, lost 3.2 percent to NT$92 after the Philadelphia Semiconductor Index slumped to an eight-week low.<br><br> Separately, the Economic Daily News reported Intel Corp. won't order more communications-related chips from Taiwan Semiconductor, the world's largest made-to-order chipmaker, because of weak demand. The TWSE Index lost 99.80 to 6355.59.<br><br> Philippines The PSE Composite Index lost 29.02 to 1325.80, bringing its six-day decline to 5.6 percent. ABS-CBN Broadcasting tumbled 13 percent to 31 pesos after reporting a 99 percent drop in first-quarter profit because of costs from firing workers and as it sold fewer advertisements. Its parent company Benpres Holdings Corp.<br><br> fell 3.2 percent to 60 centavos, a three-month low. ABS-CBN Broadcasting's results undermined confidence of a rebound in earnings for other companies this year. ``As far as evidence of a rebound in corporate profits is concerned that should happen sometime later this year,'' said Efren Cruz, who helps manage $5.9 million at the Kabuhayan Fund in Manila.<br><br> He said he may wait for stocks to drop further before buying EUR Nasdaq, London Exchange in Merger Talks, People Say New York, April 24 (Bloomberg) -- The Nasdaq Stock Market and the London Stock Exchange may merge, creating the world's largest equity market, people familiar with the talks said. The No. 2 U.S.<br><br> stock market -- home to technology companies such as Microsoft Corp., Intel Corp. and Cisco Systems Inc. -- and the biggest European stock exchange have been discussing a union for several months, the people said.<br><br> Any agreement is weeks away, and talks may still fall apart, they said. Nasdaq wants to expand overseas as traders turn to electronic networks, which offer cheaper services. About 35 percent of trading in Nasdaq shares takes place on these alternative systems.<br><br> The LSE has also tried to link with rivals; its bid for London's futures and options exchange failed in October and talks with Deutsche Boerse AG collapsed in 2000. ``Nasdaq is having to cope with the boom and bust of the tech bubble which has damaged the reputation of its market place,'' said Paul Killik, senior partner at brokerage Killik & Co., which is an LSE shareholder. ``LSE is under pressure to do a deal'' after recent failures to find a partner.<br><br> Bethany Sherman, a spokeswoman for Nasdaq, said: ``We talk to everybody, and we don't comment on specific rumors.'' LSE spokesman John Wallace declined to comment. Combining Nasdaq, founded in 1971, and the 229-year-old LSE would create a group bigger than the New York Stock Exchange in terms of the value of shares traded. Some $3.2 trillion of shares changed hands on the two exchanges in the first quarter, compared with $2.6 trillion on NYSE, according to data compiled by the International Federation of Stock Exchanges.<br><br> Biggest Companies More than 2,800 companies are traded on the LSE, including BP Plc, GlaxoSmithKline Plc and HSBC Holdings Plc -- Europe's biggest companies by market capitalization. The exchange has a market value of 1.3 billion pounds ($1.9 billion). Nasdaq was valued at $2.4 billion a year ago, when Hellman & Friedman bought 10 percent of the exchange that lists 3,900 companies.<br><br> The National Association of Securities Dealers, the owner of Nasdaq, wants to sell Nasdaq shares this year. A merger would give ``LSE access to a big market in the U.S., and Nasdaq clout in Europe,'' said Geoffrey Snow, a senior partner at Popes Stockbrokers, which owns 700,000 LSE shares. A combination may reduce technology and clearing costs, which could make trading less expensive.<br><br> The Paris, Amsterdam and Brussels exchanges combined into Euronext in September 2000, helping to reduce the cost of cross-border trading between those countries. Euronext now also includes the Lisbon bourse. Lowering Costs Stock exchange consolidation ``can take out cost if everyone uses one trading system,'' said Richard Grossman, a director at Redmayne Bentley Stockbrokers, an LSE shareholder.<br><br> Nasdaq, which is being advised by Lazard LLC Chief Executive Bruce Wasserstein and bankers from Dresdner, has had limited success in Europe. The market held talks with Deutsche Boerse in 1998. In 2000, Nasdaq examined combining with both the London and Frankfurt exchanges.<br><br> That ended when negotiations between the two European markets failed. The New York-based exchange spent $63 million last year to buy a controlling stake in Brussels-based Easdaq, which had only 60 listed companies. Nasdaq renamed the exchange 6 Nasdaq Europe.<br><br> Nasdaq, which plans to sell shares to the public later this year, is also in talks with Deutsche Boerse, though Nasdaq Chairman Hardwick Simmons and LSE Chairman Donald Cruickshank have been meeting more frequently, the people said. Furse Under Pressure The LSE, advised by Merrill Lynch & Co. and Hawkpoint Partners Ltd., has struggled to find partners, in part because it doesn't want to take a subsidiary role to another European exchange.<br><br> Another failure would increase shareholder unhappiness with Cruickshank and Chief Executive Officer Clara Furse, some investors say. ``There will be a very big question mark over the executive team if something goes wrong,'' said Angela Knight, chief executive officer of the Association of Private Client Investment Managers and Stock Brokers, whose members account for 65 percent of trades on LSE. After the discussions in 2000 with Nasdaq and Deutsche Boerse, LSE faced an unsuccessful hostile bid from OM Gruppen AB, the owner of the Stockholm Stock Exchange.