Week in Review

Comcast Withdraws $49-Billion Disney Bid

Comcast Corp. abandoned its unsolicited $49-billion bid for Walt Disney Co., handing Disney Chief Executive Michael Eisner a victory as he fights for his survival in the face of widespread shareholder unrest.

The retreat marks a rare defeat for Comcast CEO Brian L. Roberts. Roberts viewed Disney as a way to catapult the company that his family built, already the nation’s cable TV leader, into a league alongside giants such as News Corp. and Time Warner Inc.

The withdrawal of the bid was the latest piece of good news for Eisner. It came one day after Disney’s board reaffirmed its support for the executive, who has so far weathered an investor movement to oust him after 20 years at the company’s helm.

Disney executives did not return phone calls seeking comment.

Separately, Comcast released its first-quarter financial results. Profit was $65 million, or 3 cents a share, reversing a loss of $297 million, or 13 cents a share, a year earlier. Revenue rose to $4.91 billion from $4.47 billion.

Google IPO Aiming at Individual Investors

Google Inc., which became a household name by making the Internet simple to navigate, announced its plan to raise as much as $2.7 billion in the most anticipated initial public offering since the tech bubble burst.

The IPO is expected to turn Google’s co-founders, Sergey Brin, 30, and Larry Page, 31, into billionaires and bring a new level of financial maturity to the 6-year-old company.

The shares will be offered in an unusual auction designed to limit Wall Street favoritism and help individual shareholders.

The IPO filing with the Securities and Exchange Commission shed light for the first time on one of the most secretive companies in Silicon Valley. Google said it has been profitable since 2001 and earned $105.6 million last year on sales of $961.9 million. It has amassed a cash hoard of $454.9 million.

Google didn’t say when it planned to offer its shares to the public. The price will be set after receiving bids from prospective buyers. The Mountain View, Calif., company didn’t specify whether it would list its shares on Nasdaq or the New York Stock Exchange. Credit Suisse First Boston and Morgan Stanley are underwriting the offering.

Google said it planned to use the money raised to make substantial upgrades to the computing system that processes its search results.

Milk Prices Up at Least 50% From a Year Ago

The minimum retail price of milk, which has been climbing steadily this year, took a big jump to at least $2.90 for a gallon of whole milk -- 50% more than a year ago. And in major supermarkets, a gallon could command more than $4.

A surge in cheese buying by food processors and restaurants has sent the value of most dairy commodities soaring on the futures market. And because droughts have made for poor grazing, farmers unwilling to pay for extra feed have instead sold some animals for slaughter, lured by record beef prices.

What’s more, the discovery last year of a case of mad cow disease in Canada closed off the U.S.’ biggest source of replacement dairy cows, doubling the price of milk calves. And manufacturing glitches have caused a shortage of the genetically engineered growth hormone that enables cows to make more milk; that is expected to cut milk output by 2% to 3% this year.

Taken together, all these factors triggered the milk price increase. In Southern California, the minimum so-called farm-gate price for a gallon of whole milk a farmer sells to a processor will rise by 47 cents, jumping to $1.85 from April’s $1.38, according to the California Department of Food and Agriculture.

Economy Grows at 4.2% Rate in First Quarter

The U.S. economy grew at an annual rate of 4.2% in the first quarter, the government reported, enough to keep recovery on track but below some economists’ bullish expectations.

The Bush administration hailed the report from the Commerce Department as proof that its economic prescriptions were working. But analysts said it remained unclear whether the economy was growing fast enough to put large numbers of the unemployed back to work.

Some economists were troubled by signs of accelerating inflation, a trend that could spur the Federal Reserve to begin raising interest rates relatively soon to keep prices in check.

The first quarter’s growth in gross domestic product followed an 8.2% surge in the third quarter of 2003 over the previous quarter and a 4.1% gain during the fourth quarter of 2004.

Economists surveyed in advance of the report had predicted a first-quarter growth rate of 5%.

In a separate report, the Labor Department said initial claims for jobless benefits fell 18,000 in the last week to 338,000, a higher-than-expected decline.

Apparel Maker VF Agrees to Buy Vans

Vans Inc., a trailblazing Southern California maker of shoes for skateboarders, agreed to be bought by apparel giant VF Corp. for $396 million in cash.

