On Friday February 25, 2011, 6:08 pm EST
State spending cuts slow US
economic growth in Q4
WASHINGTON (AP) -- Deeper
spending cuts by state and local governments weighed down U.S. economic growth
in the final three months of last year.
The government's new
estimate for the October-December quarter illustrates how growing state budget
crises could hold back the economic recovery.
The Commerce Department
reported Friday that economic growth increased at an annual rate of 2.8 percent
in the final quarter of last year. That was down from the initial estimate of
3.2 percent.
The weaker figure was
disappointing and prompted some economists to lower their forecasts for
economic growth in the current January-March quarter.
State and local
governments, wrestling with budget shortfalls, cut spending at a 2.4 percent
pace. That was much deeper than the 0.9 percent annualized cut first estimated
and was the most since the start of 2010.
Consumers spent a little
less than first thought. Their spending rose at a rate of 4.1 percent, slightly
smaller than the initial estimate of 4.4 percent. Still, it was the best
showing since 2006. And it suggests Americans will play a larger role this year
in helping the economy grow, especially with more money from a Social Security
tax cut.
Google tweaks search to
punish 'low-quality' sites
NEW YORK (AP) -- Google
says it has tweaked the formulas steering its Internet search engine to take
the rubbish out of its results. The overhaul is designed to lower the rankings
of what Google deems "low-quality" sites.
That could be a veiled
reference to such sites as Demand Media's eHow.com, which critics call online
"content farms" -- that is, sites producing cheap, abundant, mostly
useless content that ranks high in search results.
Sites that produce original
content or information that Google considers valuable are supposed to rank
higher under the new system.
The change announced late
Thursday affects about 12 percent, or nearly one in every eight, search
requests in the U.S. Google Inc. said the new ranking rules eventually will be
introduced in other parts of the world, too. The company tweaks its search
algorithms, or formulas, hundreds of times a year, but it said many of the
changes are so subtle that only a few people notice them. This latest change is
"pretty big," the company said in a blog post.
Penney's 4Q profit rises 36
percent
NEW YORK (AP) -- Cutting
costs and selling more exclusive brands like Liz Claiborne drew new customers
and helped J.C. Penney Co.'s fourth-quarter profit rise 36 percent, the company
said Friday.
The results cap a week of
similar reports from clothing and department store chains. And, like Gap Inc.
and Kohl's Corp., J.C. Penney announced a new share buyback.
But Penney's shares fell
$1.91, or 5.2 percent, to $34.62 by midday as investors appeared worried that
price increases ricocheting through the retail industry would particularly hurt
Penney's middle-income customers.
Macy's Inc., Kohl's and
Abercrombie & Fitch Co. all said their shoppers should expect prices
increases as merchants grapple with soaring costs of labor in China and raw
materials worldwide.
Penney's reported net
income of $271 million, or $1.13 per share, for the three months that ended
Jan. 29. That compares with $200 million, or 84 cents per share, in the same
period last year.
Revenue rose 2.8 percent to
$5.7 billion. Revenue at stores open at least a year increased 4.5 percent.
Analysts expected earnings
of $1.11 per share on revenue of $5.7 billion for the quarter.
During the downturn,
department stores began offering more exclusive products to give customers
reasons to come to them specifically. Last fall, Penney became the only U.S.
retailer to sell Liz Claiborne and Claiborne women's wear other than the Liz
Claiborne New York brand, which went to QVC. Penney's also is the only
department store selling MG by Mango, a European brand.
Caesars Entertainment
reports 4Q, full-year losses
LAS VEGAS (AP) -- Caesars
Entertainment Corp., the world's largest casino operator, said Friday that it
reported a loss for its fourth quarter as gamblers kept a tight rein on their
spending.
But Caesars said Las Vegas
is showing signs of stabilizing while Atlantic City still struggles.
The privately-held casino
and resort operator said it lost $196.7 million for the period ended Dec. 31.
That compares with net income of $295.6 million a year earlier, including a
substantial one-time benefit.
Caesars said its quarterly
revenue rose 1 percent to $2.12 billion from $2.1 billion; its full-year
revenue fell 1 percent.
Caesars CEO Gary Loveman
said the company's results since the recession started in 2008 show customers
still want to visit U.S. casinos, but they can't spend as much as they once did
because they have less cash.
UK economic contraction
worse than thought
LONDON (AP) -- The British
economy shrank more than previously thought in the final quarter of 2010,
according to revised figures released Friday, dealing a further blow to the
country's shaky recovery from recession.
The Office for National
Statistics reported that gross domestic product declined by 0.6 percent between
October and December. It had previously put the contraction at 0.5 percent.
The agency said that severe
winter weather in December, when Britain was hit by heavy snowfalls, is still
largely to blame for the plunge in the final three months of the year.