<br><br> Then, in October, rival Euronext NV outbid the LSE for the London International Financial Futures and Options Exchange. Nasdaq's earnings fell 67 percent in 2001, to $40.5 million, as initial public offerings plunged. The earnings for 2000 exclude an accounting charge relating to the way fees from IPOs and other listings are treated.<br><br> LSE said net income for the six months ended Sept. 30 doubled to 22.6 million pounds. Tech, oil stocks push Europe lower LONDON, England (CNN) -- European markets ended mostly lower on Wednesday, with declines in the tech and oil sectors outweighing gains in drug and bank stocks.<br><br> London's FTSE 100 rose 0.5 percent to 5,218.2, while the CAC 40 blue chip index in Paris lost 0.8 percent to 4,528. Frankfurt's electronically traded Xetra Dax was down 0.5 percent to 5,164.51 in late trading (the German market was set to close at 1900 GMT). The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, lost 0.4 percent.<br><br> Leading the declines were the information technology and media sectors, while pharmaceutical and financial stocks were the top gainers. "We've entered a lull again, with tech issues drifting lower on the back of the slowdown in mobile sales," Richard Champion, a European fund manager at MGM Assurance, told Reuters. GlaxoSmithKline, Europe's biggest drug company, ended up 2.1 percent -- off its highs for the session -- after it said first-quarter profit rose almost 49 percent on soaring demand for asthma drug Advair in the U.S.<br><br> Franco-German drugmaker Aventis climbed 1.2 percent in Paris, with its shares also off their session highs. Switzerland's ABB, Europe's biggest engineering company, rose 5.6 percent in Zurich after it announced first-quarter net profit fell 17 percent to $114 million but said it remained confident it could hit its 2002 targets. In the financial sector, Barlcays jumped 6.3 percent in London ahead of its annual general meeting on Thursday, while Royal Bank of Scotland rose almost 4 percent after investment bank Morgan Stanley raised its share price target.<br><br> Germany's Commerzbank was up about 1 percent in late trading in Frankfurt. In the auto sector, DaimlerChrysler, the world's third largest carmaker, was up 1.3 percent -- off its highs for the session -- in late trading. The company reports its results on Thursday.<br><br> French automaker Renault climbed 1.3 percent in Paris after saying first quarter sales rose 2.4 percent, while like-for-like sales rose 5.3 percent to 9.285 billion euros. French drugs maker Sanofi-Synthelabo rose 1.9 percent after it reported a 15.4 percent like-for-like rise in first quarter sales. It also reaffirmed its target for a 25 percent jump in 2002 net pre-exceptional profit.<br><br> In the media sector, Vivendi Universal fell 2.2 percent as Chief Executive Jean-Marie Messier faced a stormy shareholders meeting in Paris after he fired Pierre Lescure, the head of French broadcaster Canal Plus, last week. Earlier, the company posted a higher than expected rise in first quarter earnings before interest, taxes, depreciation and amortisation -- thanks to strong gains in its telecoms and film business. In Amsterdam the AEX index fell 1.1 percent and the SMI in Zurich slipped 0.1 percent, while Milan's MIB30 index was flat.<br><br> USA U.S. Stocks Slide; Exxon Mobil Leads Dow Average to Its Lowest in 2 Month New York, April 24 (Bloomberg) -- U.S. stocks fell for the fifth day in six as confidence in a corporate profit rebound waned.<br><br> Exxon Mobil Corp. led the Dow Jones Industrial Average to its lowest level in more than two months. ``I can find tons of things to sell, but I can't find anything to buy,'' said Donna Van Vlack, head trader at Brandywine Asset Management, a unit of Legg Mason Inc.<br><br> that manages $8 billion in Wilmington, Delaware. The Dow slid 58.81, or 0.6 percent, to 10,030.43, with Exxon Mobil accounting for 12 percent of the drop. The Standard & Poor's 500 Index fell 7.82, or 0.7 percent, to 1093.14.<br><br> Computer-related shares contributed almost 40 percent of the decline as Microsoft Corp. tumbled to its lowest in six months. The Nasdaq Composite Index retreated 16.95, or 1 percent, 1713.34, its lowest since October.<br><br> Securities firms slid as New York State's probe into brokers' research widened and the chief financial officer of Morgan Stanley Dean Witter & Co. said revenue from sales and trading is falling. Government reports showing unexpected declines in durable goods orders and new home sales in March raised doubts about the pace of an economic recovery.<br><br> ``People are coming to the realization the economy is not likely to be as robust as many would expect,'' said Jim Luke, a fund manager at BB&T Asset Management, which oversees $25 billion in Raleigh, North Carolina. ``Stocks were looking forward to a turn in the economy.'' High Valuations The S&P 500 trades at about 22 times forecast earnings, closer to the record high of 26 than the historical average of 15. With 61 percent of the companies in the S&P 500 reporting first-quarter results, the average drop has been 8.3 percent, First Call said.