AP
Business Highlights
Thursday July 31, 6:36 pm ET

Rebates helped economy -- some -- in second quarter

WASHINGTON (AP) -- The prospects for a quick economic recovery dimmed Thursday, with new data showing the economy grew at a slower-than-expected rate this spring despite some oomph from tax rebate checks -- and actually shrank late last year.

Americans boosted spending on food, clothing and other items in the second quarter, the Commerce Department reported. But the gross domestic product still increased at a 1.9 percent annual rate, up from 0.9 percent in the first quarter but less than the 2.4 percent economists were looking for.

Meanwhile, the Labor Department said the number of newly laid-off people rose to 448,000 last week, the most in five years. More job cuts are expected in coming months, and Americans may cut back on spending, kindling recession fears.

Exxon Mobil 2Q profit sets US record, shares fall

HOUSTON (AP) -- Exxon Mobil Corp. reported second-quarter earnings of $11.68 billion Thursday, the biggest profit from operations ever by any U.S. corporation, but the results were well short of Wall Street expectations and its shares slumped 3 percent.

The world's largest publicly traded oil company said net income for the April-June period came to $2.22 a share, up from $10.26 billion, or $1.83 a share, a year ago.

Revenue rose 40 percent to $138.1 billion from $98.4 billion in the year-earlier quarter. Excluding an after-tax charge of $290 million related to an Exxon Valdez court settlement, earnings amounted to $11.97 billion, or $2.27 per share.

Bristol-Myers offering $4.5 billion for ImClone

TRENTON, N.J. (AP)-- Bristol-Myers Squibb Co. on Thursday offered $4.5 billion in cash for its cancer drug partner, biotechnology company ImClone Systems Inc., saying the two are "a natural fit."

The proposal offers ImClone stockholders $60 per share, a 30 percent premium to the New York-based company's closing price of $46.44 Wednesday. New York-based Bristol-Myers, the world's No. 14 drugmaker by revenue, already owns about 17 percent of ImClone.

The two companies have been partners since September 2001 in developing Erbitux, which is approved for treating advanced colorectal cancer and head and neck cancers.

Wall Street slides on GDP, jobless data

NEW YORK (AP) -- Wall Street sank Thursday, after weak readings on economic growth and the job market touched off renewed concerns about the financial health of businesses and consumers. The Dow Jones industrial average fell more than 200 points to 11,378.02, continuing its string of erratic, triple-digit daily swings.

Investors were concerned about data from the Commerce Department and the Labor Department, but the offer from Bristol-Myers Squibb Co. for its cancer drug partner ImClone Systems Inc. kept the Nasdaq composite index from falling as sharply as other indexes.

In other positive news, oil prices declined, and an index of Midwestern business activity indicated growth.

Oil falls to almost $124 on dour US economic data

NEW YORK (AP) -- Oil prices pulled back Thursday, wiping out some gains from the previous day's $4 a barrel rally, as traders bet that a cooling U.S. economy will continue to eat into U.S. demand for fuel.

At the pump, easing prices underscored Americans' waning consumption of gasoline. The average price of a gallon of regular slipped 1.7 cents to $3.909, according auto club AAA, the Oil Price Information Service and Wright Express.

Light, sweet crude for September delivery fell $2.69 to settle at $124.08 a barrel on the New York Mercantile Exchange, a day after the contract soared more than $4 in the biggest one-day jump in two weeks. Prices have now fallen in four of the last seven sessions and are 14 percent off their all-time trading high above $147, reached July 11.

Mass. regulators accuse Merrill Lynch of fraud

BOSTON (AP) -- Massachusetts security regulators accused Merrill Lynch of fraud Thursday for allegedly promoting the sale of auction-rate securities when they knew the investments were becoming increasingly unstable.

The administrative complaint filed by Secretary of State William Galvin claims Merrill Lynch, Pierce, Fenner & Smith -- the main subsidiary of Merrill Lynch & Co. -- aggressively sold the securities while downplaying the risks.

Auction-rate securities have their interest rates set at periodic auctions, depending on the submitted bids. The investments were once considered safe, but the market collapsed in February amid turmoil in the credit markets.

