Weekend Edition August 15 2008 at 01:54 PM Chi-Chu Tschang and Harry Maurer
Top Stories of the Week
Slightly Cheerier Consumers
For the first time in nearly two years, consumer confidence rose for the second straight month, according to the Reuters/University of Michigan Index. The index rose to 61.7 in August from 61.2 in July, probably boosted by falling oil prices.
Economists had predicted a slightly bigger boost, to 62. And consumers remain relatively gloomy, considering that the index averaged 85.6 in 2007.
Source: Bloomberg
Airborne's Big Settlement
The maker of a supposed cold remedy popular with millions, including Oprah Winfrey, agreed to settle a complain brought by the FTC by adding $6.5 million in refunds to a $23.5 million refund settlement it had already reached in settling a class action. "There is no credible evidence that Airborne products . . . will reduce the severity or duration of colds, or provide any tangible benefit for people who are exposed to germs in crowded places," said Lydia Parnes, director of the FTC's Bureau of Consumer Protection, which filed a complaint against Airborne's makers.
Source: Washington Post
Republic Says 'No Thanks' Again
The No. 3 trash hauler in the U.S., Republic Services, rejected Waste Management's latest takeover bid. Waste Management had boosted its initial offer this week from $34 a share from $37, or $6.73 billion. Republic responded by saying it still prefers its own plan to take over Allied Waste Industries. Waste Management said it was "disappointed" by the rebuff.
Source: CNNMoney.com
Global Slowdown
The world's economy, which had hung on despite weakness in the U.S., is now slowing sharply, with Europe showing the latest worrisome signs. On Aug. 14, the European Union said gross domestic product in the 15-country euro zone contracted 0.2% in the second quarter, marking the first such fall since the early 1990s in the currency bloc. At the same time, inflation in the U.S. hit a 17-year high. With the European report, four of the world's five largest economies--the U.S., Europe, Great Britain, and Japan--are facing recession. But growth remains strong in big emerging markets such as China and India.
Source: Wall Street Journal
TNK-BP Partners to Meet as CEO Banned from Working in Russia
The warring partners in Moscow-based energy giant TNK-BP are planning a September meeting to resolve their feud over management of the joint venture between BP and a group of Russian investors, even as a Russian court banned TNK-BP's American-born CEO Robert Dudley from working in Russia for two years.
Source: Times of London
InBev: Lukewarm Results Show Need for Bud
The Belgian-Brazilian brewing giant announced tepid second-quarter results, highlighting why it's so eager to add Anheuser-Busch's iconic American brands to its stable.
Source: BusinessWeek
Former Apple Counsel Settles Stock Back-Dating Charges
Nancy Heinen, the former chief counsel of Apple, has agreed to a $2.2 million settlement with the U.S. Securities and Exchange Commission, likely putting to an end charges that the company illegally back-dated stock option grants to key executives. The agreement suggests that no charges will be brought against CEO Steve Jobs--welcome news for Apple investors.
Source: Wall Street Journal, BusinessWeek
T-Mobile USA to Offer First Google Android Phone
The U.S. branch of Deutsche Telekom's T-Mobile wireless unit will be the first carrier to offer a smartphone based on the Android operating system developed by Google and associates, sources told the New York Times.
Source: Reuters/New York Times
What's Behind the iPhone Glitches?
Dropped calls and choppy Web surfing on Apple's latest smartphone stem from bugs in an Infineon chip. A downloadable software fix is on the way.
Source: BusinessWeek
Inflation: The Heat Is Rising
U.S. consumer prices climbed 0.8% in July, twice as much as expected, the Labor Dept. said. That puts prices up 5.6% from a year ago, the highest annual inflation rate in 17 years. Core prices, excluding volatile food and energy, rose 0.3%, more than the 0.2% economists had predicted. Rising inflation will put the Fed in a tougher position as it tries to navigate between the slowing economy and fears of an inflationary spiral. Higher prices beyond the realms of food and fuel, including clothing, airline travel, and education, may mean that the Fed won't be able to hold off raising rates for long. The Labor Dept. also reported that initial claims for unemployment insurance rose more than expected last week.
Source: BusinessWeek
More Auction-Rate Securities Settlements
JP Morgan Chase and Morgan Stanley became the latest big banks to reach a settlement with New York State Attorney General Andrew Cuomo as part of the auction-rate securities investigation. The two will buy back a total of $7 billion in such securities, the market for which collapsed in February. They will also pay fines of $25 million and $35 million respectively.
Source: Associated Press
Large Number of U.S. Companies Not Paying Taxes
Two out of three American companies paid no federal income taxes between 1998 and 2005. So says a new report from the Government Accountability Office, the investigative arm of Congress. The study also found that large companies were more likely to pay taxes than small ones.
Source: New York Times
Best Buy to Become First Independent iPhone Retailer
The biggest consumer electronics chain in the U.S., Best Buy, will begin selling the iPhone in September. The Richmond, Minnesota-based retailer, which has 965 stores nationwide, will become the first retailer other than AT&T and Apple to offer the iPhone.
Source: Star Tribune
Russian steelmaker buys U.S. pipemaker
Steelmaker Novolipetsk Steel has become the latest Russian company to make a major acquisition in the U.S. The London-listed Novolipetsk has announced a $3.53 billion deal for John Maneely, the largest independent tubular-steel manufacturer in the U.S. The Carlyle Group is a member of the group that currently owns John Maneely, which has 11 factories in the U.S. and Canada.
Source: Wall Street Journal
Aussie Company in $3.1 Billion U.S. Bio Deal
CSL, the world's second-largest maker of blood plasma products, announced it will buy Talecris Biotherapeutics for $3.1 billion from Cerberus Partners and Ampersand Ventures. The Australian company, which also earns royalties from Merck for the cervical cancer vaccine Gardasil, reported a 30% increase in profits to 702 million Australian dollars ($608 million).
Source: Australian
The U.S. Trade Deficit Shrinks
U.S. exports jumped sharply, for their biggest gain in four and a half years, as the nation's trade deficit unexpectedly shrank. The deficit narrowed by 4.1%, to $56.77 billion, in June, down from $59.20 billion in May. Economists had predicted the June deficit would come in at $62.70 billion. Exports, partly spurred by the weak dollar, have proved one of the strong points of the U.S. economy recently, and will probably contribute to an upward revision in second-quarter growth figures. Exports rose in June by 4%, to a new record, and imports also rose, but only by 1.8%.
Source: Wall Street Journal
Good News on Crops
Back in June, as floods devastated parts of the Midwest, prices of agricultural commodities soared on the assumption that the harvest would suffer. But now the Agriculture Dept.'s monthly crop estimate says that "ideal" weather since then has boosted expected yields sharply. The corn crop will be the second-largest ever and the soybean crop the fourth-largest, says the USDA. The agency cut its estimates for cash prices for the crops, saying that corn will average $5.40 a bushel, down from a previous estimate of $6, and soybeans will average $12.25, down from $12.75.
Source: Bloomberg
Conversation of the Day: Which Grads Earn the Most?
Reader Chris Boulanger writes: "As a grad from a small liberal arts college, my starting pay was no different from that of friends from larger public universities. Now I'm making about 25% more."
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