<br><br> Earnings are forecast to rise 7.7 percent in the second quarter, and analysts have scaled back expectations for a rebound from 9 percent on Feb. 1. Salomon Smith Barney senior economist Steven Wieting said in a report today that the consensus estimate for profit 7 increases this year -- 15.4 percent, according to First Call -- ``assumes an implausibly robust'' gain.<br><br> Some 1.3 billion shares traded on the New York Stock Exchange, up 7 percent from the three-month daily average. Advancing and declining stocks were about even on the Big Board. Oil Shares Fall Exxon Mobil fell after the American Petroleum Institute reported an unexpected rise in U.S.<br><br> inventories last week. The largest publicly traded oil company lost $1.05 to $40.30 and has dropped 5.2 percent this week. Exxon yesterday reported first quarter earnings that declined 58 percent.<br><br> Amerada Hess Corp. slumped $1.44 to $78.06 after the company's first-quarter net income fell 58 percent on lower energy prices and a $22 million loss in its refining business. U.S.<br><br> shares of Royal Dutch Petroleum Co. lost $1.01 to $52.13. Calpine Corp.<br><br> fell $1.53 to $11.80. The power-plant owner reported a first-quarter loss and said it will sell as many as 69 million new shares and use the proceeds to pay debt. Probe Into Brokers Widens Morgan Stanley dropped $2.51 to $50.99.<br><br> CFO Stephen Crawford said revenue from sales and trading in the first half of the firm's fiscal second quarter declined from the previous quarter. Sales and trading typically account for about a third of the firm's revenue. Merrill Lynch & Co.<br><br> lost $2.49 to $44.65. New Jersey and California will join New York in leading a 50-state investigation of whether the company and other securities firms violated laws by misleading investors with biased stock research. Citigroup Inc., parent of Salomon Smith Barney, declined 80 cents to $44.70 and Lehman Brothers Holdings Inc.<br><br> fell $2.37 to $60.15. Microsoft led software shares lower. Chairman Bill Gates, who has been testifying this week in the company's antitrust case, said the biggest software maker will pull its flagship Windows operating system from the market if a penalty plan offered by nine states gets approved.<br><br> Microsoft fell 97 cents to $53.02 has dropped 7.3 percent over three sessions. Oracle Corp., the world's largest database- software maker, slid 62 cents to $10.50. Siebel Systems Inc., the biggest maker of software for managing customer accounts, dropped $1.42 to $23.76.<br><br> AOL Rises AOL Time Warner Inc. rose 19 cents to $19.30. After exchanges closed, the biggest Internet and media company said it posted a loss of $54.2 billion, the biggest in U.S.<br><br> history, on costs related to America Online Inc.'s purchase last year of Time Warner Inc. Sales rose 7.1 percent. AT&T Corp., the biggest U.S.<br><br> long-distance telephone company, had a wider loss and forecast a plunge in consumer long-distance sales will accelerate this year. AT&T fell 10 cents to $13.75. Amazon.com Inc., the largest Web retailer, jumped $2.73 to $16.79 after the company raised its forecast for 2002 income from operations.<br><br> Its first-quarter loss, excluding some expenses, was narrower than expected. Johnson & Johnson and Forest Laboratories Inc. gained after GlaxoSmithKline Plc and Forest Laboratories reported higher quarterly earnings as they sold more antidepressants.<br><br> Amgen Inc. advanced after J.P. Morgan Securities Inc.<br><br> analyst David Molowa said the company's revenue should grow more quickly than at major U.S. drugmakers. Forest Laboratories climbed $4.35 to $78.40, Johnson & Johnson rose 81 cents to $63.61 and Amgen gained $1.36 to $56.11.<br><br> The Russell 2000 Index of smaller stocks slid 2.97, or 0.6 percent, to 507.32. The Wilshire 5000 Total Market Index, the broadest measure of U.S. shares, lost 65.04, or 0.6 percent, to 10,359.97, paring $74.8 billion in value.<br><br> After Hours Trading Simplex Shares Gain, Stock Index Futures Advance New York, April 24 (Bloomberg) -- Simplex Solutions Inc. shares rose in extended trading after the maker of semiconductor- design software said it agreed to be acquired by larger rival Cadence Design Systems Inc. ON Semiconductor Corp.<br><br> dropped after the chipmaker filed with the Securities and Exchange Commission for approval to sell 40 million shares. The stock lost as much as 16 percent to $5.01 after the 4 p.m. close of the New York Stock Exchange.<br><br> U.S. stocks pared their losses during extended trading hours as WorldCom Inc., Microsoft Corp. and Oracle Corp.<br><br> gained. The Nasdaq 100 Index, which follows some of the largest companies traded on the Nasdaq Stock Market, rose 2.43, or 0.2 percent, to 1304.75, erasing some of its loss from earlier in the day. About 58 million shares were exchanged after 4 p.m., according to Nasdaq, down from 64 million yesterday.<br><br> Six of the ten most active stocks rose, two fell and two were unchanged. U.S. stock index futures rose, suggesting the indexes may open higher when 8 regular trading resumes Thursday.<br><br> Nasdaq 100 Index futures gained 1.50 to 1310.00. S&P 500 Index futures rose 0.60 to 1092.40. U.S.