Motorola posts small 2Q profit, beats expectations

NEW YORK (AP) -- In a sign that it may be finally turning its fortunes around, Motorola Inc. surprised investors Thursday by reporting a small profit for the second quarter and revealing it had shipped more cell phones than in the first quarter. Its shares soared.

The unexpected profit was the result of a sales increase across all units from the first quarter, helped by cost cuts. The company has laid off more than 10,000 workers since last year.

The Schaumburg, Ill.-based company earned $4 million, less than 1 cent per share, in the three months ended June 30. That includes accounting charges of 2 cents per share.

Chavez to nationalize Spanish-owned bank

CARACAS, Venezuela (AP) -- President Hugo Chavez said Thursday he intends to nationalize the Bank of Venezuela, which is owned by the Santander banking group of Spain.

Chavez said he made the decision to nationalize after learning that Santander had begun to make contacts with a local bank to sell the institution. He said the local bank asked for authorization from the government, but that he, "as the head of state," nixed the sale.

A Bank of Venezuela spokesperson -- speaking on condition of anonymity because of the sensitivity of the issue -- told The Associated Press that the bank heard of the nationalization on television and has no other information.

Santander purchased the Bank of Venezuela in 1996. The financial institution is the country's third-largest bank.

GMAC posts $2.5 billion loss in 2nd quarter

NEW YORK (AP) -- GMAC Financial Services said Thursday it swung to a $2.48 billion second-quarter loss, pulled down by a steep drop in the values of used trucks and sport utility vehicles.

The loss, which exceeded GMAC's losses for all of 2007, compared with a profit of $293 million in the same quarter last year.

GMAC is majority owned by private equity firm Cerberus Capital Management, but Detroit-based General Motors Corp. still holds a large minority of the business. That stake is expected to be a drag on GM's results when it reports second-quarter figures Friday morning.

Kodak posts lower 2Q profit, revises outlook

ROCHESTER, N.Y. (AP) -- Eastman Kodak Co. said Thursday its second-quarter profit fell 14 percent as digital inkjet-printer investments and higher costs for raw materials offset a hefty tax settlement gain. It also warned that full-year operating earnings will come in at the lower end of its previous forecast, sending its already depressed stock down more than 7 percent.

The photography pioneer, which has transformed itself from the world's biggest maker of chemical-based film products to one centered on electronic imaging, said it earned $495 million, or $1.62 a share, in the April-June quarter, down from $575 million, or $2 a share, a year earlier.

Sales edged up 1 percent to $2.49 billion from $2.47 billion, as revenue from digital businesses rose 10 percent to $1.64 billion but traditional film-based revenue slumped 14 percent to $847 million.

Sanofi, AstraZeneca paths diverge in 2nd quarter

PARIS (AP) -- Two of Europe's largest drug firms Thursday issued rosier forecasts for earnings growth this year despite reporting second-quarter results that highlighted their diverging fortunes in the face of competition from generic drugmakers and the weakening of the U.S. dollar.

French pharmaceutical giant Sanofi-Aventis SA lifted its forecast for earnings-per-share growth this year to 8 percent from its previous target of around 7 percent, while rival British drug maker AstraZeneca PLC upped its target range for core 2008 EPS to between $4.60 and $4.90. Britain's second-largest drug maker behind GlaxoSmithKline PLC had previously forecast 2008 EPS between $4.40 and $4.70.

Like other drug makers, Sanofi-Aventis and AstraZeneca have struggled with a growing number of patent challenges to top-selling drugs, particularly in the United States.

By The Associated Press

The Dow Jones industrial average fell 205.67, or 1.78 percent, to 11,378.02.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 16.88, or 1.31 percent, to 1,267.38, while the Nasdaq fell 4.17, or 0.18 percent, to 2,325.55.

Light, sweet crude for September delivery fell $2.69 to settle at $124.08 a barrel on the New York Mercantile Exchange.

In other Nymex trading, heating oil futures fell 8.16 cents to settle at $3.4387 a gallon while gasoline prices lost 8.71 cents to settle at $3.048 a gallon. Natural gas futures shed 12.9 cents to settle at $9.119 per 1,000 cubic feet.

In London, September Brent crude fell $3.12 to settle at $123.98 a barrel on the ICE Futures exchange.