Vans would retain its name and headquarters in Santa Fe Springs, but the proposed purchase by Greensboro, N.C.-based VF, the nation’s largest publicly held apparel company, would mean a notable shift for an icon of youth culture.

VF’s offer of $20.55 a share represented a 30% premium over the shoemaker’s Monday closing price of $15.81.

Vans would be the latest in a string of acquisitions by VF. VF, with 2003 sales of $5.2 billion, has used the deals to grow beyond its huge-but-cyclical jeans business. The company makes jeans under the Lee and Wrangler brands, among others. The company’s products also include JanSport backpacks and Vanity Fair bras.

WTO Ruling Rattles State Cotton Farmers

In an interim ruling, the World Trade Organization favored Brazil in a complaint that the U.S. cotton subsidy program violates global trading rules by distorting world prices and blocking developing nations’ goods from reaching market.

It was the first case by the WTO to examine the effect of export subsidies on agricultural products. The U.S. last year gave producers of rice, wheat, cotton and other commodities more than $19 billion in aid.

The White House vowed to appeal the WTO’s decision and said it considered the subsidies to be “fully consistent” with international trading rules.

Meanwhile, cotton farmers in California are being forced to think about a world without subsidies. Farmers might convert their acreage to crops that don’t receive government aid but could still be profitable, or sell off land for urban development. Both moves would accelerate trends already underway in California, potentially helping to change the face of the state’s $31-billion agriculture industry and the landscape of the Central Valley.

AT&T; Proposes End to Dispute With Baby Bells

AT&T; Corp. proposed that it use its own equipment to provide local telephone service across the country, part of a bid to break a deadlock over access to residential lines owned by the regional Baby Bells.

The nation’s largest seller of long-distance service has been locked in a bitter dispute with Bell companies such as SBC Communications Inc. over the rates the Bells charge competitors to use their networks.

Under the AT&T; proposal, the Baby Bells could raise the monthly price for renting the full package of hardware and software needed to provide telephone service by $1 a year for three years. In California, Bell rivals pay an average of about $14 a month per line for that service from SBC, the state’s dominant local phone company.

In exchange, the monthly price for renting only the copper wires that run to homes and businesses would be cut by $1 a year. SBC currently is allowed to charge $10 a month per line.

Bell companies were skeptical about parts of the proposal.

An SBC spokesman said the company would review AT&T;’s framework.

State Reaches Settlement With Dynegy, NRG

California reached a $281.5-million settlement with Dynegy Inc. and NRG Energy Inc. over allegations of widespread abuses during the state’s energy crisis, Atty. Gen. Bill Lockyer said.

The state had accused the firms’ joint venture West Coast Power of withholding power and conducting trading schemes to push up electricity prices in 2000-01. Much of the settlement would benefit ratepayers, but it was unclear how much would trickle down to customers.

If the California Public Utilities Commission and Federal Energy Regulatory Commission approve the accord, state regulators will drop their financial claim against West Coast Power and FERC will end its inquiry into the firm’s conduct during the energy crisis. But the attorney general’s office is looking into allegations that Houston-based Dynegy engaged in price gouging and made unjust profit from its California operations.

Dynegy Chief Executive Bruce A. Williamson said: “We are pleased to reach this agreement ... and we appreciate efforts to resolve the issues from the past so that we all may continue to focus on providing safe and reliable electricity.”

Executives at Minneapolis-based NRG couldn’t be reached for comment.

Jury Starts Deliberations in Frank Quattrone Trial

Jurors began deliberations in the retrial of Frank Quattrone, a star investment banker during the Internet stock bubble who is accused of obstruction of justice by sending an e-mail encouraging colleagues to destroy files.

The Manhattan federal court jury started deliberating Friday afternoon, after the prosecutor said in closing arguments that Quattrone purposely told colleagues at Credit Suisse First Boston to destroy files so he could protect his personal fortune from a federal inquiry.

The jury was deliberating into Friday evening but asked to return Monday, an apparent sign they did not expect to reach a verdict before the weekend.

Jurors asked to review testimony from Quattrone and two high-ranking CSFB lawyers who testified at the trial. Jurors also asked for all e-mails introduced at the trial that were to or from Quattrone -- a collection that would amount to hundreds.

Quattrone’s lawyer said prosecutors had built a flimsy case.

For a preview of this week’s business news, please see Monday’s Business section.