AP Business Hightlights
On Monday February 7, 2011, 6:05 pm EST
More confident consumers
break out credit cards
WASHINGTON (AP) --
Americans are putting more money on their credit cards after more than two
years of cutting back, a sign that they are gaining confidence in the economy.
The first increase in
credit-card debt since the financial crisis hit helped to boost overall
consumer borrowing 3 percent in December, to a seasonally adjusted annual rate
of $2.41 trillion, the Federal Reserve said Monday. It was the third straight
monthly gain.
Borrowing in the category
that includes credit cards rose 3.5 percent, the first rise since August 2008.
Borrowing on auto loans increased 2.8 percent.
Mark Zandi, chief economist
at Moody's Analytics, viewed the gain as an encouraging sign that households
are becoming more confidence about the economy and jobs. He also said banks are
loosening some lending restrictions put in place after the financial crisis.
Even with the December
gains, consumer borrowing is just 0.7 percent higher than the more than
three-year low hit in September. It is 6.6 percent below the high set in July
2008. But analysts predicted further credit gains in coming months.
FDIC seeks delay in bonuses
for top bank execs
WASHINGTON (AP) -- Federal
regulators have proposed making top executives at large financial firms wait at
least three years to be paid half of their annual bonuses, a move designed to
cut down on risky financial transactions.
The Federal Deposit
Insurance Corp. voted Monday to advance the rule, which builds on more general
requirements in last year's financial regulatory law to curtail risk-taking.
The rule targets firms with $50 billion or more in assets, seeking to tie
bonuses with financial performance over a longer time period.
The requirement would apply
major financial institutions, such as Bank of America Corp., JPMorgan Chase
& Co., Citigroup Inc., Goldman Sachs Group Inc., and Wells Fargo & Co.
Lawmakers and government
officials have blamed outsize bonuses for helping to fuel the financial crisis,
saying they encouraged short-term risk-taking. The financial regulatory law
enacted last year simply directed government regulators to put in rules to
prohibit incentive-based payments that encourage excessive risks.
Other financial regulators
-- including the Federal Reserve, two Treasury Department agencies, and the
Securities Exchange Commission -- must also adopt the bonus rule before it is
finalized. They are expected to act in the next few weeks, and the final rule
could take effect by the fall, officials said.
Hasbro 4Q earnings fall on
soft US game demand
NEW YORK (AP) -- Hasbro
Inc.'s earnings slipped 16 percent in the fourth quarter as U.S. demand for
board games waned later in the year.
But the toy maker's net
income still beat Wall Street expectations, and the company said it expects
earnings and revenue growth in 2011.
Hasbro, which raised its
quarterly dividend by 20 percent four days ago, admits it had some missteps in
its games category in the fourth quarter, including trying to promote too many
products at the same time. It makes many of the classics, including Life, Clue,
Cranium and Battleship.
The fourth quarter is a
crucial one for toy makers because it includes the holiday season. The period
can often make up nearly a third of annual revenue.
Hasbro's quarterly net
income fell to $140 million, or 99 cents per share, for the three months ended
Dec. 26. That compares with $165.6 million, or $1.09 per share, a year ago.
This surpassed the 93 cents
per share that analysts surveyed by FactSet predicted.
Danaher agrees to buy
Beckman Coulter for $5.87B
NEW YORK (AP) -- Medical
and industrial instruments maker Danaher Corp. said Monday it agreed to buy
medical testing instrument maker Beckman Coulter for about $5.87 billion.
Beckman Coulter Inc. makes
products that simplify and automate biomedical testing. It will become part of
Danaher's life sciences and diagnostics business if the deal goes through. That
would more than double the life science unit's revenue, making make it
Danaher's largest business.
Beckman Coulter, which is
based in Brea, Calif., had reportedly put itself up for sale in December.
Danaher has agreed to pay
$83.50 per Beckman Coulter share, a 45 percent premium over Beckman's share
price on Dec. 9 -- the day before the acquisition rumors first surfaced.
Danaher valued the purchase at $6.8 billion including Beckman Coulter's debt
and its cash on hand.
The deal is expected to be
completed in the first half of the year. Closing depends on a majority of
Beckman Coulter shareholders tendering their shares in favor of the deal.
Beckman Coulter said its board unanimously supports the sale.
Oil driller Ensco to buy
Pride for $7.31B
LONDON (AP) -- Oil rig
company Ensco PLC has agreed to buy U.S. rival Pride International Inc. in a
$7.3 billion deal that will create the world's second largest offshore drilling
company.
The deal provided a boost
Monday for drilling industry shares following several months of political and
public pressure in the wake of the Gulf of Mexico oil spill last April.
The combined company will
be valued at $16 billion and have a total of 74 rigs, including 21
ultra-deepwater and deepwater platforms, in key locations around the world --
placing it behind Switzerland's Transocean Ltd., the owner of BP's ill-fated
Deepwater Horizon rig in the Gulf and the world's largest driller.
Houston, Texas-based Pride
brings expertise building and operating ultra-deepwater semi-submersibles and
drillships, with customers in the fast-growing markets of Brazil and West
Africa, to the table. London-based Ensco, meanwhile, is a leading provider of
rigs in the North Sea, Southeast Asia, North America and the Middle East.
