Enron Prosecutor Attacks Theory
Of 2001 Collapse
By Alexei Barrionuevo and Simon Romero
THE NEW YORK TIMES HOUSTON
A prosecutor sought Thursday to undercut Kenneth L. Lay’s assertion that short sellers were part of a “conspiracy” that caused Enron’s downfall, showing that one of Lay’s own sons had bet that the company’s stock would decline.
Under cross-examination by the prosecutor, John C. Hueston, Lay expressed surprise and became flustered when confronted with brokerage records showing that Mark Lay, his son, had sold Enron stock before its bankruptcy filing in December 2001. Lay said he did not know until Thursday that his son had been selling Enron stock during that time.
Mark Lay, a former Enron executive, left the company in 2001 to enter a local Baptist seminary.
In a day of testy exchanges, the prosecutor relentlessly attacked Kenneth Lay’s explanation for Enron’s collapse. He also suggested Lay lied about Enron’s plans to pursue a water business so he could avoid a potentially fatal credit downgrade.
And Hueston suggested Lay should have been more forthcoming with investors about tens of millions of dollars in Enron stock he was selling to meet bank demands to repay loans — even as he portrayed himself as bullish on the stock.
Costs Cloud Microsoft’s Sales Rise
By John Markoff
THE NEW YORK TIMES SAN FRANCISCO
Microsoft reported strong third-quarter revenue growth on Thursday, but analysts said the company also telegraphed a significant increase in spending, an indication that it was preparing to take on its big online rivals, Google and Yahoo.
The company reported a 13 percent increase in sales for the quarter, to $10.9 billion, and a 16 percent rise in net income, to $2.98 billion, or 31 cents a share, from $2.56 billion, or 28 cents, in the period a year earlier.
The earnings were 2 cents a share below what analysts surveyed by Thomson First Call had forecast.
The chief financial officer for Microsoft, Chris Liddell, said: “Overall for the quarter, we are very happy with the continued market momentum we’re seeing. Revenue is accelerating for the year.”
Despite a bullish stance on revenue, Microsoft evidently surprised analysts by predicting significantly higher expenses in the next fiscal year. Its shares, which had gained 15 cents, to $27.25, in regular trading, fell on the news of the higher expenses, dropping more than 6 percent, to $25.50, after hours.
Executives also said they did not see any immediate increase in profit on the horizon even as Microsoft prepared for its largest release of new products in more than five years.
The company said once again that the update for its new operating system software, Windows Vista, would not be available until January.