<br><br> stocks declined during regular trading hours for the fifth day in six during regular trading as investors grew less confident that profits are rebounding. The S&P 500 lost 7.82, or 0.7 percent, to 1093.14. The Nasdaq Composite Index dropped 16.95, or 1 percent, to 1713.34.<br><br> Simplex Solutions surged 46 percent to $17.98. The company said after the close of regular trading that it will be acquired by Cadence for about $18 a share in stock. Internet-security company Symantec Corp., one of the most active stocks after 4 p.m., rose after it reported fiscal fourth- quarter profit and sales that exceeded analysts' forecasts.<br><br> The shares rose $2.45 to $37.10. Company News ATT AT&T Corp. Has 1st-Quarter Loss as Sales Drop 11% New York, April 24 (Bloomberg) -- AT&T Corp., the biggest U.S.<br><br> long-distance telephone company, had a first-quarter loss as sales declined for a fifth straight quarter. The loss widened to $975 million, or 28 cents a share, from $192 million, or 10 cents, a year earlier, AT&T said in a statement distributed by Business Wire. Sales fell 11 percent to $12 billion.<br><br> The recent quarter included expenses of $856 million from a change in AT&T's acquisition-related accounting. Consumer long-distance revenue tumbled 22 percent because of increased competition from regional carriers such as Verizon Communications Inc. and as consumers relied more on mobile phones and e-mail.<br><br> AT&T said those factors will continue to crimp results, and it expects consumer sales to fall at a mid-20 percent range this year. Soaring debt and a declining share price forced Chief Executive Officer Michael Armstrong to break up AT&T, abandoning a plan to sell cable-TV, phone and wireless services under one roof. The New York company is planning a 1- for-5 reverse stock split to boost its share price after the sale of the company's cable- television unit to Comcast Corp.<br><br> later this year. AT&T shares rose 10 cents to $13.85 yesterday. The stock has fallen 19 percent in the past year.<br><br> Per-share figures are after the payment of preferred dividends. Sales in the year- ago first quarter totaled $13.6 billion. Year-ago figures exclude the results of AT&T Wireless, which became an independent company in July 2001.<br><br> AOL Time Warner AOL Time Warner enregistre une perte trimestrielle record de 54 milliards USD Le groupe a révisé à la baisse sa prévision d'EBITDA pour 2002.AOL Time Warner enregistre une perte trimestrielle record de 54 milliards USD Le numéro un mondial des médias et de l'Internet AOL Time Warner a enregistré une perte nette de 54,24 milliards de dollars au 1er trimestre 2002, un record aux Etats-Unis, selon un communiqué du groupe diffusé mercredi. Cette perte est liée à une charge exceptionnelle de 54 milliards de dollars consécutive à un changement de règles comptables sur les écarts d'acquisition (goodwill) le 1er janvier 2002 aux Etats-Unis. Sans cette charge, AOL Time Warner a enregistré une perte nette de 1 million de dollars, contre une perte nette de 1,4 milliard de dollars un an plus tôt au 1er trimestre.<br><br> Le chiffre d'affaires a augmenté parallèlement de 4% à 9,8 milliards de dollars par rapport à la même période de 2001. L'excédent brut d'exploitation (EBITDA) - une des références sur la santé financière des groupes de médias - a augmenté de 3% à 2,05 milliards de dollars. Il en résulte un bénéfice par action de 0,18 dollar, supérieur de 4 cents aux attentes des analystes (14 cents) selon le consensus établi l'agence First Call.<br><br> Le futur Pdg du groupe, Dick Parsons, qui prendra ses fonctions en mai, a concédé que la "faiblesse des recettes publicitaires d'AOL", leader mondial des services Internet, restait un "problème". Dans ce contexte, AOL Time Warner a réaffirmé son objectif d'une hausse de 5 à 8% du chiffre d'affaires en 2002 mais a révisé à la baisse sa prévision d'EBITDA. Celui-ci ne devrait augmenter que de 5% à 9% en 2002 par rapport à 2001, selon ses nouvelles projections, là où le groupe tablait sur une hausse de 8 à 12% en janvier.<br><br> (EB) Andersen Andersen's Enron Lapses Followed Faulty Audits of Other Firms Chicago, April 24 (Bloomberg) -- Duane Kullberg, then chief executive of Arthur Andersen & Co., says that as he read the three-page memo back in 1988, one word flashed in his mind: mutiny. The document revealed that Gresham Brebach, head of Andersen's consulting business, had held a secret meeting at New York's 21 restaurant that April with a dozen of the firm's top consultants. The consultants were furious at a noncompete clause placed in their contracts that would have prevented them from working for other consulting firms for a year if they left Andersen.<br><br> They discussed the value of the consulting business if it split from Andersen, and they plotted strategy with a lawyer and an investment banker they'd invited to the meeting. Kullberg, who ran Andersen from 1980 to 1989, says he realized that the meeting could mean only that Brebach was planning to lead an exodus of consultants from the accounting firm. Three days after he was leaked the memo by a partner who'd attended the meeting, Kullberg summoned Brebach to his office and fired him.<br><br> A long-simmering internal battle between Andersen's auditors and consultants was about to boil over. `Match in the Tinderbox' ``I had fired one of their crown princes, and that was the match in the tinderbox,'' says Kullberg, 69, who retired at the end of that year. He's now lead plaintiff in a lawsuit aimed at protecting pension rights for former Andersen executives.