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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Elwood P. Dowd who wrote (94149)	12/11/2001 4:13:09 PM
From: Elwood P. Dowd	Respond to of 97611

Houston economy slows as high-profile layoffs hit By Andrew Kelly HOUSTON, Dec 11 (Reuters) - Advantage BMW sales manager Dale Lasko says it's still too early to know how hard the collapse of energy-trading giant Enron Corp. (NYSE:ENE - news) will hit sales of his luxury German cars, but business has already started to slow. ADVERTISEMENT ``Enron employees are important customers for us and we've had a few canceled orders,'' said Lasko, whose dealership is just a few blocks from Enron's downtown Houston headquarters. Dixie Yeck and her husband Mike certainly won't be dropping by Lasko's showroom any time soon. A flashy new set of wheels is just about the last thing on their minds after they both lost their jobs at Enron as well as a six-figure sum invested in Enron stock. ``We're putting our house on the market. We just want to be mobile enough to accept any job that's out there,'' said Yeck who was laid off from Enron's broadband unit. Enron laid off about two-thirds of its 7,500 Houston-based employees last week after filing for bankruptcy protection on Dec. 2, the latest in a wave of mass lay-offs to hit a city that until recently had seemed almost immune to the U.S. economic downturn. Continental Airlines Corp. (NYSE:CAL - news) is cutting some 3,000 jobs in its hometown of Houston and a total of 12,000 worldwide as it adjusts to the decline in air travel triggered by the Sept. 11 attacks on the World Trade Center and the Pentagon. Houston-based Compaq Computer Corp. (NYSE:CPQ - news) is laying off 3,000 workers here because of slow computer sales and that number is likely to rise as Compaq and Hewlett-Packard Co. (NYSE:HWP - news) target 15,000 job cuts as part of a proposed merger. SLOWDOWN ARRIVED LATE IN HOUSTON Despite the gloomy news from some of its biggest corporate citizens, the nation's fourth largest city has only recently started to show signs of losing steam. Houston's economy began to contract in October after 31 straight months of expansion and it continued to shrink in November, according to the National Association of Purchasing Management. Not long ago Houston was plucking the fruits of a natural gas drilling boom that kept the regional economy humming even as things took a turn for the worse in the rest of the country. But gas prices fell as the national economy weakened and the number of rigs drilling in the United States fell from a peak of almost 1,300 in July to a current levels of just over 900. ``Upstream energy really buffered Houston from the national slowdown but it faltered in midsummer,'' said Jim Kollaer of the Greater Houston Partnership, a local economic development body. While Houston once followed its own cycle of boom and bust, based on the ups and downs of oil and gas prices, diversification of the economy has reduced dependence on the energy sector and brought Houston more into line with the national economy. ``Diversity has led to homogeneity with the rest of the country,'' said Robert Hodgin, Associate Professor of Economics at the University of Houston-Clear Lake. Hodgin said the indirect impact of job cuts such as those at Enron, Compaq and Continental was probably greater on the regional economy than the direct impact. ``People read about it, they see it on television, they cinch up, they stop moving, they stop spending,'' he said. JOB GROWTH SEEN SLOWING IN 2002 Nevertheless, the Greater Houston Partnership is forecasting that the region will see a net gain of 15,000 jobs in 2002 after adding almost 42,000 this year, assuming that a national economic recovery gets under way in the second quarter of the year. That would represent an increase of 0.7 percent, the slowest rate of job growth since 1991, when employment actually fell in Houston, but it would still be a better performance than is currently projected for the national economy. Unemployment in the Houston area was running at 4.3 percent in October, the latest month for which statistics are available, compared with a national rate of 5.4 percent. Other recent statistics are not yet reflecting much of a slowdown. TeleCheck Services, a unit of First Data Corp. (NYSE:FDC - news), estimates that retail sales here rose 2.8 percent in October compared with a rise of 1.4 percent nationwide. And sales of automobiles and existing homes rebounded in October after falling in September, boosted by zero-interest financing deals and low mortgage rates. Real estate developer Trammel Crow Co. (NYSE:TCC - news) has recently postponed construction of a 34-storey tower combining office space and apartments because of concerns that Enron's demise will lead to a glut of office space in and around downtown. But on a brighter note, Houston is set to gain 760 jobs that planemaker Boeing Co. (NYSE:BA - news) is moving here from California.