Martha Stewart sued over stock sale

Journal Record, The (Oklahoma City), Aug 23, 2002

NEW YORK (AP) -- An investor in Martha Stewart's company has filed a lawsuit alleging she dumped shares of her own stock because she knew she would be investigated on suspicion of insider trading in the ImClone case.

The suit against Stewart was filed in U.S. District Court in Manhattan late Tuesday on behalf of Howard Rosen, a shareholder in Martha Stewart Living Omnimedia. It alleges that Stewart and other company executives sold about 5.3 million shares in the company worth more than $79 million -- to avoid losses they would have suffered after the ImClone scandal surfaced in June. Stewart announced Jan. 8 that she had sold 3 million shares, or 9 percent of her stake, to ValueAct Capital Management, a hedge fund, for $45 million.

The domestic design tycoon is currently being investigated to determine whether she sold shares of ImClone stock because she had insider information that the Food and Drug Administration was going to reject the company's application for its new colon cancer drug. She has maintained she did not know about the FDA's decision.

"Being a former stockbroker, Stewart knew that the suspicious timing of her ImClone stock sales would bring public, if not legal, scrutiny," the lawsuit said.

The insider-trading suit, which names Stewart and nine other defendants, seeks class-action status for investors who bought shares of Martha Stewart Omnimedia from Jan. 8 to July 24.

Steven Lipin, a spokesman for Martha Stewart Omnimedia, said the company "believes the lawsuit is without foundation, and we intend to defend it aggressively."

Shares of Martha Stewart Living fell 32 cents to close Thursday at $8.59 on the New York Stock Exchange.

Southwest Airlines cuts highest fare

DALLAS (AP) -- Southwest Airlines said Thursday it was cutting its highest-priced fare by one-fourth in a move that appeared aimed squarely at business travelers who have complained about high prices for last-minute travel.

Southwest said its top fare for last-minute travel would fall immediately to $299 one-way from $399. Among the routes where top prices will fall: Tampa, Fla. to Seattle, Los Angeles International to West Palm Beach and Fort Lauderdale to Las Vegas.

Northwest Airlines spokesman Kurt Ebenhoch said later that Northwest has matched the fares in markets where the two carriers compete.

Although Southwest has remained profitable since Sept. 11, it has seen a decline in travel. Southwest carried nearly 5.7 million passengers in July, an 8.5 percent decline from July 2001. At the same time, the Dallas-based carrier has expanded its capacity by 4 percent, resulting in more empty seats. In July, its planes averaged 73.2 percent occupancy, down from 75.8 percent full a year earlier.

Joyce Rogge, Southwest's senior vice president of marketing, said people are still flying but more of them are using discounted fares that carry restrictions. She said Southwest was trying to extend the discounting to last-minute travelers.

In trading Thursday, Southwest shares rose 38 cents to $15.23 on the New York Stock Exchange while Northwest gained $1.07 to $11.45 on the Nasdaq Stock Market.

Barnes & Noble profit disappoints

NEW YORK (AP) -- Barnes & Noble reported its first quarterly profit of the year Thursday, but the results were lower than expected and the company reduced its forecast for the rest of 2002.

For the quarter ending Aug. 3, the bookseller reported a profit of $1.4 million, or 2 cents per share, an improvement from a loss of $1.7 million, or 3 cents per share, reported a year ago. The results were well below the 10 cents per share consensus forecast of analysts surveyed by Thomson First Call.

The earnings reflected 15 cents per share in losses on investments in iUniverse.com, Book magazine and other items.

Total sales for the second quarter came to $1.16 billion, a 10 percent improvement from $1 billion a year earlier.

The company said it is lowering its second-half forecast because of the difficult retail environment. Still, the company said the third quarter will likely exceed results from last year, when the Sept. 11 attacks hurt sales. It also expressed optimism that new titles for the fall and holiday season will attract customers.

Overall bookstore earnings were $13.6 million, flat from the same period a year ago, although sales rose 4.9 percent. Within the group, performance varied.

For the first half, the company has lost $14.9 million, or 22 cents per share, compared with a loss of $13.2 million, or 20 cents per share during the same period in 2001. Sales rose to $2.29 billion from $2.06 billion.

Limited Brands profits surge

COLUMBUS, Ohio (AP) -- Limited Brands on Thursday reported its second quarter earnings rose 16.3 percent from a year ago, helped by stronger sales at Victoria's Secret and its apparel brands.

The specialty retailer said it earned $83.2 million, or 16 cents a share, in the quarter ended Aug. 3, compared with $71.6 million, or 16 cents a share, a year ago. Earnings per share held steady because there are now more shares outstanding.