<br><br> Brebach's firing sparked an internal war between consultants and auditors that more than a decade later, in 2000, would rend the firm in two -- and help bring down the original enterprise. From the early 1980s on, the firm's partners had become increasingly dependent on lucrative consulting fees. Once much of that revenue had disappeared from Andersen because of the split, all bets 9 were off, say former company executives.<br><br> Andersen's top managers, they say, struggled to find new revenue sources and often allowed auditors to overlook shoddy accounting by clients. Evidence of those problems isn't hard to find. During the past five years, Andersen has been named as a defendant in 146 federal cases brought by clients and their shareholders, about 50 of which involve Enron.<br><br> Andersen's Record That's more than double the number brought against PricewaterhouseCoopers LLP, the largest U.S. accounting firm. In the past five years, Andersen has paid four of the five largest settlements for audit failures.<br><br> ``Senior officials at Andersen have trouble reconciling their duties to investors with their business interests,'' says Richard Breeden, who was chairman of the U.S. Securities and Exchange Commission from 1989 to 1993. The U.S.<br><br> Justice Department cited those trends when it indicted the firm in March for allegedly impeding an investigation into Enron Corp.'s collapse by shredding relevant documents. On April 17, talks with the Justice Department aimed at a settling the charges broke down, and the government is preparing for a May 6 criminal trial. A guilty verdict probably would prohibit Andersen from auditing U.S.<br><br> companies. `Big Problems' ``Arthur Andersen had big problems before we indicted this case,'' Assistant U.S. Attorney Samuel Buell told a federal judge in Houston during a hearing on March 20.<br><br> Andersen spokesman Patrick Dorton says all accounting firms are common targets in shareholder lawsuits. In July 1997, Andersen paid $90 million to settle shareholder claims against Colonial Realty Co., which went bankrupt in 1990. Colonial, based in Hartford, Connecticut, had used financial projections prepared by Andersen to raise money for real estate tax shelters.<br><br> Connecticut's attorney general, who investigated the firm's collapse, found it had corrupted an Andersen executive with $200,000 in cash payments, hotel stays, cruises, cars and assistance in getting loans. ``It was a systematic failure at Andersen,'' says Harold Williams, who, as SEC chairman from 1977 to 1981, was an early critic of allowing auditors to do consulting work. ``Something is fundamentally wrong.'' In May 2001, Andersen paid $110 million to settle claims that it had approved fraudulent audits at home appliance maker Sunbeam Corp.<br><br> Another $100 Million One month later, in June 2001, it paid almost $100 million more to settle similar claims involving Houston- based Waste Management Inc., the biggest U.S. trash hauler, which had been acquired by USA Waste Services Inc. in 1998.<br><br> In March 2002, it agreed to pay $217 million to settle charges brought by investors who lost millions when the Baptist Foundation of Arizona, a nonprofit religious group that invested in real estate on behalf of elderly church goers, went bankrupt. It backed out of the settlement on March 29, after its insurer -- a subsidiary of Andersen's parent company, Andersen Worldwide -- refused to pay. In all, Andersen paid almost $400 million from 1997 to 2001 to settle claims related to audit failures, according to industry newsletter Public Accounting Report.<br><br> Settlements involving the Baptist Foundation and Enron could double that figure. Rivals None of Andersen's rivals have paid as much. Only Ernst & Young LLP paid a larger settlement for a single failure, shelling out $335 million for its work for Cendant Corp., owner of the Avis rental car company and Days Inn hotel chain.<br><br> Andersen has lost about 200 clients this year. The company's partnerships are voting to join rivals, and a special committee led by former Federal Reserve Chairman Paul Volcker recommended Andersen shed its tax operations and remaining consulting business to focus solely on auditing. Chief Executive Joseph Berardino resigned in March, and the firm named Aldo Cardoso, a Paris-based partner who ran the firm's worldwide umbrella organization, to replace him.<br><br> Andersen told partners in a conference call on April 4 that it would cut 6,500 jobs to preserve cash and transfer much of its U.S. tax practices to Deloitte & Touche LLP. Lawsuits Andersen also faces lawsuits by Enron shareholders seeking billions in damages.<br><br> Those claims could leave the partnership unable to rebuild, even under the protection of a bankruptcy filing. The firm's fate is particularly stunning because of the stellar reputation it once enjoyed. Arthur Andersen, a Northwestern University professor who founded the firm in 1913, was the first industry executive to hire only professionally trained accountants.