Egypt raises $2.2B in
T-bill auction
CAIRO (AP) -- Egyptian financial
officials promised to restart the stock market in a week and raised more than
$2 billion through Treasury Bills on Monday, as the government pushed to
maintain investor confidence in the country where fallout from the prolonged
protests drove the currency to new six-year lows.
The developments
spotlighted frenetic damage control efforts to an economy expected to take a
bruising after the demonstrations demanding the ouster of President Hosni
Mubarak rattled a nation once seen as a pillar of stability in a restive
region.
Tourists fled by the tens
of thousands while businesses, banks and the bourse were closed for over a week
as the protests sporadically drifted into violence.
The Central Bank's T-bill
auction drew 13 billion Egyptian pounds ($2.2 billion) in offers, providing the
government with a rare bit of good news in a week in which predictions of the
protests' impact included a devaluation of the pound by as much as 25 percent
and a cut in GDP growth from 5.3 percent to roughly 3.7 percent.
The 3-month T-bill came in
with yields at an average of nearly 11 percent, according to the Central Bank's
website.
The buyers of the bills
were essentially domestic banks, with their international counterparts
reluctant to enter the market given the uncertain political climate in the
country, brokers and economists said.
Chesapeake Energy plans to
sell $5B in assets
NEW YORK (AP) -- Chesapeake
Energy Corp. said Monday it will sell all of its assets in a massive natural
gas field and stakes in two companies as part of a plan to reduce debt and
focus on more profitable regions.
Chesapeake says it hopes to
bring in more than $5 billion, before taxes, from the sales. Chesapeake Energy
is aiming to reduce its debt by 25 percent by 2012.
The natural gas properties
are located in the Fayetteville shale, a natural gas field in central Arkansas.
Chesapeake Energy is the second largest producer of natural gas there.
The Oklahoma City company
says it will sell its 25.8 percent stake in Frac Tech Holdings LLC and its 20
percent piece of Chaparral Energy Inc.
The move will allow
Chesapeake to focus more on higher-margin oil assets as oil prices spike and
natural gas prices remain low. The Fayetteville shale is not as profitable as
several other major U.S. natural gas fields.
German industrial orders
fall in December
BERLIN (AP) -- German
industrial orders fell an unexpectedly sharp 3.4 percent during December, due
mainly to a large drop in demand for capital goods from non-eurozone countries,
the Economy Ministry reported Monday.
Domestic industrial orders
in December dropped 2.4 percent when adjusted for price changes and seasonal
factors, while foreign orders dropped 4.2 percent.
Orders from within the
eurozone rose 3.7 percent, however, while outside the 17-nation bloc they fell
8.9 percent, the ministry said.
The drop followed a robust
5.2 percent overall rise in industrial orders in November over the previous
month, and ING economist Carsten Brzeski said it was partially an expected
correction.
By one measure, federal
taxes lowest since 1950
WASHINGTON (AP) -- Taxes
too high?
Actually, as a share of the
nation's economy, Uncle Sam's take this year will be the lowest since 1950,
when the Korean War was just getting under way.
And for the third straight
year, American families and businesses will pay less in federal taxes than they
did under former President George W. Bush, thanks to a weak economy and a
growing number of tax breaks for the wealthy and poor alike.
Income tax payments this
year will be nearly 13 percent lower than they were in 2008, the last full year
of the Bush presidency. Corporate taxes will be lower by a third, according to
projections by the nonpartisan Congressional Budget Office.
The poor economy is largely
to blame, with corporate profits down and unemployment up. But so is a tax code
that grows each year with new deductions, credits and exemptions. The result is
that families making as much as $50,000 can avoid paying federal income taxes,
if they have at least two dependent children. Low-income families can actually
make a profit from the income tax, and the wealthy can significantly cut their
payments.
AOL steps up news, ad
effort with Huffington Post
AOL Inc., once the king of
dial-up Internet access known for its ubiquitous CDs and "You've got
mail" greeting in its inboxes, is stepping up its efforts in news and
online advertising with a $315 million deal to buy news hub Huffington Post.
The acquisition announced
Monday is among the most aggressive strategic moves engineered by AOL CEO Tim
Armstrong in an effort to reshape a fallen Internet icon.
Perhaps just as important
as picking up a news site that ranks as one of the top 10 current events and
global news sites, AOL will be adding Huffington Post co-founder and media star
Arianna Huffington to its management team.
After the acquisition
closes later this year, Huffington will run AOL's growing array of content,
which includes popular technology sites Engadget and TechCrunch, local news
sites Patch.com and online mapping service Mapquest.
By The Associated Press
The Dow Jones industrial
average rose 69.48 points, or 0.6 percent, to 12,161.63. The Dow has now risen
for six straight days, its longest winning streak since November.
The Standard & Poor's
500 index rose 8.18, or 0.6 percent, to 1,319.05. The Nasdaq composite gained
14.69, or 0.5 percent, to 2,783.99.
West Texas Intermediate
crude, or WTI, for March delivery fell $1.55 to settle at $87.48 a barrel on
the New York Mercantile Exchange. In London, Brent crude lost 58 cents to settle
at $99.25 per barrel on the ICE Futures exchange.
In other Nymex trading in
March contracts, heating oil rose 1.06 cents to settle at $2.7061 a gallon and
gasoline futures gained 1.52 cents to settle at $2.4505 a gallon. Natural gas
fell 20.6 cents to settle at $4.104 per 1,000 cubic feet.