The news at a glance
Lehman Brothers: A damning ‘autopsy’; Search engines: Google and China trade jabs; Medical devices: Boston Scientific issues recall; Apparel: Tommy Hilfiger sold; Retailing: Snow can’t stop shoppers
Lehman Brothers: A damning ‘autopsy’It was “the Wall Street equivalent of a coroner’s report,” said Michael de la Merced and Andrew Ross Sorkin in The New York Times, and it wasn’t pretty. In a 2,200-page postmortem on the September 2008 demise of Lehman Brothers, court-appointed legal expert Anton Valukas found that the 158-year-old investment bank used “accounting sleight of hand” to mask its dependence on borrowed funds and conceal its precarious financial position. The report provides fresh ammunition to plaintiffs suing Lehman’s former executives for allegedly misstating the firm’s financial condition.
Lehman CEO Richard Fuld must have squirmed when he read the report, said Alan Abelson in Barron’s. Fuld’s claim that he was unaware of any “accounting trickery” at Lehman just doesn’t ring true. Other executives say he was fully briefed. Fuld denies any wrongdoing, though he admits that he pressured his senior executives to reduce the debt on Lehman’s books. What Fuld & Co. did might not have been illegal, but “it should be.”
Search engines: Google and China trade jabsThe showdown between Google and China has escalated, with Google vowing to stop self-censoring search results for Chinese users “within weeks,” said Loretta Chao and Ben Worthen in The Wall Street Journal. In response, a top Chinese official warned that Google would “bear the consequences” if it followed through on the threat. Analysts say the Chinese government will likely shut down Google’s China service if it doesn’t suppress content deemed objectionable. The dispute has frayed already testy relations between Washington and Beijing.
Medical devices: Boston Scientific issues recallMedical device maker Boston Scientific has halted sales of two types of cardiac defibrillators, explaining that it had not obtained federal approval for some of its manufacturing processes, said The Boston Globe. The company also recalled defibrillators that had already been sold but not yet implanted in patients. The manufacturing snafu is the latest in “a string of problems” for Boston Scientific’s defibrillators. Since buying the business from rival Guidant for $27 billion in 2006, Boston Scientific has issued multiple defibrillator recalls.
Apparel: Tommy Hilfiger soldIn a deal that creates one of the world’s largest clothing manufacturers, Phillips–Van Heusen this week acquired the Tommy Hilfiger clothing line for $3 billion, said Ben Rooney in CNNmoney.com. Executives of Phillips–Van Heusen, which also owns Calvin Klein and Izod, said “the deal was timed to take advantage of an improving global economic climate.” Although U.S. sales of Tommy Hilfiger apparel have slipped in recent years, the designer’s clothes have gained popularity outside the U.S., where Hilfiger draws 65 percent of its overall sales. Tommy Hilfiger himself will stay on as the brand’s chief designer.
Retailing: Snow can’t stop shoppersRetail sales rose a surprising 0.3 percent in February, “as shoppers braved blizzards to get to the malls,” said Bob Willis in Bloomberg.com. The fourth sales increase in five months suggests that the recovery “is broadening beyond manufacturing.” Electronics purchases jumped 3.7 percent, and restaurant and bar receipts posted their biggest gain since April 2008, a sign that consumers are more willing to spend money on nonessentials. Auto sales fell 2 percent, as snow kept shoppers out of showrooms.