<br><br> Under former Chief Executive Leonard Spacek, who took over after Andersen's death in 1947, the firm served as the conscience of the accounting industry. When he was named to Andersen's oversight board, Volcker referred to Spacek's tenure as a time when Andersen was the ``gold standard'' for accounting firms. Spacek, who retired in 1973 and died two years ago, exhorted auditors to champion investors by resisting clients' efforts to cut corners.<br><br> Andersen's Past He helped create the Accounting Principles Board, an organization that set accounting and ethical standards. SEC officials still quote from Spacek's speeches calling for greater oversight and more public accountability for auditors. ``Arthur Andersen historically has been the type of firm that would stand up to its clients,'' says Scott Whisenant, a University of Houston accounting professor.<br><br> Spacek did something else with lasting implications for the accounting industry: He introduced it to consulting. In 1954, Andersen auditors, working with International Business Machines Corp., convinced General Electric Co. to install a Univac I, the first mainframe computer.<br><br> The computer system was designed to help GE streamline its payroll and help its auditors better monitor expenses. Within two years, Spacek was making speeches warning that accounting firms' burgeoning consulting businesses could compromise their independence and undermine the integrity of audits. Consulting Contracts The warnings didn't slow Andersen's own pursuit of consulting contracts.<br><br> By 1978, Andersen's consulting practice led the industry and accounted for 21 percent of the firm's $546 million in revenue, according to a 10 Harvard Business School study of Andersen. By 1984, consulting had surpassed auditing in profitability, the study found. While consulting was boosting profits, former executives say, it was tearing Andersen apart.<br><br> Consultants at Andersen had been complaining for years that they were under-represented in the firm's management. They wanted their pay to reflect the success of their business, which was driving Andersen's growth. In 1986, two years before Kullberg quelled the consultants' mutiny, Gresham Brebach's predecessor, Victor Millar, left to form a consulting group at Saatchi & Saatchi Plc.<br><br> Later, Kullberg rejected an overture from the British advertising firm to buy Andersen's consulting operation outright. Holding On Then CEO Maurice Saatchi flew to Chicago to meet with Kullberg at Andersen's headquarters. ``We had no intention of getting rid of our consulting business,'' Kullberg says.<br><br> ``When I said it wasn't for sale, he abruptly got up, turned around and walked out of my office.'' Saatchi didn't return a call seeking comment. In order to stem future defections after Millar's departure, Kullberg forced through changes designed to keep more consultants from leaving. Andersen amended its bylaws to require that consultants sign one- year noncompete agreements.<br><br> Brebach and other consultants got furious and began demanding greater control. ``We were getting a disproportionately small piece of the income, given what we were contributing,'' Brebach says. Brebach, now chairman of Seurat Co., a Waltham, Massachusetts-based consulting firm, says he never intended to lead a rebellion within Andersen.<br><br> Secret Meeting He called the secret meeting in April 1988 to determine the value of Andersen's consulting business as part of a plan to demand a larger role in running the firm, he says. The uprising nonetheless sparked changes within Andersen to keep its consultants happy. After firing Brebach, Kullberg created an internal panel that studied how to deal with the consultants' mounting discontent.<br><br> The group recommended splitting the firm into two units under one worldwide organization. At the end of 1988, the partners voted to form Andersen Consulting -- now known as Accenture Ltd. -- and Arthur Andersen LLP and to christen the new global entity Andersen Worldwide, which would be based in Geneva and serve as a parent company for Andersen partnerships around the world.<br><br> Andersen Consulting would focus on large consulting projects, while Arthur Andersen would bid on consulting work for smaller companies to make up its lost revenue. Resignation Kullberg resigned voluntarily after the vote. The firm's partners voted to elect Lawrence Weinbach as Kullberg's replacement.<br><br> George Shaheen was appointed head of Andersen Consulting, and Richard Measelle, who would be involved in two of Andersen's biggest audit failures, would run the audit business. Weinbach, now chairman of Unisys Corp., declined to comment. Shaheen, who ran online grocer Webvan Group Inc.<br><br> before it filed for bankruptcy in July 2001, also declined to comment. Under the agreement, Arthur Andersen was supposed to handle consulting contracts with firms that had a market capitalization of $2 billion or less, while Andersen Consulting focused on larger firms. The two would not share revenue, and that division created an immediate disparity between auditors and consultants.<br><br> Average Base Salary: $600,000 Consultants were earning $50,000-$100,000 a year more than their audit colleagues, the Harvard study estimated. Partners currently earn an average base salary of about $600,000 a year. Soon, each side was accusing the other of encroaching on clients.