Your update of the most important business news from dozens of respected news sources, selected by the editors of BusinessWeek.

Late Edition August 06 2008 at 03:01 PM Chi-Chu Tschang and Harry Maurer

Oil Down Sharply from July's Peak

The price of crude oil tumbled to $117.11 a barrel in futures trading today, on expectations that a global economic slowdown will curb demand for the commodity. Part of the decline can also be attributed to the dollar hitting a seven-year high.

Oil prices are now more than 20% below their July 11 record of $147.27 a barrel. For equities, a decline of that magnitude traditionally signals the beginning of a bear market. Yet analysts caution that oil's bull run may still have legs.

Source: Bloomberg.

Freddie Mac Slashes Dividend

Barely a week after Congress threw the nation's floundering mortgage giants a lifeline, Freddie Mac reported a second-quarter loss of $2.8 billion, because of rising levels of bad loans in its mortgage portfolio. The figure was nearly double the loss it recorded in the first quarter, and considerably larger than the market had been anticipating. The company also announced that it will cut its common stock dividend from 25 cents per share to 5 cents per share effective next quarter.

Source: Associated Press.

U.S. Authorities Net Identity-Theft Ring

U.S. prosecutors have charged 11 people in connection with allegedly stealing and selling more than 40 million credit and debit card numbers from nine U.S. retailers in what could be the country's biggest ever identity theft case. The scheme involved people from at least five countries, who breached companies' security systems and installed programs that gathered personal data which the alleged criminals then sold to others or used themselves, according to the indictments.

Source: Financial Times.

AOL Drags Down Time Warner Results

Time Warner reported that second-quarter profit fell 26%, to $792 million. The biggest culprit was the AOL division, which is struggling to meld a string of acquisitions into a leading online advertising network. One bright spot for Time Warner was the cable division, which continues to gain subscribers.

Source: Washington Post.

Wall Street eyes U.S. pension funds

The world's biggest big investment banks, insurers, hedge funds, and private equity shops have been quietly laying the groundwork to buy up and run troubled corporate pension plans. They would be a big prize for Wall Street. The $2.3 trillion pension honey pot has $500 billion in 'frozen plans' that are closed to new employees and whose benefits are capped. Critics worry that financial firms don't have workers' best interest at heart, which would put some 44 million current and future retirees at risk.

Source: BusinessWeek

Yahoo shareholder dissatisfaction grows

Yahoo on August 5 issued a new tally of its directors' election, showing that company directors -- including Chief Executive Officer Jerry Yang -- were re-elected to the board with much higher protest votes than previously reported. That indicates strong shareholder dissatisfaction with the company's performance and its failed merger negotiations with Microsoft.

Source: New York Times

Cisco profits remain strong despite downturn

Cisco Systems has posted stronger-than-expected fiscal fourth quarter results of $2.0 billion - up from $1.9 billion over the same period last year -- and said it expected weak economic conditions to be a relatively short-term problem. Cisco, which sells routers and switches that direct Internet traffic, has benefited as global phone companies and large corporations upgrade their networks to meet growing Internet use. Despite the good results, investors are worried that a weaker economy could reduce technology spending.

Source: Reuters

Siemens to part ways with Fujitsu

German company Siemens has informed its Japanese counterpart Fujitsu that it wants to end their nine-year joint venture, according to people familiar with the matter. That could set the stage for the sale or dismantling of a leading European maker of personal computers, although Fujitsu has the right of first refusal to buy Siemens's 50% stake in Fujitsu Siemens Computers.

Source: Wall Street Journal

Japan's government concedes economy is in trouble

Japan's government has said the economy is 'deteriorating,' acknowledging for the first time that the country's longest postwar expansion is coming to an end. On August 6, Shigeru Sugihara, head of business statistics at the Cabinet Office said: "there is a high possibility the economy has entered a recession."

Source: Bloomberg

High energy prices here to stay

Experts expect U.S. heating bills this winter to far exceed those of last year despite the recent drop in oil and natural gas prices. Currently, the price of natural gas is still 11% above last winter's levels and heating oil is 36% higher compared to the same period in 2007. Government projections show the costs of both fuels will remain high.

Source: New York Times

European banks post mixed results

BNP Paribas -- France's largest bank -- said on August 6 that second-quarter profits fell 34% as it wrote down $707 million of debt backed by bond insurers and increased risky-loan provisions. Net income dropped to $2.34 billion from $3.53 billion over the same period in 2007. On the same day, Commerzbank -- Germany's second-largest bank by assets -- said profits in the second quarter rose 6.4% as a tax gain and higher revenue from lending offset debt-related writedowns. Net income increased to $1.27 billion from $1.18 billion a year earlier.

Source: Bloomberg

News Corp profits jump 27%

Media conglomerate News Corp reported a 27% increase in its fiscal fourth-quarter net income, but said it faces a 'much more difficult economic environment.' Asset sales helped boost its fourth-quarter net income to $1.1 billion from $890 million a year earlier.

Source: Reuters

Facebook execs sell shares

Insiders at social networking Web site Facebook are selling stock at prices that suggest the sky-high valuation backers once placed on the company may prove unrealistic. A number of current and former executives -- including Chief Executive Officer Mark Zuckerberg and executive Matt Cohler -- allegedly have put some of their stock up for sale.

Source: BusinessWeek

Conversation of the Day: Red Ink and Fed-Think

Reader Insert Hugo van Randwyck writes: "The U.S. should increase incentives to switch to fuel efficient transport and spend less on overseas oil. Petrol is around $9 a gallon in Europe, and car companies make profits."

Tell Us: What's Your Economic Diagnosis-and Remedy?

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