But the data also showed
that household spending declined 0.1 percent -- the first drop since the second
quarter of 2009.
The agency's chief economist,
Joe Grice, said it was a small revision, rather than a shock and the Statistics
Office believed that stripping out the weather effect left the contraction at
around 0.1 percent.
But other economists said
the data was concerning, particularly as harsh spending cuts from the
Conservative-led coalition government are yet to filter through.
LSE trade halted because of
technical glitch
LONDON (AP) -- Investors
were left in limbo for four hours on Friday as the London Stock Exchange halted
trading because of a technical glitch -- the latest embarrassing outage to hit
the bourse as it trys to bed down a new system.
The LSE suspended dealings
shortly after the opening auction, blaming issues with market data technology
just two weeks after it introduced its new Millennium platform.
It restarted trading
shortly after midday, with LSE Chief Executive Xavier Rolet expressing
"sincere regret" at the inconvenience caused.
The apology did little to
appease many traders on what was expected to be a busy morning, following the
release of data showing that Britain's economy was faring worse than previously
thought and amid ongoing volatility on world markets stemming from the Libyan
political crisis.
On the equity side, brisk
trade was anticipated in the part-nationalized Lloyds Banking Group after it
reported a net loss in 2010, but a return to pretax profit.
The outage is the latest in
a string of blackouts caused by technical glitches at the exchange in recent
years -- including a full day shutdown in September 2008 and a three and a half
hour knockout in November 2009 -- and comes just days after Borsa Italiana, the
LSE's Milan platform, was hit by a five-hour blackout.
J&J will pay CEO $1.9
million salary for 2011
WASHINGTON (AP) -- Health
care giant Johnson & Johnson raised Chief Executive William Weldon's salary
but cut his annual bonus for 2010, after two years of revenue declines and an
unprecedented string of recalls involving Tylenol and other household
medicines.
The New Brunswick,
N.J.-based company set Weldon's salary at $1.92 million effective Jan 1, up 3
percent from $1.86 million in the previous year. The company disclosed the pay
raise Friday in a Securities & Exchange Commission filing.
But the company cut
Weldon's annual bonus 45 percent to $1.97 million from $3.6 million in 2009.
For 2009, Weldon received
total compensation of $25.6 million, which includes stock options, bonuses and
other perks. J&J is expected to release his total compensation for 2010
next month.
In 2010, J&J's stock
fell 4 percent to $61.85, a steep decline for a diversified company that sells
everything from Band-Aids to chemically engineered biotech drugs.
In its last quarter the
company reported a 12 percent drop in profit, as sales were squeezed by a weak
economy, pricing pressures and recalls that have kept many popular
nonprescription medicines off store shelves. Sales of the company's
over-the-counter medicines fell more than 19 percent for the full year.
Federal court upholds
Starbucks win in Kraft case
NEW YORK (AP) -- Starbucks
Corp. is one step closer to ending its distribution partnership with Kraft
Foods Inc. after a U.S. Appeals Court on Friday upheld a lower court ruling
against Kraft.
The food maker began
distributing Starbucks coffee to groceries and other stores more than a decade
ago.
After Starbucks announced
in November that it planned to end the arrangement, Kraft tried to get a
federal court to prevent Starbucks from abandoning their relationship. The
court denied that request in January.
On Friday, the U.S. Court
of Appeals for the Second Circuit in New York upheld the lower court's ruling
and said Kraft failed to show it faces irreparable harm if Starbucks breaks
away before a separate arbitration process ends.
Starbucks said it still plans
to take the packaged-coffee business back on Tuesday.
In arbitration, Kraft is
seeking to be paid fair market value for losing the business, plus a premium of
up to 35 percent.
The business brought Kraft
about $500 million per year in revenue.
Sales at grocery stores and
other retailers are increasingly important to Starbucks as it tries to expand
its business beyond cafes.
By The Associated Press
The Dow Jones industrial
average rose 61.95, or 0.5 percent, to close at 12,130.45. It was the first
rise for the Dow after three days of losses.
The Standard & Poor's
500 index rose 13.78, or 1.1 percent, to 1,319.88. The Nasdaq composite rose
43.15, or 1.6 percent, to 2,781.05
Oil for April delivery
wavered in a volatile trading day on Friday before settling 60 cents higher at
$97.88 per barrel on the New York Mercantile Exchange.
In other Nymex trading for
March contracts, heating oil added 5.23 cents to settle at $2.9455 per gallon
and gasoline futures gained 3.37 cents to settle at $2.9086 per gallon. Natural
gas for April delivery picked up 13.3 cents to settle at $4.005 per 1,000 cubic
feet.
In London, Brent crude rose
78 cents to settle at $112.14 per barrel on the ICE Futures exchange.