<br><br> The differences became irreconcilable, and in December 1997, Andersen Consulting filed for divorce, asking the International Chamber of Commerce's Court of Arbitration in Paris to allow it to split from Andersen Worldwide. ``The agreements that we reached provided for separate but complementary businesses, but since that time, Arthur Andersen itself has embarked on a strategic intent to build its own separate and distinct consulting practice,'' Shaheen said in a Bloomberg News interview at the time. ``For three or four years, we've been in internal discussions to resolve that, and we have been unable to do that internally.'' $100 Million Breakup Fee In August 2000, the court ruled that Andersen Consulting could separate.<br><br> Andersen Worldwide had earlier rejected an offer from the consulting arm to pay more than $1 billion to split. In the arbitration, Arthur Andersen received a $100 million breakup fee and overnight went from annual revenue of $16.3 billion to $7.3 billion. With its revenue lopped in half by the split, Andersen set out to bolster its own consulting business by seeking more clients.<br><br> That drive for fees caused Andersen to cut corners, say regulators investigating its work. For example, Andersen didn't change its audit policies or discipline key personnel in the wake of the Sunbeam and Waste Management cases. Several top managers who oversaw the Waste Management account also were involved in approving Enron's accounting after some partners questioned it, according to internal Andersen memos.<br><br> `Grit Their Teeth' ``They don't want to lose the account, so they grit their teeth and go along with it,'' says Roderick Hills, a former SEC chairman and Waste Management board member who led the company's internal investigation into its accounting. ``The more fees, the more danger.'' The seeds of the company's later woes had been planted almost two decades before, as consulting and other services began to overtake auditing as revenue producers. In one of the earliest examples, creditors blamed Andersen when automaker John DeLorean's car company collapsed in 1982.<br><br> DeLorean had left General Motors Corp. and started DeLorean Motor Co. in 1975, vowing to spawn an auto-making revolution.<br><br> His 12-cylinder sports car with gull-wing doors and stainless steel skin became best known for its role in the Back to the Future movies. It was never a commercial success. Creditors, including parts suppliers and the British 11 government, claimed Andersen auditors knew or should have known that DeLorean, through a shell business he controlled in Panama, had diverted $17.6 million from the car company to accounts in Europe.<br><br> Ignoring Fraud Andersen ignored the fraudulent accounting because DeLorean was a top client of Andersen at the time, says Michael Hess, an attorney who led the 1998 trial against the firm to recover losses for DeLorean creditors. ``Andersen didn't have an automotive company as a client, and there was a big desire to get a foothold into that market,'' Hess says. ``It would mean both prestige and revenue for them.'' A Manhattan jury found Andersen guilty of negligence and breach of contract, ordering it in March 1998 to pay as much as $110 million.<br><br> Andersen settled the case a year later for about $27.8 million, according to David Allard, a lawyer for the DeLorean trustees. Andersen also agreed to pay $35 million to the British government, which had helped finance DeLorean's factory in Northern Ireland. The firm settled the case without admitting wrongdoing.<br><br> Scapegoat Andersen spokesman Robert Hubbell said at the time that the firm had been made a scapegoat for DeLorean's schemes. The DeLorean audits were handled by Measelle, the future head of Andersen's auditing unit. Measelle didn't return phone calls seeking comment.<br><br> Andersen's relationship with Commercial Financial Services Inc. provided another early warning sign. Andersen began auditing CFS's books in 1988, and by the mid-1990s, it was providing a host of consulting services for the company as well, generating fees of $3.8 million from 1995 to 1998.<br><br> CFS started as a family-owned business in Muskogee, Oklahoma, in 1986. Its founder, William Bartmann, had gone bust selling oil field equipment and was angered by what he considered the shabby treatment of debtors by collection agencies. Defaulted Loans He bought a portfolio of defaulted loans and, working with his wife, Kathy, from their kitchen table, made a profit by using polite persuasion to collect the debts, according to a lawsuit filed last year against Andersen by the company's bankruptcy trustee.<br><br> By 1998, when the company collapsed, the Bartmanns were among the 400 richest Americans as listed by Forbes magazine, with a net worth of $1.4 billion. At Andersen's urging, CFS began to concentrate on the riskier businesses of collecting bad credit card debt and packaging and selling bad loans to investors -- a move that contributed to CFS's demise, the lawsuit says. The company overestimated its ability to collect overdue loans and filed for bankruptcy in December 1998, two months after Bartmann resigned amid allegations that, to boost profit, CFS sold some of the bad loans to another company it controlled.<br><br> Inappropriate Advice ``Andersen, as a counselor and an auditor, did not appropriately advise CFS and was partially responsible for its demise,'' says Harley Tropin, an attorney representing CFS's bankruptcy trustee. Andersen hasn't responded to the lawsuit. Andersen spokesman Dorton declines to comment on CFS or any other lawsuit involving the firm.