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Walmart: In crisis over bribery allegations

Walmart was rocked this week by allegations that its top executives ignored evidence that the company paid millions of dollars in bribes to open stores in Mexico, said Jessica Wohl and Elinor Comlay in Reuters.com. The bribery allegations, detailed in a major investigative story in The New York Times, prompted a Justice Department investigation, and two U.S. lawmakers have announced their own inquiry. A resulting stock plunge wiped $10 billion off the company’s market value. Walmart executives in Bentonville, Ark., allegedly buried information about widespread bribes paid in Mexico, so as not to jeopardize meteoric growth in that country, now home to 20 percent of the retailer’s stores.

The blockbuster allegations could have major implications for the world’s largest retailer and its executives, said Anne D’Innocenzio in the Associated Press. If Walmart is found to have violated the Foreign Corrupt Practices Act, which prohibits bribes to foreign officials, the company could be on the hook for hundreds of millions of dollars in fines. Eduardo Castro-Wright, the former head of Walmart de Mexico and current vice chairman of Walmart, is among the top executives who could lose their jobs—or even go to jail. “This is going to be a major distraction for Walmart,” said business law professor Leonard Baynes of St. John’s University.

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Internet: Facebook’s growth slows

Facebook said this week that its profits and revenues were slipping, said Geoffrey A. Fowler and Shira Ovide in The Wall Street Journal. Revenue for the first quarter of 2012 was $1.06 billion, Facebook said, down 6 percent from the previous quarter, and profits were down 32 percent. The company blamed “seasonal trends” in advertising and the mounting expense of building data centers and hiring engineers. Facebook also announced that it would pay Microsoft $550 million for some of the patents that Microsoft bought from AOL last month.

Airlines: Unions stage revolt at American

Unions at bankrupt American Airlines, outraged at the scale of potential layoffs, struck an unusual deal with a rival airline last week, said David Koenig in the Associated Press. Pilots, flight attendants, and transport workers signed a deal with U.S. Airways to secure pay raises and fewer job losses if the two airlines join forces. But American says it wants to remain a standalone company, and this week asked a federal judge to approve its plan to trim 13,000 jobs and void current labor contracts in order to emerge from bankruptcy intact.

Tech: Apple reports impressive profits

Apple announced first-quarter profits of $11.6 billion, nearly twice those of the same period a year ago, quelling speculation about slackening growth, said Adam Satariano in Bloomberg.com. The company said strong demand overseas, particularly in China, pushed sales of iPhones to 35.1 million in the first three months of the year, an 88 percent increase over the same period last year. It also more than doubled its sales of iPads. These results “should erase any doubt in investors’ minds that this company can’t continue to deliver,” said Jack Ablin, chief investment officer of Harris Private Bank in Chicago.

Hollywood: Disney film chief exits

Rich Ross, the head of Walt Disney Studios, abruptly resigned last week after less than three years on the job, said Dawn C. Chmielewski and Rebecca Keegan in the Los Angeles Times. He “leaves a legacy of costly box-office flops,” including last year’s Mars Needs Moms, which cost $150 million to make but grossed just $39 million, and John Carter, which forced the studio to take a $200 million write-down, one of the biggest in movie history. Industry analysts say Ross, a former Disney television executive, never managed to adapt “to the world of film.”