<br><br> Even as it allegedly overlooked accounting lapses at CFS, Andersen was ignoring even bigger problems at Waste Management, according to the SEC. Waste Management paid Andersen almost $20 million from 1991 to 1997 for audit and consulting work. At the same time, according to SEC investigators, Waste Management was overstating revenue and fraudulently representing the financial state of its business so it could meet Wall Street expectations.<br><br> According to the SEC investigation, the company undervalued the depreciation on its trucks and equipment, failed to record expenses on its balance sheets and postponed costs. `Cooked the Books' ``For years, these defendants cooked the books, enriched themselves, preserved their jobs and duped unsuspecting shareholders,'' SEC Enforcement Director Tom Newkirk said when the agency filed civil charges against Waste Management executives in March. For four years, Andersen's auditors, backed by senior executives in the firm's Chicago headquarters, approved the practices.<br><br> Robert Allgyer, known as a ``rainmaker'' inside Andersen for his skill at winning business by pitching consulting, tax and other nonaudit services, was named lead engagement partner. Waste Management became one of Andersen's ``crown jewel'' clients. Allgyer first brought the accounting problems to senior Andersen executives' attention in January 1994, saying the trash hauler had overstated 1993 earnings by $128 million, or 21.5 percent of net income, according to internal SEC documents obtained by Bloomberg News.<br><br> Waste Management Senior executives, including Steve Samek, then head of the firm's commercial audit business, agreed that Andersen would approve the fraudulent audits and urge Waste Management to correct the situation, the SEC report says. Then Chief Executive Measelle was briefed on the decision, according to the report. Waste Management didn't address the issue, and the following year, Allgyer again met with senior Andersen executives, identifying $163 million in accounting errors, the report says.<br><br> Again, Andersen approved the trash hauler's financial statement. In 1995, Waste Management attempted to cover up past misstatements by using profits from the sale of its stake in ServiceMaster LP's ServiceMaster Consumer Services subsidiary, the documents say. Allgyer approved that in January 1996.<br><br> In October 1996, Samek was told about the improper accounting and was told it was ``an area of SEC exposure.'' Neither man ordered the problem corrected, the report says. Alleged Fraud The alleged fraud was exposed in 1998, when Waste Management was purchased by USA Waste Services and the new management restated earnings by $1.7 billion. A subsequent SEC investigation found Andersen responsible for approving audits it knew were fraudulent, and in June 2001, regulators fined the firm $7 million, the largest SEC penalty ever assessed against an auditor.<br><br> Samek, who was by 12 then U.S. country managing partner and on the firm's executive committee, was not named in the settlement -- at Andersen's insistence, according to two people familiar with the case. Measelle also wasn't named.<br><br> Andersen settled the case without admitting or denying wrongdoing. During the investigation, Allgyer was asked by SEC investigators whether the millions Andersen had been paid by Waste Management clouded the firm's judgment. He replied, according to the SEC report, ``We are in the business to make money.'' Firm's Biggest Customer No client made more money for Andersen than Enron, which by 2000 was the firm's biggest customer.<br><br> Enron paid $52 million in auditing and consulting fees in 2000, and Andersen partners openly discussed the prospects that those fees could double. ``They were getting paid too much money, and they were enchanted by the success of Enron,'' former SEC Chairman Hills says. Andersen was aware of accounting snares at Enron more than a decade ago.<br><br> The firm helped unravel a 1987 scandal involving Enron's oil trading division in Valhalla, New York. Traders sold short millions of barrels of oil in a bet that prices would fall. Unraveling the transactions, which were uncovered by Enron's internal auditors, ultimately cost the company about $140 million, says Michael Muckleroy, former Enron vice president in charge of the cleanup.<br><br> Questions About Enron By 2001, questions about Enron's accounting prompted Andersen partners to discuss whether it should continue auditing the Houston energy trader. In February of that year, eight Andersen partners in Houston met to discuss the Enron account via telephone with seven senior firm officials, according to a memo written by Michael Jones, one of the Houston partners. The auditors were concerned about private partnerships set up and run by Enron Chief Financial Officer Andrew Fastow.<br><br> Fastow was using the partnerships to buy Enron debt, poorly performing power plants and other weak assets, effectively hiding huge losses from shareholders. The Andersen partners discussed Fastow's compensation for running the partnerships, which Enron later would reve

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